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Will Murdoch Swap MySpace For DirecTV?

DirecTV, once the cornerstone of News Corporation's media strategy, no longer means what it once did to chairman Rupert Murdoch. Now, he's considering swapping his $9 billion stake in the satellite operator with rival John Malone. Liberty Media Chairman Malone actually owns a 19 percent voting stake in News Corp., 11 percent less than the Murdoch family. In 2004, Murdoch introduced a poison pill to curtail Malone from acquiring more shares. The result was that the Murdoch family could not increase their stake, either. Since then, the media moguls have gone back and forth as allies and enemies, but the most recent round of negotiations would swap Malone's stake in News Corp. for Murdoch's stake in Liberty Media Group, the owner of DirecTV. People close to the talks say a deal looked likely, although nothing is expected for several weeks. "News Corp., and Rupert Murdoch in particular, would prefer that Liberty and John Malone not control 19 percent of News Corp. voting power, but News Corp. has been unwilling to execute [a deal] with Liberty that yields too much of the benefits to Liberty," says Richard Greenfield, analyst at Pali Research. Murdoch appears ready to offload his stake in Liberty now that broadband Internet, MySpace and online video have taken center stage. Regulatory obstacles in the U.S. mean it's not easy to adapt one-way satellite technology to include broadband Internet and telephone connections. Other media distributors are able to offer consumers phone, Internet and TV service for one price.

Read the whole story at Financial Times »

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