After making noises that he might go it alone, John Malone has decided to team with Rupert Murdoch in his pursuit of DirecTV. Malone's Liberty Media said last Thursday it will invest another $500 million in Murdoch's News Corp., strengthening its ability to bid for control of DirecTV parent Hughes Electronics. The deal will increase Liberty's interest in the Australian media conglomerate from 18% to 20%.
Offers are expected as soon as next week from any players interested in at least the controlling, supervoting stake in Hughes held by General Motors. In the last auction for the entire company, Hughes attracted only two bidders, Murdoch and rival DBS service EchoStar Communications. EchoStar won, but was thwarted when antitrust regulators choked on the anticompetitive effects of a merger.
This time News Corp.'s desire remains steady and telco SBC has been exploring a bid, even though Chairman Ed Whitacre has scrapped every other video investment or venture the Baby Bell has been involved with over the past decade.
Before the News Corp. investment was disclosed last Friday, Liberty President Dobb Bennett was already signaling diminished interest in going solo. "We like to try to buy things that he we can help grow and help develop," Bennett said in a conference call. "But there have been a lot of situations in the past where someone else has turned out to be a more logical buyer or more logical owner once we've worked it for a while."
News Corp. has also just sold $1.5 billion worth of bonds. Currently, the market value of all of Hughes' stock is just $11 billion, half what EchoStar had agreed to pay.
Liberty's move leaves the question of what Malone will pursue next. "It would now appear that Liberty will focus more actively on programming assets, rather than U.S. distribution assets," said Merrill Lynch media analyst Jessic Reif Cohen.
Liberty's principal targets are QVC and Vivendi's Universal entertainment assets, principally Universal Studios, USA Network and Sci-Fi Network, Cohen said.
Malone has already triggered a process that may give Liberty a chance to buy the 54% of shopping network QVC it doesn't already own.