DirecTV to Sell Hughes Investment
Friday, November 11, 2005
DirectTV Group Inc., the satellite television company owned by Rupert Murdoch, will sell its remaining stake in Germantown-based Hughes Network Systems Inc. to the holding company of a New York private equity firm for $100 million in cash.
Once the deal is complete, Hughes Network Systems will become a wholly owned subsidiary of SkyTerra Communications Inc., which is controlled by Apollo Management LP. In April, SkyTerra bought half of the Germantown satellite company for $50 million and 300,000 shares of stock.
The company will continue to operate as Hughes Network Systems and no layoffs are expected among its 1,500 employees.
The deal is the latest in a long series of ownership changes for Hughes Network Systems. The company was founded as Digital Communication Corp. in 1971 by eight alumni of Comsat Laboratories. In 1984, just after its engineers created the small satellite dishes that became the company's signature, it was sold to Hughes Electronics Corp.
In 1987, as sales of the company's satellite networks began taking off among retailers who wanted to connect stores with distribution centers, General Motors acquired Hughes Electronics. By 1996 the Hughes Network Systems division had $1.1 billion in revenue and 2,200 employees. In January 2004, Murdoch's group, News Corp., bought a controlling interest in Hughes Electronics for $6.5 billion, primarily for Hughes's DirectTV satellite television unit.
Apollo's portfolio includes a number of satellite companies. It is a major shareholder in Sirius Satellite Radio and was part of a group of firms that bought Intelsat Ltd. for $5 billion in cash and debt last year.
Pradman Kaul, Hughes Network System's chief executive, will remain with the company, as will the rest of the senior management team.
Shares of SkyTerra, traded on the OTC Bulletin Board, rose 93 cents yesterday to close at $30.88.