News Corp. News: DirecTV Deal

After nearly three years of trying, News Corp. chairman Rupert Murdoch
finally won the top prize in the U.S. direct-broadcast satellite market,
agreeing to purchase a 34 percent interest in DirecTV Inc. for $6.6 billion in
cash and stock.

The deal brings DirecTV -- the largest DBS service provider, with 11 million
subscribers -- into one of the largest content and broadcasting powerhouses in
the world.

In addition to owning the Fox Broadcasting Network, News Corp. controls a
passel of cable networks, including Fox News Channel, FX and several regional
sports networks.

After the deal is closed, expected by the end of the year, Murdoch will
become chairman of DirecTV parent Hughes Electronics Corp. and former News Corp.
co-chief operating officer Chase Carey will become president and CEO.

Hughes' corporate senior executive vice president, Eddy Hartenstein, will be
vice chairman and report to Carey.

In the meantime, News Corp. hopes it has averted any possible problems with
the Federal Communications Commission by pledging to provide open access to its
programming to all suppliers and distributors.

The deal worked out just as most observers expected it. News Corp. will
acquire General Motors Corp.'s 19.9 percent interest in Hughes stock for $3.8
billion in cash and stock, and 14.1 percent from public shareholders and GM's
pension fund for $2.8 billion in News Corp. shares.

GM's 19.9 percent stake is supervoting and controls more than one-half of
Hughes' shareholder votes.

News Corp. will then sell the stake to its Fox Entertainment Group Inc.
subsidiary in exchange for a $4.5 billion promissory note and approximately 74.2
million shares in Fox. As a result, News Corp.'s equity interest in Fox will
rise to about 82 percent.

Valued at $14 per share, the deal represents a premium of about 22 percent
over Hughes' stock price of $11.48 each.

News Corp. also gets Hughes' 81 percent interest in satellite manufacturer
PanAmSat Corp. and Hughes Networks Systems, a provider of broadband-satellite

The deal ends what has been a three-year odyssey for News Corp. After more
than one year of negotiation, News Corp. was a hair's length away from buying
Hughes in 2001 for about $25 billion when it was outbid at the 11th
hour by EchoStar Communications Corp. However, the FCC blocked the
EchoStar-Hughes merger in December 2002 for anti-competitive reasons.

After the FCC action, News Corp. was back in the hunt for DirecTV, but it had
competition from bidders like Liberty Media Corp., SBC Communications Inc. and
Cablevision Systems Corp.

However, in the past month, Liberty, SBC and Cablevision all dropped out of
the running, leaving News Corp. as the sole suitor.

On a conference call with reporters, Murdoch joked about his past frustration
in trying to snag DirecTV.

"For those of you who have been eagerly on hold," Murdoch told reporters,
"try it for three years."