News Corp in 2005: Consolidating the DirecTV Acquisition
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The DirecTV Deal Contd...
Following the completion of the acquisition,
Murdoch became Chairman of Hughes, while News Corp' s former Co-Chief
Operating Officer, Chase Carey (Carey) became the President and Chief
Executive Officer. The public shareholders as well as GM' s pension and
other benefit plans owned all of GM' s Common Stock, which represented
80.1% of interest in Hughes Electronics. GM retained a 19.9% stake in
Hughes. |
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News Corp looked well placed to drive down the prices of entertainment and
sports programming. With so many viewers hooked up to DirecTV, no programmer
would risk not being in News Corp' s system. At the same time, Murdoch, known
for his aggressive marketing tactics, would have the leverage to force his cable
and satellite rivals to carry his programs at premium prices.
It was widely reported that Murdoch might distribute set-top boxes at a very low
price to attract subscribers to DirecTV. Meanwhile, rivals such as Comcast and
Time Warner Cable were attempting to expand their own distribution networks.
Comcast acquired AT&T Broadband in 2003 for $54 billion. AT&T Broadband owned
regional sports rights, telephony and two-way Internet interactivity over cable
lines. Comcast was also seeking to enhance its partnership with programmers such
as Viacom.
In many ways, Comcast, the Number 1 cable system in the US, looked the only
rival, which could remotely match the power of News Corp. After closing the AT&T
Broadband deal, Comcast had pursued various deals to strengthen its distribution
network. Comcast had even made a hostile bid to take over Walt Disney in
February 2004 for $ 56 billion before backing out. Comcast had held firm on fees
for pricey cable channels, won favorable deals for equipment, and put pressure
on Hollywood to change its long-standing movie-release tradition so that it
could get movies ahead of video stores and sell them over cable.
Comcast had launched various initiatives to strengthen its content. It had
partnered with Radio One to launch a new channel targeting African Americans.
Comcast had also acquired TechTV to cater to video gamers. In December 2003,
Comcast struck a deal with Chicago's major sports teams, Chicago Bulls, Cubs,
White Sox, and Blackhawks, to create a new sports channel, leaving Murdoch's Fox
Sports Chicago with no big draws. Comcast had also struck a deal with Viacom
channels, such as MTV and Nickelodeon to supply content to Comcast' s 21
million-subscribers for as long as five years.
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