Murdoch resurrects global TV dream

12 April 2012

THE dream of global dominance in satellite TV broadcasting still arouses passion in the heart of 70-year-old Rupert Murdoch. And he might yet get his chance. The vision appeared to be in tatters nearly a year ago when Murdoch publicly conceded defeat in his battle to add DirecTV - the biggest satellite operation in the US - to his stable.

The News Corp chairman had been outbid by his old sparring partner, Charlie Ergen of EchoStar, and he was bitterly disappointed. But almost a year after the DirecTV battle appeared to be over, there is still no ruling from the US Justice Department on whether to allow a merger between EchoStar and DirecTV.

And now, industry insiders predict that the tie-up will be blocked - or that Ergen will face such tough conditions on the £11.7bn deal that he will be forced to walk away. That would give Murdoch a second chance to realise his American dream - and he knows just the man to make it come true.

A successful News Corp bid for DirecTV could see Tony Ball, the 46-year-old chief executive of BSkyB, become head of Sky Global, the dormant company that Murdoch would revive to push on with his worldwide satellite television interests. Ball was touted as the likely head of Sky Global when Murdoch was first trying to buy DirecTV last year. He has had a successful three years at BSkyB, in which News Corp has a 36% stake.

Following the collapse of ITV Digital, BSkyB dominates pay-television with more than 6m subscribers and a stock market value of £11bn.

Ball stepped down as nonexecutive director of Marks & Spencer last week to spend more time on his core business interests. He has signed a new contract at BSkyB, but this is not seen as an obstacle to stop him taking a plum role in the News Corp empire.

Industry analysts predict that the elimination of Ergen, and a tougher economic and regulatory environment, could cut the price that DirecTV majority shareholder General Motors could demand by at least a quarter.

Murdoch, who apparently still has financial backing from software behemoth Microsoft for a second go at DirecTV, is 'watching the situation closely,' according to a News Corp spokesman. 'We are very interested to see the outcome of the regulatory process.'

After Ergen's apparent victory in the DirecTV bidding war last October, Murdoch did not give up. News Corp lobbyists circulated in Washington's halls of power 'The Essential Guide To The EchoStar/ DirecTV Deal', a position paper arguing that Ergen would have a monopoly in rural America, where cable companies do not operate, and could raise prices with impunity. Groups including the National Consumers Federation, the American Council of the Blind and the Latino Coalition joined the fight against Ergen.

News Corp is in pretty good shape. Last month, it unveiled a £4.1bn loss for the year to June, but that was because it wrote down the value of its stake in Gemstar TV, an electronic TV guide system. The price of shares in Murdoch's group has risen by about 20% since the end of July.

News Corp has repaid $2bn in debt while building a $3bn war chest, and the company has $1.5bn in cashflow. Even Murdoch's-Fox TV network, which has seen ratings fall 6.5% this year along with other US terrestrial television networks, is showing signs of improvement.

American Idol, its version of the hit British television show Pop Idol, has attracted huge audiences with last week's final pulling in 23m viewers, the highest audience for a non-sports show on Fox in ten years.

Meanwhile, Murdoch-owned 20th Century Fox studios in Hollywood has seen revenues rise from boxoffice receipts for its hit film Ice Age, while DVD sales of Planet Of The Apes have been strong. With its 10.7m subscribers, DirecTV would give Murdoch dominance of the vital US satellite television business - the one major pay-TV market that has so far eluded him.

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