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Rupert Murdoch once had a vision of a satellite broadcasting operation that would span the world.
With DirecTV, News Corp is the biggest satellite broadcaster in the world with more than 30m subscribers across North and South America, the UK, Italy and Asia, where it operates Star TV.
However, the rapid spread of broadband internet access, combined with fiercer competition from strong cable rivals in the US, has reduced the relative attractiveness of DirecTV versus News Corp’s other satellite businesses.
Indeed, if Mr Murdoch did not want to remove a threat to his family’s control presented by Mr Malone’s 19 per cent voting stake in News Corp, it is widely believed to be unlikely News Corp would have sold its DirecTV investment.
The broadband factor plays out differently in the US for regulatory reasons, which limit the ability of companies to access telephone lines which can be used to offer broadband access.
The picture is different in the UK, where British Sky Broadcasting, the UK satellite operator in which News Corp has a 39.1 per cent stake, has established a convincing lead over NTL, the cable provider, in the battle for pay-TV subscribers. This autumn it launched a broadband access product allowing it to compete more closely with its closest rival and with telecoms companies such as BT Group and Carphone Warehouse, the mobile telephony group.
“DirecTV needs some sort of broadband play…to be able to package a…triple play and in order that we remain competitive and for regulatory reasons, that’s much easier in either Italy or Great Britain,” said Peter Chernin, president and chief operating officer of News Corp, last week, also mentioning News Corp’s Asian satellite venture.
“We certainly feel good about those businesses given the less aggressive regulatory environment in terms of as it relates to broadband,” he added.