Murdoch and Malone ditch joint Hughes bid

Rupert Murdoch's News Corporation could face opposition from one of his closest allies in the auction for Hughes Electronics, the business which owns the DirecTV satellite network in the US.

Liberty Media, run by John Malone, is considering an offer for Hughes after it emerged yesterday that informal plans for a joint bid by the two media tycoons had been ditched.

The split is a positive development for General Motors - which has watched the value of its 30% stake in Hughes crumble since it first invited offers several years ago and is eager for a competitive auction. Other potential bidders for Hughes include the US local telecommunications company, SBC Communications.

The prospect of them going head to head in a contest for Hughes hints at worsening relations between Mr Murdoch and Mr Malone, who have frequently worked together. They were involved in a joint effort to acquire Hughes in the previous round of bidding which ended with satellite rival Echostar winning the day, only to be subsequently blocked by regulators. Mr Malone is also the largest outside shareholder in News Corp.

But people close to the situation say the abandonment of the plans did not have any broader implications for the future relationship between Mr Murdoch and Mr Malone, who built his fortune as one of the pioneers of cable TV. "There are no hard feelings. These two are both pretty much realistic, pragmatic guys," said one source.

News Corp and Liberty had been assembling an offer for GM's stake, which analysts have valued at $6-7bn.

Insiders said the pair could still make a joint offer but admitted it was more likely News Corp would bid alone. They also warned it was still early in a "fluid" process. News Corp is continuing due diligence and has not yet had formal discussions with GM.

News Corp noted that Mr Murdoch's chief lieutenant, Peter Chernin, had told reporters on February 12 that the group was working on an offer alone.

GM is now understood to be considering offering just two-thirds of its stake and placing the rest in its pension fund for tax reasons. News Corp is sitting on $3bn in cash and its $7.5bn debts pale in comparison to those of Vivendi Universal and AOL Time Warner