NEW YORK -- An attempt by U.S. telephone company SBC Communications Inc. to buy satellite TV provider DirecTV from General Motors has broken down, leaving Rupert Murdoch's News Corp. as the lone serious bidder.
SBC, based in San Antonio, Texas, had been in talks with GM about buying all or part of Hughes Electronics Corp., the parent company of DirecTV, since early this year.
But those negotiations fell apart this week when the two sides "fell out of alignment" on the structure of the deal, one source said on Tuesday.
"It appears to be an uncontested bid for DirecTV. At this stage, you'd have to say that GM really doesn't have too many options, despite their apparent unwillingness to sell to News Corp," said Scott Maddocks, fund manager at BT Financial Group in Sydney.
It remained unclear whether SBC might re-enter the bidding process. The No. 2 U.S. telephone company had wanted to acquire DirecTV to help accelerate its high-speed Internet plans, but was not interested in all of Hughes, a source said.
"GM seems to have found a better alternative somewhere else," one source said.
That alternative is likely to be Murdoch, who has been pursuing an acquisition of Hughes since it was first put on the block by GM two years ago.
He was initially outbid by EchoStar Communications Corp., which struck a deal to acquire the unit in August 2001 but called off the merger late last year when regulators threatened to block it.
LAST MAN STANDING
News Corp is not expected to submit a formal bid for all or part of Hughes on Wednesday, when GM was initially hoping to have offers in hand.
But the Australian-based media company does hope to formally present an offer by early next week, according to one source.
Other remaining bidders have gradually fallen by the wayside. Liberty Media Corp., controlled by cable magnate John Malone, last week struck a deal with Murdoch to help finance News Corp.'s bid.
Cablevision Systems Corp., the Bethpage, New York-based regional cable operator, has also mulled making a bid, sources said. But many analysts question the company's ability to finance an offer.
GM, Hughes and SBC all declined to comment Tuesday. News Corp and Cablevision both declined to comment as well.
GM has been pressing ahead with the Hughes auction in recent weeks, hoping to avoid the dragged-out negotiations experienced during the first auction.
Reuters reported last week that the automaker asked all the bidders to first submit how they would structure any purchase of Hughes or DirecTV before submitting actual prices.
The SBC talks broke down during the conversations on structure, sources confirmed. The two sides had not yet delved into specific price negotiations, the sources said.
Hughes is a wholly-owned subsidiary of GM, but trades as a tracking stock that is only 20 percent controlled by the automaker.
Earlier this month, GM moved to alleviate potential tax concerns surrounding a purchase of Hughes by shifting about 150 million shares of the tracking stock off its books into two employee benefit plans -- bringing its Hughes stake to just under 20 percent.
SBC shares have fallen 14 percent since its interest in DirecTV emerged in early February as investors feared the acquisition would hurt the company's earnings, analysts said. Concerns about the high cost and distraction from a merger also weighed on SBC's stock price in recent weeks, investors said.