Rupert buys largest satellite television provider: leverage ensues:
- Murdoch’s News Corp. agreed to acquire control of Hughes Electronics Corp., DirecTV’s parent, in a $6.6 billion cash and stock deal announced Wednesday. Murdoch would transfer control of DirecTV to his Fox Entertainment Group subsidiary, which includes the Fox News Channel.
….DirecTV’s 11 million subscribers will give News Corp. leverage negotiating with program producers such as The Walt Disney Co. and AOL Time Warner Inc., who want cable systems to pay more for airing their popular channels.
“The leverage will keep prices down or give them some added profitability so they don’t have to raise prices as much,” predicted Steve Mather, an analyst with Sanders Morris Harris. “As an industry, distributors are growing their ability to fight back against increasing programming costs.”
DirecTV, its rival Dish Network, and cable companies have been fighting hikes sought for channels such as Disney’s ESPN and AOL Time Warner’s CNN. Now that he has his own distribution outlet, Murdoch can use the leverage he has with his own popular networks, such as Fox News, to negotiate better deals for DirecTV.
….Murdoch, who already runs satellite television services in Britain, Australia, Asia and Italy, could also use DirecTV to launch the kind of interactive television offerings that have found a home among Europeans, but so far haven’t found a U.S. audience.
In Britain, Murdoch’s 6.1 million Sky Digital subscribers can choose from eight different camera angles while watching live broadcasts of soccer matches, shop using the remote control and bet on horse races. New remote controls include keypads for text messaging and new set-top boxes include personal video recorders to pause live television and record programs on a computer disk. The boxes can also serve as game consoles using wireless game pads. [AP]