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DirecTV's New Suitor Looms as a Longshot

Analysts say Cablevision and founder Charles Dolan may lack the money to compete with deep-pocket rivals that got to the party first.

March 29, 2003|Sallie Hofmeister | Times Staff Writer

Although Cablevision Systems Corp. may take a run at the nation's biggest satellite provider, DirecTV, industry analysts Friday said it was unlikely the company could raise enough money to outbid other suitors.

Cablevision, the nation's sixth-largest cable operator, is scheduled to launch a satellite TV service this summer. But the company's service might be hard to sell because its satellite's orbital position provides weak West Coast signals.

Cablevision founder Charles Dolan believes that buying DirecTV's parent, Hughes Electronics Corp., would correct the problem, according to company insiders. But with the cost expected to be at least $3 billion, analysts are skeptical Dolan can execute his vision.

"Dolan has been a pioneer time and time again, but he's having enough trouble getting his satellite launched, to say nothing of the billions it will take to get the venture off the ground," said Jimmy Schaeffler of Carmel Group, which tracks the satellite industry. "It's a real longshot."

What's more, federal regulators have in the past been unwilling to let cable operators own major satellite assets because of competitive concerns.

To finance his plan and eliminate regulatory questions, sources close to Dolan say he is considering a sale of the company's cable systems, which serve about 3 million customers in the New York metropolitan area.

The sources say Dolan has approached General Electric Co., the parent of NBC, as well as Walt Disney Co. about teaming up in a bid for DirecTV.

Cablevision did business with NBC last year, when it sold its Bravo cable channel to the network.

None of the three companies would comment. NBC sources said there have been no substantive talks with Cablevision.

Reuters news service reported Cablevision's interest in DirecTV late Thursday.

Dolan may be too late to the party. Two other likely bidders -- Rupert Murdoch's News Corp. and phone giant SBC Communications Corp. -- have reviewed Hughes' books and could submit bids next week.

Hughes sources said Friday that they doubted their parent company, General Motors Corp., would open DirecTV's books to a cable competitor or take the kind of regulatory risk a Cablevision deal would present.

Federal regulators late last year blocked a proposed acqui- sition of Hughes by EchoStar Communications Corp. because of antitrust concerns about a combination of the country's two lone satellite TV providers. EchoStar was unable to save the deal by striking an eleventh-hour pact that would have given Cablevision the satellite position it needs for the West Coast.

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