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McCain Questions a News Corp.-DirecTV Merger

11 May, 2001 By: Staff Reporter

Confident predictions by News Corp. that the proposed merger of its global satellite television assets with Hughes Electronics Corp.'s DirecTV would face no regulatory hurdles were muddied Thursday when Sen. John McCain, R-Ariz., raised objections to the deal.

In an interview with London's Financial Times, McCain said bringing DirecTV under the same corporate umbrella as News Corp.'s other U.S. media and entertainment assets -- which include the Fox film studio, television stations and broadcast and cable networks -- would give too much power to News Corp. chairman and c.e.o. Rupert Murdoch.

McCain said the deal would mean "a consolidation of power the likes of which this country has not seen since William Randolph Hearst."

The comments came just a day after News Corp. president and c.o.o. Peter Chernin said the company saw no regulatory hurdles to the deal.

In a conference call with reporters, Chernin said Hughes and News Corp.'s worldwide collection of satellite TV assets under the Sky Global Networks banner "are largely businesses that exist in different parts of the world and don't involve anything that would pose any potential regulatory problems."

Chernin said Hughes' parent, General Motors Corp., regarded that as a strong advantage of merging DirecTV with News Corp. rather than with a local rival such as EchoStar Communications.

Last week, GM's board of directors agreed to proceed with further talks with News Corp. on a merger that would create a worldwide satellite TV business valued at more than $60 billion.

Because McCain chairs the Senate Commerce Committee, which oversees communications and consumer-protection regulatory bodies, his views could signal political opposition to the deal.

But by late Thursday, McCain's office was backtracking from suggestions that the senator had a preconceived opposition to a DirecTV-News Corp. merger. McCain's aides said the senator's concern was not out of the ordinary.

"It's exactly the same type of thing he's said about any industry that falls under the jurisdiction of the Commerce Committee," said Nancy Ives, the senator's spokeswoman. "It doesn't matter if it's airlines or telecommunications companies. It's really nothing new."

Another aide brushed off the idea that the powerful senator was attempting to help his friend Charlie Ergan, chairman and c.e.o. of EchoStar, DirecTV's biggest competitor.

"He's friends with both (Ergen and Murdoch). He respects them both, and they both have contributed money to his campaigns," the aide said. "There's really no connection there."

A News Corp. spokesman said McCain's remarks surprised the company, as the Arizona senator has long been an advocate of greater competition to cable television operators in the United States and has heralded satellite TV as the technology that would give households greater choice in pay TV services.

McCain also has repeatedly spoken of his admiration for Murdoch, something he repeated in the Financial Times interview.

"I have the greatest respect for him -- don't get me wrong," McCain said. "I'm not judging his character. I'm just saying we should look at this very carefully."

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