The dramatic turn of events followed the decision of Rupert Murdoch, the News Corporation chairman and CEO, to walk away from the deal on Saturday evening when GM decided to delay its decision on selling DirecTV.
GM had indicated that it would make a decision at the weekend on whether to accept the News Corporation bid or that of rival US satellite TV business EchoStar. Murdoch had threatened to walk away from the deal if the GM board delayed. He then made good on his threat and effectively handed DirecTV to EchoStar, the US number two satellite company which operates as the Dish Network in the US.
Murdoch said that News Corp was left with "no option but to withdraw". The loss of DirecTV business will come as a heavy blow to Murdoch, who had sought the business to complete his satellite TV empire, which has no presence in the US.
Murdoch has operations in India, Japan, South America and the UK, through his dominance of the UK market with BSkyB.
On Friday, ahead of the weekend meeting, News Corp had looked close to closing its $22.5bn (£15.6bn) bid to buy DirecTV. The EchoStar bid had looked to be in trouble as it at first failed to secure $5.5bn (£3.8bn) in credit to back its deal, but it was able to attract the cash it needed on Saturday evening. This triggered the GM board to announce that it was to delay its decision and prompted Murdoch to walk away.
In a statement, Murdoch said, "Hughes would have been an excellent strategic fit for our global platforms and we are disappointed with the board's inaction in the face of an as-yet unfinanced counter-proposal. I am surprised that the board of GM did not share my vision and enthusiasm for what would have been a one-of-a-kind global multimedia company, with far superior growth prospects."
A deal with EchoStar does contain potential pitfalls. In the dying hours before the weekend's meetings, Murdoch was said to be trying to raise concerns that a merger between EchoStar and DirecTV would result in a lengthy anti-trust investigation in an effort to close the deal.
The concerns are real. The competition authorities are almost certain to be worried that control of the US satellite TV market will fall into the hands of a single company, sparking fears at GM of a potentially lengthy regulatory investigation. Last week, at least 10 members of Congress, including the chairmen of several powerful committees, expressed serious reservations about such a merger.
EchoStar's bid will require the approval of the Federal Communications Commission and possibly the Federal Trade Commission as well. EchoStar is reported already to have hired David Boies, an anti-trust lawyer who worked the US government's case against Microsoft.
The EchoStar deal amounts to a straightforward takeover of Hughes. Hughes shareholders will get about 0.73 of an EchoStar share for each Hughes share, which values Hughes shares at $18.44 (£12.78).
News Corp had been ready to sign a deal since the summer, but EchoStar stepped in with a $30.4bn (£21.3bn) bid just as negotiations were drawing to a close.
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