DirecTV succumbs to Murdoch

Rupert Murdoch's long held ambition to own a pay-TV platform in the US was finally realised last night when the media tycoon's News Corporation agreed a $6.6bn (£4.1bn) deal to take control of Hughes Electronics.

It was the culmination of a three-year campaign to win control of Hughes, the parent company of DirecTV, the largest satellite network in the US. Mr Murdoch described the agreement as a "genuinely exciting and transforming deal for News Corp".

News Corp is acquiring a 19.9% stake in Hughes held by the car maker General Motors and a further 14.1% from public shareholders, GM's pension and other benefit plans. News Corp can elect to pay a certain amount in shares when the deal closes.

The media group will transfer ownership of Hughes to the Fox Entertainment Group, a subsidiary that houses its US television assets including the main Fox network, programming, the film studio and cable stations. Fox is 80.6% owned by News Corp, although after the deal is completed that will rise to 82%.

Explaining the place of Hughes within the group, Mr Murdoch said it "belongs" in Fox. "As a TV distribution platform it obviously fits within that structure. There will be a mutually beneficial relationship. The platform represents an invaluable outlet for our products.

"In a landscape of increasing choice and also of consolidation it is essential to ensure our content continues to reach consumers and its long term viability is greatly enhanced by owning a platform."

Mr Murdoch's victory became an inevitability after the handful of rival suitors for Hughes dropped out .

John Malone's Liberty Media, a long time associate of Mr Murdoch as well as the largest shareholder in News Corp, abandoned thoughts of a rival bid and decided to back its old ally. SBC Communications, the telecoms group, retreated under pressure from its shareholders, perhaps concerned at the ill-fated precedents of combining telecoms and media.

Mr Murdoch will become chairman of Hughes while the News Corp veteran and former co-chief operating officer Chase Carey will be president and chief executive.

The businesses included in the acquisition are the DirecTV platform, which has more than 11m subscribers, an 81% holding in the satellite operator PanAmSat and Hughes Network Systems, which provides broadband satellite network solutions.

Mr Murdoch said: "Hughes has a very strong brand and a large customer base, and we plan to take the value of this great asset and grow it dramatically using not only our content but the expertise that we have gained around the world.

"With almost 15 years of expertise gained at our worldwide pay-TV platforms, including the industry leader BSkyB, we are confident in out ability. We will help to make satellite a viable competitor to cable [in the US]."

News Corp is paying $3.8bn to GM for its 19.9% interest, of which $768m can be in shares. The remainder can be paid in cash or shares, depending on News Corp's wishes when the deal closes. The company has one of the strongest balance sheets of any media conglomerate.

News Corp owns networks across Asia, Latin America and Europe. Its most recent addition last week was the Italian pay-TV group Telepiu.