Dish Network in the News

EchoStar Offers Hughes Cash for DirecTV

NEW YORK (Reuters) - August 24, 2001 - Satellite television company EchoStar Communications Corp. has introduced a cash component into its unsolicited bid for its larger rival Hughes Electronics Corp., a source familiar with the matter said Friday.

At a meeting last Sunday with executives from Hughes parent General Motors Corp., EchoStar offered several alternatives to its $30 billion all-stock offer for Hughes, which owns the DirecTV satellite television service. Those discussions included offering some cash, the source said.

"EchoStar understands that cash could be a part of this deal," the source said. "The company has proposed several alternatives to GM."

The source declined to say how much cash EchoStar was offering or from where that cash would come.

EchoStar is trying to trump an offer by Rupert Murdoch's News Corp., which is seeking to merge Hughes with its Sky Global network of satellite services.

Microsoft Corp. is believed to be contributing $3 billion to $4 billion to News Corp.'s deal, while cable pioneer John Malone is believed to be considering a $500 million to $1 billion investment.

A GM spokesman said, "We are engaged in active discussions with both EchoStar and News Corp. There are a lot of things being discussed. And we are not prepared to comment on any specifics of any transactions."

A News Corp. representative had no comment. A spokeswoman with EchoStar also declined to comment. Hughes executives were not immediately available for comment.

EchoStar shares closed at $28.93, up 4.4 percent, or $1.21, in Friday's Nasdaq trading, in line with the broader Nasdaq composite index. Hughes shares rose 1.7 percent, or 32 cents, to $19.65 on the New York Stock Exchange, also in line with the broader markets. News Corp American depositary receipts rose 1.5 percent, or 54 cents, to $35.66 on the Big Board.

Since announcing its unsolicited bid earlier this month, EchoStar Chief Executive Charlie Ergen has said that he would be willing to include cash in its bid. Many analysts have said that a cash component would be key to any takeover effort for Hughes.

GM has been pursuing options for its Hughes unit since November in an effort to generate cash.

As of June 30, EchoStar had $1.5 billion in cash and marketable securities on its books.

In an earlier proposal to Hughes, EchoStar, whose Dish Network has over 6 million subscribers, said it was willing to pay $5.5 billion in cash for Hughes' 81 percent stake in the PanAmSat satellite network. That deal was rejected by Hughes, and EchoStar countered with its all-stock offer.

At that time, EchoStar reached out to a number of potential partners, including several telephone companies, some of which offer DirecTV services to their local customers.

Shortly after EchoStar announced its bid, Swiss digital technology firm Kudelski, which counts EchoStar as its largest client, said it was willing to raise 25 percent in fresh capital to contribute $1 billion to EchoStar's effort.

But Executive Chairman Andre Kudelski appeared to back off slightly this week, saying the probability of a capital hike was bigger than 10 percent but less than 50 percent.