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EchoStar wins Direct TV by default

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Oct 29, 2001 | 11:33am EST

In a surprise move, Rupert Murdoch on Sunday withdrew from the bidding for DirecTV after General Motors' board of directors failed to announce a decision on whether to sell the home satellite service to Murdoch's News Corp or to Charlie Ergen's EchoStar Communications. Hours later, GM concluded a deal with EchoStar that reportedly guarantees GM a $500-million break-up fee if regulators nix the deal or if EchoStar is unable to come up with the $32.3 billion in stock, cash and assumed debt that it has offered. Today's Wall Street Journal said that another part of the deal calls for EchoStar to pay $5 billion in cash to buy GM-controlled PanAmSat Corp., even if the DirecTV deal is rejected by regulators. (Ergen reportedly personally guaranteed half the cash commitment.) "Murdoch's behavior is similar to that of a spurned lover," Robert Chapman of Chapman Capital told Bloomberg News after Murdoch walked away from the deal. "But if GM needs to jettison EchoStar, I feel confident News Corp will be there." However, an unnamed News Corp executive told the London Financial Times: "We are through. We are done. Life goes on. It is over."

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