News Corp. Chairman Rupert Murdoch blasted back against EchoStar's attempt to snatch away DirecTV. Murdoch expressed irritation over EchoStar Chairman Charlie Ergen's declaration that News Corp.'s offer is inferior.
"The assumptions that our deal offers no premium and few synergies are dead wrong,'' Murdoch said while discussing the company's fourth quarter earnings. "Our deal offers a healthy premium and synergies that no other company can match."
Ergen contends that combining two U.S. DBS services would dramatically reduce operating and marketing costs. The efficiencies created by merging DirecTV into News Corp.'s Sky Global international DBS operation are less obvious. But Murdoch insisted that he could create economies by standardizing set-top equipment, buying programming in bulk worldwide and somehow lowering churn rates. Ergen is trying to create "a satellite monopoly" that would "give people in 30% of the country no choice at all in provision of multichannel video services.
He added that ``There's been some speculation that Charlie's playing a clever hand of poker,'' by disrupting DirecTV parent Hughes Electronics while EchoStar gains market share. "I say that in admiration, not criticism. It's quite possible. But I think he's finally tempted to put something very big together. We'll just have to see how he plays his hand.''
News Corp.'s TV operations have been pinched by the weak ad market, but Murdoch and News Corp. President Peter Chernin that the pain has been offset by ratings gains at the Fox broadcast network and the Fox News and Fx cable networks.
"Cable is a very tough marketplace overall," Chernin said, with some networks seeing "20 even as much as 30% declines" in CPMs.
Fx and Fox News have been cutting CPMs, but because of strong ratings growth, particularly at Fox News, "we are actually seeing net revenue gains." He said that at Fox Broadcasting, CPMs are down just 2% and the network has sold 75% of its inventory. He denied speculation that CPMs for NFL games on Fox are falling 20-25%.
- John M. Higgins