El Segundo-based DirectTV Inc. suffered the corporate equivalent of a really tough day at the office Thursday.
First, News Corp. Chairman Rupert Murdoch, whose firm owns 38 percent of DirecTV, called the nation’s largest satellite broadcaster a “turd bird” in an interview with CNBC and said he is considering selling the controlling stake to John Malone’s Liberty Media Inc.
Then, Federal Communications Commission Chairman Kevin Martin shot down another possible outcome for the satellite broadcaster, signaling that federal regulators remained reluctant to greenlight a merger between DirecTV and its smaller rival, EchoStar Inc.
Satellite broadcasters are feeling the pinch as cable companies continue to roll out a triple play of video, Internet and telephone service. DirecTV stock fell 3.23 percent Thursday to close at $19.19 after a Morgan Stanley analyst downgraded the shares.
News Corp. chief operating officer Peter Chernin further threw water on speculation that DirecTV is looking to merge with EchoStar, saying there have been no substantive talks.
The two firms tried to merge in 2002, but U.S. antitrust regulators killed the deal, and News Corp. swooped in.
Some industryites have argued recently that the entrance of telephone companies into the video and cable industry has changed the competitive landscape and thus could render a satellite merger allowable.
“Obviously, there’s the potential for that in the future,” Martin said, referring to the growth of the telco TV biz. “But I don’t think it’s been widespread enough to talk about changing our analysis of the nationwide video market,” he said on a conference call with Wall Streeters sponsored by UBS.
Malone, Murdoch duel
For well over a year, News Corp. has been trying to find a way to buy Malone’s stake in exchange for some combination of assets and cash. Liberty holds voting and non-voting stock worth $10 billion, making Malone News Corp.’s second largest shareholder after Murdoch.
Malone’s position made Murdoch so nervous that News Corp.’s board adopted a poison pill, which is meant to deter hostile takeovers. Shareholders, including Liberty, will vote at News Corp.’s annual meeting Oct. 20 on whether to keep the poison-pill measure in place.
News Corp. wanted to resolve the issue before then.
Investors tend not to like poison-pill provisions, and some shareholders had sued News Corp. for imposing it and then extending it.
This past summer, the swap for News Corp. stock was going to include some Fox TV stations, but that option seems to have been tabled.
News Corp.’s Chernin said last week “talks (with Liberty) are going pretty positively.”
“We’d like to see this resolved, but we’re not going to feel pressure to do a deal. We feel that investors are likely to vote in favor of a poison pill because no one wants us to do a deal that’s not in our best interest,” he said at a media conference.
