Murdoch Gets Into Us Satellite Tv Market

Rupert Murdochs News Corp. took two giant steps in the television business Wednesday, agreeing to buy Pat Robertsons Family Channel cable network in a $1.9 billion deal and teaming up with cable operators to form the No. 2 satellite TV service in the United States.

Fox Kids Worldwide Inc., the childrens programming arm of Murdochs media empire, will pay $35 a share in cash for the Robertsons International Family Entertainment Inc., which owns Family Channel and other assets.

Evangalist Robertson, a former U.S. presidential candidate, is expected to be named co-chairman of the merged company, while his son, Tim Robertson, is expected to continue as president and chief executive.

 

A News Corp spokesman said the company has not yet determined who will be the other co-chairman.Fox Kids, which is owned equally by News Corp. and Saban Entertainment, aims to expand International Family through

News Corp.s worldwide distribution system. Meanwhile, PrimeStar Partners --- the satellite TV service owned by the cable companies said it would restructure into a public company that will include satellites and other assets from News Corp. and MCI Communications Corp.

The deal follows News Corp.s failed efforts to join forces with EchoStar Communications Corp. Their proposed $1 billion deal collapsed into a morass of litigation. I couldnt quite say this is a replacement, but because that deal didnt work out, this is the next one were doing,

News Corp. spokesman Jim Platt said. This is a way for us to recoup our investment in the satellites. PrimeStar, with about 1.8 million subscribers, said the new assets will help it compete in the fast-growing small-dish satellite TV business.

Analysts said the deal would create a strong competitor to DirecTV, the nations largest satellite TV service owned by Hughes Electronics Corp. and AT&T Corp. But consumer advocates and others already were criticising the venture, calling it another deal that violates the spirit of competition envisioned by last years communications law.

Regulators said they would examine the proposed transaction closely. It is a major development in the market, Peter Cowhey at the Federal Communications Commission said in Washington, Itwill get close scrutiny. He said the FCC will want to know how this is going to affect the market for multichannel video services.

Under the new ownership structure, the current PrimeStar partners Time Warner Inc., Tele-Communications Inc., Cox Communications, U S West Media Group, Comcast Corp. and GE American Communications Inc. will contribute their interests and subscribers to the new public company, PrimeStar Inc., in return for a combination of stock and cash.

In exchange for the satellites, News Corp. and MCI will get a non-voting stake in PrimeStar Inc. worth about $1.1 billion, PrimeStar said in a statement.

PrimeStar Partners Chairman James Gray will be chairman of the new company until the restructuring is completed, when

Daniel OBrien, president of Time Warner Satellite Services Inc., will become president.

Cai von Rumohr at Cowen & Co. estimated DirecTV has about 2.6 million subscribers while No. 3 EchoStar has about 600,000. Other analysts said the two biggest players could dominate the market.

There are very few businesses that have more than two dominant players; for Coke there is Pepsi. You are seeing the developement of a duopoly in the direct broadcast satellite business, said PaineWebber analyst Chistopher Dixon.

The value of the Family Channel deal was put at $1.9 billion, including assumption of IFE debt.

That deal also requires approval from regulators. Gene Kapp, spokesman of the Christian Broadcasting Network, said CBN owns 3.8 million shares of International Family and Regent University owns 4.2 million shares. Pat Robertson is founder and chairman of the Christian Broadcasting Network and chancellor of Regent University, he said.

Time Warner rose 75 cents to $50.375, Cox rose 25 cents to $25.25, U S West Media Group fell 37.5 cents to $21.75, News Corp. gained 25 cents to $18 and General Electric rose 37.5 cents to $62.625, all on the New York Stock Exchange.

MCI stock fell 94 cents to $40.50, Comcast fell 37.5 cents to $21.8125 and Tele-Communications was little changed at $16.94, all on Nasdaq.