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Murdoch still looking for U.S. satellite partner

May 22, 1997

NEW YORK (AP) _ Rupert Murdoch’s effort to find a new partner for his nascent U.S. satellite television business is pushing ahead following the collapse of his joint venture with EchoStar.

Murdoch could get his ASkyB service up and running far more easily if he joins with an established satellite broadcaster. The service, which would fill out his orbital empire in Asia, Europe and Latin America, has not yet launched any satellites or signed up subscribers.

Negotiations took place earlier this week between Murdoch’s News Corp. and Leo Hindery, president of Tele-Communications Inc., the nation’s biggest cable company and a partner in the Primestar satellite venture.

``It’s our understanding that Murdoch is not only talking with us but with others,″ Joann Dobbs, a TCI spokeswoman, said Thursday.

A source close to News Corp., speaking on condition of anonymity, said Murdoch was also in talks with DirecTV and companies outside the satellite business. The source said talks are progressing best with Primestar, and a deal with somebody could come within a couple of weeks.

Direct satellite television uses dishes as small as pizzas to bring TV signals to consumers. Satellite TV is a competitor to cable, and generally offers more channels and crystal-clear digital quality. Cable operators are working to upgrade their own services to digital.

In order to compete well with cable, though, industry analysts feel the satellite players need to be bigger and have greater resources.

``There are too many players. There’s got to be a consolidation in the industry,″ said Tom Wolzien, a media analyst at Sanford C. Bernstein & Co., a brokerage firm.

The deal with EchoStar could have accomplished that, with some even dubbing the planned 500-channel service ``Death Star.″ Announced in late February, it unraveled earlier this month with some acrimony. EchoStar has sued News Corp. for $5 billion for breach of contract. News Corp. responded the claim was meritless and has vowed to fight it.

As the deal went bust, reports surfaced that Murdoch was looking for another partner. Primestar is a natural since it is owned by a consortium of cable companies. Murdoch is said to want the Primestar partners to agree, on some level, to carry some of his cable networks on their systems as part of the deal.

That could present a problem since Primestar partner Time Warner is publicly feuding with Murdoch over its decision not to carry Murdoch’s Fox News Channel in New York. That case is currently in court.

USA Today reported Thursday that a deal with Primestar could be close but noted Time Warner opposes a deal. Daily Variety also reported a Primestar deal could be near, but said that Time Warner had softened its position and was now debating the structure of a deal.

Time Warner Cable spokesman Mike Luftman said the company’s position that Primestar does not need any new partners has not changed. News Corp. declined comment, as did DirecTV.

``They’re going to have to come to an agreement with somebody,″ said Jessica Reif, an entertainment analyst at the brokerage firm Merrill Lynch & Co. ``They’re going to have to do something soon.″

News Corp., with partner MCI, is sitting on satellite slots and would like to put them to use. Launching a new satellite system from scratch is extremely costly, so a partnership appears the most logical choice.

Murdoch’s satellite empire comprises BSkyB in Britain and STAR in Asia, as well as the still-emerging JSkyB in Japan and Sky-Latin America, primarily operating in Mexico and Brazil. ASkyB in the United States had been slated to begin operations next year.

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