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News Corp. and Liberty Ask FCC To OK DirecTV Deal - Broadcasting & Cable

News Corp. and Liberty Ask FCC To OK DirecTV Deal

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News Corp. Monday filed a petition with the FCC for permission to transfer its interest in DirecTV to Liberty Media.

Liberty will also get three regional sports networks serving Denver, Pittsburgh and Seattle and $550 million in cash in the deal, which is valued at about $11 billion..

Liberty will also give up its stake in News Corp.

Liberty has agreed to abide by the conditions--including program access and carriage conditions for the regional sports networks-- that were imposed on News Corp. by the FCC when it approved the company's purchase of over a third of the satellite broadcaster from Hughes Corp. in January 2004.

Those include not Liberty's agreement not to enter into exclusive programming arrangements with any multichannel video provider, discriminate against unaffiliated program services, and to submit and regional sports network carriage impasse to independent arbitration.
Liberty owns QVC and Starz! It spun off its half-interest in Discovery in 2005, although Liberty Chairman John Malone is Chairman, CEO and a major stockholder in Discovery. Liberty also owns a stake in satellite broadband company WildBlue, Expedia, GSN and Hallmark, among others. The WildBlue stake could be of particular interest to the FCC. Broadband competition and roll-out to underserved areas is a big priority for FCC Chairman Kevin Martin. In the petition, News Corp. and Liberty pointed out that the WildBlue interest, as well as that of Starz! and QVC, would "lead to continued development and deployment of innovative products that will be available to all U.S. consumers, including those underserved or unserved by terrestrial alternatives." 
In asking for FCC approval, the parties point out that the move reduced vertical concentration by moving DirecTV from an owner with "must have" broadcast programming and regional sports networks (15 beforehand, 12 after), to one with far fewer networks and no attributable interest in TV stations (it owns 1% of CBS).
The FCC has to rule on the transfer's public interest implications since it involves the transfer of satellite licenses issued by the commission.

News Corp. has tried for years to get Liberty out of the company because of concerns that Malone was eyeing the company. In 2005, Liberty upped its voting stake in News Corp. from 9% to 17%, startling company Chairman Rupert Murdoch and prompting him to take defensive action. In the past, News Corp. offered Liberty several local TV stations for its stake, but the company apparently likes its broadcasting from space.DirecTV's limited growth has frustrated News Corp., which could explain its willingness to part with it.

Murdoch aggressively went after DirecTV for years, but has been so disappointed with it lately, he has reportedly referred to it as a "turd bird."
Anne Becker contributed to this report

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