Wedding vows, take two, Will the second time be a charm for Murdoch's DBS efforts?
Anxious to ensure carriage of his fledgling cable networks, News Corp. head Rupert Murdoch appears to have pulled off a shotgun wedding with cable-backed direct broadcast satellite carrier Primestar Partners last week.
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A tentative agreement calls for Murdoch to contribute the satellite slot that News Corp. and MCI control - ironically, the same orbital slots that Primestar partner Tele-Communications Inc. unsuccessfully bid for in last winter's DBS auction. In return, the cable partners would likely carry News Corp.'s programming, analysts say. Murdoch would also reportedly receive a minority, non-voting share in Primestar.
If the deal goes through, the cable industry can breathe an enormous sigh of relief. The proposed News Corp./EchoStar joint venture that promised hundreds of channels and local signal delivery had cable operators in a panic over possibly losing even more subscribers to DBS. Joining forces with Murdoch would let the cable industry neutralize its competition while reclaiming the channel capacity it had hoped to gain through last year's auction.
But the road to a Primestar/News Corp. merger is bumpy. For one thing, the relationship between Murdoch and Time Warner Vice Chairman Ted Turner is contentious, leading one analyst to wonder how the deal got past Turner.
"It looks like Ted Turner did not get veto power over this, which surprises me," said Barbara Sullivan, president of B.G. Marketing, a Denver-based consulting firm.
On a more technical note, if Primestar takes over News Corp.'s orbital slots, it will need to replace its customers' 36-inch medium-power dishes, which it provides on a rental basis, with 18-inch, high-power dishes.
Despite the hurdles, the unlikely pairing could give both sides a much-needed boost. TCI had been planning to hand over the orbital slot to Primestar so it could shore up its channel capacity, a crucial step if the cable partners were to successfully compete against DBS competitors DirecTV and EchoStar.
And with the Primestar deal, Murdoch could redeem himself after his wild leap into the U.S. DBS market.
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© 2012 Penton Media Inc.
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