US satellite giants consider $32bn merger

NEWS EchoStar, the second biggest satellite TV operator in the US, has made a last-ditch $32bn attempt to gain control of its larger rival, Hughes Electronics - owner of DirecTV. The proposed merger would scupper a deal between Hughes and Rupert Murdoch's News Corp - which is in the final stages of lengthy negotiations to buy DirectTV. Under the proposed deal, EchoStar would exchange 0.75 shares of its own stock in return for each Hughes share. The offer represents an 18 per cent premium over Hughes' closing share price last week and would give Hughes, and parent company General Motors (GM), shareholders 66 per cent of the merged company. Setting out EchoStar's proposal in a letter to GM shareholders, EchoStar chairman and CEO Charlie Ergen said the deal would create $56bn in savings by bringing down programming costs, reducing the costs of attracting new customers and saving on transmission capacity. GM has been attempting to offload the satellite TV division for over a year and originally placed a $45bn price tag on the company. However, with only News Corp bidding for the business the price has fallen. However, should the EchoStar bid succeed, the deal would likely face intense scrutiny from US regulators as the company would control more than 90 per cent of consumer satellite TV services and boast 15 million subscribers in the US. Ergen said he was confident there would be no regulator opposition to the deal as satellite TV players struggled to compete with cable TV operators, reports claim.