After seven years in the wilderness, media mogul John Malone may once again own the means to deliver TV to your home.
Malone reportedly is near a deal to secure a 39% stake in direct broadcast satellite company DirecTV Group Inc. by trading his 11% stake in News Corp. with its chairman Rupert Murdoch. Malone, News Corp.'s second largest shareholder, had become a thorn in the side of Murdoch prompting reports that Murdoch would do anything to get Malone to unload his stake in News Corp. The news about such a swap first surfaced earlier in the year as the fortunes of DirecTV started to turn sour.
Although Murdoch had coveted DirecTV for years before buying it in 2003, the business has fallen on hard times as it has not grown as fast as expected primarily because of cable's ability to offer video on demand and bundled Internet and phone service, which satellite can't replicate. In addition, phone giants AT&T and Verizon are also beginning to offer high-speed Internet, video and voice bundles via fiber optic, which is faster than co-axial service used by the cable companies. While the availability of the big telecom's services are still limited, the prospect of the service could already be affecting DirecTV and rival EchoStar.
Nonetheless, owning a stake in DirecTV would give Malone access to a means of distribution for the first time in almost a decade. Specifically, he will gain access to more than 15 million U.S. homes. Malone was a trailblazer in the cable industry founding cable provider TCI in 1973 after starting his career at Bell Labs and General Instruments. He built TCI into one of the country's largest cable providers before selling it to AT&T in 1999. Malone has had his eye on regaining direct access to the consumer as early as 2001, when AT&T decided to exit the cable TV business. However, Malone lost the auction for his old company to Comcast. —Matthew Wurtzel
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