MUMBAI: Global media major News Corp last Friday formally applied to the US federal communications commission (FCC) for clearance of its $ 6.6 billion stock and shares purchase of 34 per cent stake in Hughes Electronics.
News Corp. has said it expects savings or revenue enhancements of between $ 610 million and $735 million annually from its planned acquisition of Hughes, Reuters reports.
GM proposes to split off Hughes and divest its interest in Hughes such that Hughes will become a separate and independent company. As a result of these and several related transactions, News Corp. will control a 34 per cent interest in Hughes, three GM employee benefit trusts managed by an independent trustee will have a combined approximately 20 per cent interest in Hughes, and the remaining 46 per cent interest in Hughes will be held by the general public.
The transaction - which is subject to several conditions, including regulatory approvals, a tax ruling, and GM and Hughes stockholder approval - will be accomplished in a series of interrelated steps that transpire essentially simultaneously.
Reports indicate that The Federal Communications Commission's review of the proposed deal will in all probability centre on the combined company's potential power over content distribution.
The companies had agreed that once merged they would continue making programming available to all multi-channel distributors on non-discriminatory terms. At the time of the deal closing the 34 per cent ownership interest will be transferred to Fox Entertainment Group.
FCC Chairman Michael Powell has been quoted in a Reuters report saying, "I think the principle focus of the transaction we'll be looking at are content related issues. I think it's a helpful step. Those are the bevy of issues that will concern the government -- including the antitrust division -- whether they're complete or satisfactory I don't know yet."
Readers will recall that last year the FCC gave DirecTV's proposed combination with EchoStar Communications the thumbs down as it feared that the combined entity would create a monopoly that would desatroy competition.