DirecTV warns of sharply reduced growth

LONDON - DirecTV, the US satellite broadcaster which Rupert Murdoch is trying to take over, has warned that second-quarter customer growth has slowed sharply as a result of the weakened US economy.

The broadcaster said it expects to add 175,000 new subscribers in the second quarter, a long way short of its 275,000 target. This will bring its total just short of the 10m mark.

Jack Shaw, CEO of DirecTV's parent company Hughes, said, "Sales at our national consumer electronics retailers have been slower than we expected. As a result, we expect that our DirecTV business in the US will add fewer net subscribers than we originally anticipated this quarter and for the full year."

The figures could weaken the position of parent company Hughes -- a division of General Motors -- which is negotiating a lucrative deal with News Corporation chairman Rupert Murdoch.

Murdoch wants to merge Hughes with Sky Global Networks, parent of BSkyB, in order to expand his satellite TV empire -- which operates in the UK, Latin America and Asia -- into the US where he has previously been unsuccessful.

Murdoch had to renegotiate with General Motors after Hughes directors refused his bid because they were unhappy with the amount of cash he was offering and because of the lack of control they would retain in the event of a successful News Corp deal.

Since Murdoch's latest offer, rival broadcaster EchoStar has put together a counter offer for DirecTV. It recently secured the help of AOL Time Warner, a minor shareholder in Hughes, which agreed to try and rally a small number of shareholders behind the EchoStar bid.

A merger between EchoStar and DirecTV, however, would likely be subject to a rigorous investigation by US anti-trust authorities, which would be hesitant to allow one satellite TV provider to control the US market.

EchoStar yesterday announced that it has added 1m customers in the last seven months bringing its customer base to 6m.

EchoStar is still some way behind its DirecTV rival, which has 9.8m subscribers.



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