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DirecTV May Spend $1 Billion for Web Foray

January 10, 2006|From Bloomberg News

DirecTV Group Inc., the El Segundo-based satellite television company controlled by Rupert Murdoch's News Corp., may spend as much as $1 billion to get into high-speed Internet access.

News Corp. and DirecTV are considering options such as partnerships to sell Internet service, Murdoch said Monday at a Citigroup media conference in Phoenix.

"You'll be hearing from us within two months on a very clear plan what will happen, and it's not as expensive as you might think," Murdoch said. "We have a lot of people on this full time at the moment."

News Corp., which beefed up its Internet presence with acquisitions including MySpace.com last year, is looking for new ways to distribute its TV shows and movies, Murdoch said. DirecTV, the largest U.S. satellite TV company, competes with cable television providers that already offer Internet access.

The youth-oriented MySpace was among more than $1 billion in Web purchases made by New York-based News Corp. last year. The company is targeting young adults with its Internet sites, the same audience for its films and TV shows.

The Internet-access investment probably will come through DirecTV, which has about $4 billion in cash, Murdoch said. The companies are trying to make sure the technology can be upgraded over time to keep delivering fast access, he said.

DirecTV shares rose 19 cents to $14.95. News Corp. Class A shares rose 33 cents to $15.84.

Murdoch also said News Corp. is working on deals to distribute video over the Internet and other platforms. The changes are necessary to ensure that content is sold in ways customers prefer.

"Big companies like ours, big industries with fixed business models, have to change," Murdoch said. "And we're preparing ourselves for that."

News Corp. is looking at technologies including WiMax, a wireless system supported by Intel Corp., he said.

News Corp. was the fourth-biggest U.S. media company before the split of Viacom Inc. last week. Time Warner Inc. is the largest U.S. media company, followed by Walt Disney Co.

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