The chief executive of DirecTV parent Hughes Electronics, who opposed the company's sale to Rupert Murdoch, suddenly hit the exit doors Friday, a day after DBS player EchoStar Communications made a rival bid.
Mike Smith, brother of John F. Smith, chairman of Hughes' parent General Motors, announced his immediate retirement after 16 years at GM.
Smith has openly criticized News Corp. Chairman Murdoch's attempts to buy the satellite and DBS company, saying his offers haven't been very impressive. Murdoch wants to merge Hughes into his international satellite unit, Sky Global, and will pay out cash provided by backers Microsoft Corp. and Liberty Media. Murdoch has blasted Smith for supposedly trying to save his job.
Smith's replacement, GM Vice Chairman Harry Pearce, would say only that "these changes were the result of intense and comprehensive discussion among GM, Hughes, the boards and Mike."
Smith's exit came a day after EchoStar revealed that GM had reached out to its chairman, Charlie Ergen, about a counteroffer. Ergen suddenly borrowed $1 billion last week, raising his checking account to $2.3 billion. But GM, which owns 30% of the Hughes tracking stock, wants at least $5 billion in cash out of any merger. Analysts say Ergen would need new, deep-pocketed equity partners to come up with that much cash.
Industry and Wall Street executives believe Smith was squeezed out for his opposition to a sale, which GM shareholders have been clamoring for. "The due diligence process has been excruciatingly slow, and it's Smith that's been holding it up," said one analyst. "Murdoch clearly has the upper hand now." News Corp. and EchoStar executives could not be reached for comment. - John Higgins