Murdoch Looks for U.S. Arm of Satellite Empire

Media titan Rupert Murdoch was once asked by a German journalist whether he recognized himself when described by critics as an “ogre.”

“No,” Murdoch replied. “But I can think of more important things than being loved by everybody.”

What the chairman of News Corp. is thinking of these days is circling the Earth with broadcast satellites, distributing films and other programming to billions of people in a single shot.

With the official collapse last week of EchoStar Communications Corp.’s proposal to buy General Motors Corp.’s DirecTV satellite service, the door has now been opened for Murdoch to make the purchase.

If he succeeds in buying DirecTV, Murdoch will add satellite broadcasting in the U.S. to his BSkyB satellite operations in Britain and Europe, his Star TV satellite group in Asia and his SkyGlobal satellite services in Latin America.

“DirecTV is the golden piece needed to fill in his global picture,” says Sean Badding, senior analyst of Carmel Group, a California research firm that tracks satellite TV and other media.

Of course, it’s on the ground, not in space, where the real effect of Murdoch’s move would be felt.

A Murdoch acquisition of DirecTV could affect millions of U.S. households by sparking a price war with cable operators.

Carmel Group projects that satellite broadcasting will have 30 million U.S. subscribers within a few years, in part because the firm figures that Murdoch would expand the reach of DirecTV to 20 million households, up from its present 12 million.

To be sure, satellites would still trail far behind cable as a delivery system for television and other services; cable operators have 73 million customers today. And the merger of Comcast Corp. and AT&T; Corp.’s systems, which received federal approval last month, creates a single company with 22 million cable subscribers.

Murdoch, in other words, would be the underdog in this battle. And that’s just the position he relishes most.

The 71-year-old prides himself on having forged the News Corp. empire out of the two newspapers he owned in Adelaide, Australia, nearly half a century ago. “I have fought against them all my life,” Murdoch said of his more entrenched competitors in Australia back then -- and of all of his competitors since, according to Australian journalist Neil Chenoweth’s biography published last year.

Murdoch, already a press lord in Britain, became a force in U.S. media circles in the mid-1980s. In a single year, the then-much-smaller News Corp. spent $2.6 billion to acquire the 20th Century Fox film studios, a chain of magazines and six television stations. The TV outlets became the nucleus of the Fox Entertainment Group, which now has 35 stations.

In all, News Corp. stands as a giant with more than $30 billion in stock market value and $16 billion in annual revenue from television, newspapers, satellite and filmed entertainment on six continents.

Murdoch has insisted repeatedly that he follows no grand plan. “News Corp. is what it is today because I never pretended to know in advance which course development would take,” he said in an interview more than a decade ago. “I am a businessman and the chief executive of a media company, but not a media guru with the vision of a new age coming.”

In fact, he says the only reason that he got into satellites is because he “missed the boat” on cable. “I was wrong about its profit potential,” he conceded.

The alternative course Murdoch picked hasn’t been easy. In the late 1980s, News Corp. started BSkyB in Britain and promptly lost hundreds of millions of dollars with it over several years.

Still, Murdoch persevered.

“Rupert is a very determined competitor,” says John Tinker, managing director of Blaylock & Partners, a New York investment firm, who has followed Murdoch’s businesses for decades. “BSkyB is a very strong property now.”

In 1991, News Corp. almost went under, just as the Gulf War and a worldwide recession hit. Murdoch agreed to sell some assets, largely magazines and print operations, and was allowed to refinance News Corp.’s burdensome $7.6-billion debt load.

But even then, he didn’t slow the company’s global expansion.

In 1993, Murdoch bought the Star satellite operations from its owners in Hong Kong. News Corp. has had many setbacks with Star, among them a ban for many years on broadcasting to China. But Star beamed into India, set up business in Japan and is now back in China.

In the late ‘90s, Murdoch tried to establish a satellite presence in the U.S. by setting up a company called ASkyB. But he ran into a hostile opposition.

The cable companies feared competition with Murdoch, anxious over the leverage that his global satellite operation could use to make deals with producers of programming.

The cable industry campaigned vigorously against Murdoch, lobbying Congress and freezing out News Corp.’s Fox channels in retaliation.

Ultimately, Murdoch retreated from the ASkyB attempt, but he came back last year, negotiating for months with General Motors to buy DirecTV. GM instead tried to sell the satellite service to EchoStar, a proposed deal that was nixed by federal antitrust regulators.

The very day the EchoStar-DirecTV merger collapsed, News Corp. phoned GM executives, asking for a meeting.

It’s not a mystery why. Media experts such as Jack Myers, who publishes an online newsletter on the advertising and media industries, predict a robust future for satellites, which can be put into operation with much lower capital investments than cable systems demand.

Murdoch is saying nothing publicly about his desires for DirecTV. “It’s way too early to talk,” says News Corp. spokesman Andrew Butcher. “We have to see if they want to sell it to us and whether we want to buy it at the price they may want.”

That’s true. But it’s a sure bet that whether it’s through DirecTV or some other means, Murdoch eventually will find a way to assemble the last piece of his global satellite network.

“There is no such thing as a ‘global village,’ ” Murdoch has said. “Most media are rooted in their local and national cultures.

“Nevertheless, when you ask me whether global communications networks are a reality, my answer unequivocally is ‘Yes!’ ”

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James Flanigan can be reached at jim.flanigan@latimes.com.