Audio Video News

Telecommunications conglomerate SBC Communications may be next in line to attempt an acquisition of Hughes Electronics' DirecTV satellite television service, according to several reports the first week of February.

The Wall Street Journal noted February 8 that the El Sugundo, CA–based direct broadcast satellite company has been in preliminary talks with SBC, a major player in the telephone industry in the West and Southwest. Should the talks lead to something more substantial, SBC would become the first telecommunications company to make a successful foray into the television delivery business. Almost all of SBC's competitors have tried it and failed. A joint venture by Rupert Murdoch's News Corporation and Liberty Media still has an interest in acquiring DirecTV and the Walt Disney Company is also rumored to be in the game.

Major shareholders of General Motors, owner of Hughes Electronics, voted last year to approve the sale of Hughes to EchoStar, the Littleton, CO satellite television company that is DirecTV's only serious competitor. Federal regulators nixed that merger in December after a prolonged campaign by both parties to convince them that it was in the best interests of consumers. Justice Department and Federal Communications Commission (FCC) officials determined otherwise, claiming that the merged entity would amount to a monopoly.

The result was DirecTV's availability to other potential partners. Since the collapse of the EchoStar-DirecTV deal, GM executives have expressed their willingness to find other options. SBC has previously shown interest in acquiring Hughes, and GM has said that it will soon begin entertaining serious offers. A deal with News Corp./Liberty Media might make the most sense, given their existing businesses in satellite news broadcasting, TV studio operations, and cable TV provision. That scenario could yield new operating efficiencies for DirecTV, perhaps saving as much as $400 million per year, according to some analysts. However, San Antonio, TX–based SBC is said to be in the best financial position to make the deal.