explanation for todays fall?

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    News Corp slides on fresh DirecTV worries


    SHARES in Rupert Murdoch's News Corp Ltd dropped more than 3 per cent today as worries resurfaced about the company's possible $US7 billion ($A11.87 billion) bid for DirecTV.

    The concerns were sparked by a report from London overnight that Mr Murdoch was setting up a new company to acquire the largest satellite TV operator in the United States.

    The new company would be controlled by News Corp and part-owned by Liberty Media, which owns about 18 per cent of News Corp, according to The Observer newspaper.

    Wall Street sources told the newspaper a bid could be tabled as early as this week.

    "Liberty ... would share the cost of the purchase with Murdoch, but the details of the carve-up are not yet known," the newspaper said.

    News Corp's ordinary shares slid 36 cents to $10.92 after earlier hitting an intra-day low of $10.83.

    Its preferred scrip lost 34 cents to $9.11.

    Analysts attributed the share price falls to investors being concerned that Mr Murdoch could end up paying too much for DirecTV.

    "I just think the market is wary of Rupert paying a high price for the asset," said one analyst, who asked not to be named.

    "It's not the asset it was four or five years ago."

    As well, analysts also noted that expectations that the US share market would fall tonight because of setbacks in Iraq contributed to the weakness in News Corp's shares.

    DirecTV currently has about 11 million subscribers while its main rival EchoStar Communications Corp has lifted its customers to about seven million from one million in about five years.

    The analyst said many market watchers had previously expected EchoStar to fail in its entry into the US satellite TV market whereas now it was "more of a two horse race" between it and DirecTV.

    "So it (DirecTV) is now a less attractive asset," he said.

    Last week News Corp raised $US1.5 billion ($A2.54 billion) in a bond issue from New York, sparking speculation it might re-enter the race for DirecTV.

    The company last month reaffirmed its interest in the US satellite TV market but stressed that it did not want to get into a bidding war for any assets.

    Its previous attempt to buy DirecTV from General Electric's subsidiary Hughes Electronics in 2001 failed after a bidding war broke out with EchoStar which also eventually failed to buy its rival because of regulatory problems.

    According to The Observer, some analysts fear that News Corp's latest bid could be derailed by Ed Whitacre's SBC, an American telephone company, which has expressed an interest in DirecTV.




    -AAP
 
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