News Corp., Liberty Reportedly Eyeing GM

Television satellite stocks broke one-day trading records Thursday, fueled by speculation that News Corp. and Liberty Media Corp. are considering making a hostile bid for General Motors Corp. to gain control of the nation’s third-ranked pay TV service, DirecTV, which is owned by the giant auto maker.

News Corp. quickly denied the speculation, calling a midday Thursday CNBC report “entirely false and without merit.”

Liberty Media, which is controlled by media mogul John Malone, would not comment on the speculation.

Yet sources close to News Corp. and Liberty said the two companies both “have aspirations for the asset” and have been discussing the idea of a hostile tender offer for GM and crunching numbers for months to see if the deal makes sense. They join a list of telecommunications companies rumored to be interested.

A deal hasn’t happened yet, however, because it is easier said than done. GM is unwilling to part with its satellite TV business.

DirecTV, the nation’s third-largest pay television service after AT&T; and Time Warner, would give News Corp. worldwide satellite reach. In the next few months, Rupert Murdoch’s News Corp. will roll together satellite assets in Japan, Asia, Latin America and Europe into a new company, called Platform Co., and take it public to unlock hidden value in the global media empire.

Malone, whose Liberty Media owns a 10% stake in News Corp., sits atop a $6-billion cash stockpile from selling his Tele-Communications Inc. cable company last year to AT&T.; Through Liberty, the media visionary is building a portfolio of investments that include all forms of new-media and wireless and satellite distribution.

Sources said Malone and Murdoch would sell or spin off the auto assets, although they added that the pair had still not lined up a buyer. Toyota is the most likely candidate. Murdoch and Malone are also interested in securing “the electronic platform rights” to the 8 million cars that the company produces every year. In addition to beaming signals to homes, DirecTV satellites could transmit data including restaurant listings, directions, stock quotes, sports scores and e-mails to GM cars. It’s a project already in the works at GM.

Though the transaction is a longshot because of its complications, Wall Street was not dampened by News Corp.’s denials. Shares of GM unit Hughes Electronics Corp., which owns DirecTV, soared $11.44 to close on the New York Stock Exchange at a record of $135.88. The stock continued to rise in after-hours trading to $141.

The enthusiasm for DirecTV also lifted the second-ranked satellite television operator, EchoStar Communications Corp., whose shares jumped 16% to close on Nasdaq at $72.81.

Both stocks have risen dramatically during the last year as Congress adopted rules allowing them to transmit local broadcast signals, leveling the playing field with cable operators.

GM stock has been a poor performer. GM’s breakup value is $90 billion, although its current market value is only $54 billion. GM’s 65% stake in Hughes, worth $40 billion, outstrips the $35-billion value for the core auto business.

The prospect of such a deal, however, diminishes as the price of GM shares rises. The takeover speculation has increased the value of GM shares nearly 50% since August. They closed Thursday at a 52-week high of $87, up $5.25 a share.

At these prices, News Corp. would have to pay more for GM than its own current market value.

Several companies, including Global Crossing and MCI WorldCom, have considered a run at GM, which has been unwilling to sell DirecTV despite Wall Street’s pleas that it spin off the unit.

Analysts say GM has been unwilling to contemplate such a measure, fearful that its stock price would sink without DirecTV. The car maker’s market share is the lowest in decades.