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Sunday, 05/27/2001 1:24:55 PM

Sunday, May 27, 2001 1:24:55 PM

Post# of 13000
EchoStar Looks to Buy GM's Hughes


Updated: Thu, May 24 4:28 PM EDT

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FOX 25.50 -0.46 (1.77%)




By CATHERINE TSAI, Associated Press Writer
DENVER (AP) - Satellite television provider EchoStar Communications Corp. placed itself in the picture Thursday to acquire General Motors Corp. subsidiary Hughes Electronics, which owns DirecTV, EchoStar's main competitor.

In a filing with the Securities and Exchange Commission, EchoStar said GM is open to discussions for a sale of DirecTV to Littleton-based EchoStar. EchoStar spokeswoman Judianne Atencio declined to comment on whether any meetings had been scheduled.

GM, which has been trying to sell Hughes since last year, refused to include EchoStar in earlier sales discussions, EchoStar said in the filing.


A GM spokeswoman declined comment on the filing, but the company has made no secret of its intention to find the best price for Hughes. Although many observers consider Rubert Murdoch's News Corp. the leading suitor, GM has said for months that it is considering a number of sales options.

"We have an obligation to consider any alternative proposal in the interest of our shareholders," said GM spokeswoman Toni Simonetti.

GM's board of directors this month authorized renewed talks with News Corp., after months of negotiations through the winter failed to produce a sale agreement.

Analyst David Kestenbaum of ABN Amro predicted Hughes could be sold as early as mid-June to News Corp.

"Hughes is pretty close. They're pretty far along with News Corp.," he said.

EchoStar CEO Charlie Ergen said last fall that a merger of Hughes and EchoStar would make sense. Some analysts agreed, while cautioning that the deal could run into trouble with regulators over antitrust concerns.

DirecTV has 9.5 million subscribers who receive their television service through pizza-sized satellite dishes. EchoStar has 5.3 million subscribers.

Murdoch has been outspoken about his interest in acquiring Hughes, which would fill a major gap in the coverage area of his existing satellite network. Through BSkyB and various other subsidiaries, Murdoch's satellites already reach much of Asia, Europe and Latin America.

The Wall Street Journal reported Thursday that GM was told EchoStar could make a formal bid to challenge News Corp. for Hughes next week.

EchoStar said Monday it would sell $1 billion in debt to finance new satellites and other initiatives. The move sparked speculation Ergen is building EchoStar's cash reserves to court Hughes.

"I think Charlie ultimately is trying to bid up the price," Kestenbaum said. "He wants to make News Corp. overpay because they're going to be competing as we go forward."

EchoStar reported $2.7 billion in revenue last year with an operating loss of $424.1 million. Hughes reported $7.3 billion in revenue for 2000 with an operating loss of $354.1 million.

News Corp., a majority owner of Fox Entertainment Group, has about $14 billion in annual revenue and assets of about $39 billion.

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On the Net:

http://www.hughes.com

http://www.dishnetwork.com

http://www.newscorp.com


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