DirecTV sells 50% of unit to SkyTerra for cash, stock

December 07, 2004|By BLOOMBERG NEWS

EL SEGUNDO, Calif. - DirecTV Group Inc., the biggest U.S. satellite-television service, sold a 50 percent stake in a new unit that includes its Hughes Network Systems business to SkyTerra Communications Inc. yesterday. The deal is valued at $360 million.

In addition to $251 million in cash, SkyTerra also will give DirecTV 300,000 shares.

SkyTerra is an affiliate of private equity firm Apollo Management LP. Hughes Network Systems, based in Germantown, Md., sells satellite-networking services and equipment for credit-card verification and video teleconferencing.

Shares of DirecTV rose 9 cents to close at $15.74 yesterday on the New York Stock Exchange. SkyTerra rose $2.25, or nearly 14 percent, to $18.60 in over-the-counter trading.

DirecTV chief executive Chase Carey said this year that the company was "evaluating what to do" with some of its businesses, including Hughes Network Systems.

As part of the deal, DirecTV will include the Spaceway 3 satellite that Boeing Co. is building for it to provide high-speed Internet access to its North American customers. The cash proceeds received by DirecTV are to be reduced by an agreed-upon amount necessary to complete Spaceway 3.

In September, DirecTV decided to use two other new Spaceway satellites to expand its high-definition TV programming, rather than to provide Internet access. The decision stems from the satellite TV company's effort to win subscribers from cable rivals. DirecTV has about 12.1 million customers, excluding former customers of the National Rural Telecommunications Cooperative and Pegasus Communications Corp.

DirecTV is 34 percent owned by Fox Entertainment Group, which is approximately 82 percent owned by News Corp. DirecTV has stopped providing services other than TV programming since Rupert Murdoch's News Corp. acquired a controlling stake from General Motors Corp.

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