Bidders for DirecTV Unit Seen

The auction for DirecTV Group’s Hughes Network Systems is heating up, with at least a dozen potential buyers expressing interest in bidding for all or part of the division, people close to the sales process said this week.

The unit, which includes the Direcway satellite communications division and Spaceway, a planned higher-speed satellite communications service, was put on the block this year in an auction that analysts said could generate $1 billion or more.

Buyout firms Spectrum Equity Investors, Cerberus Capital Management and others probably will submit preliminary bids for Direcway, sources said. Israel’s Gilat Satellite Networks, a smaller Direcway rival, is seeking private equity backing for a possible bid for Direcway.

DirecTV, controlled by Rupert Murdoch’s News Corp., has said it plans to sell “noncore” businesses like the Hughes network systems unit and invest in building up the No. 1 U.S. satellite television provider.

A spokesman for DirecTV declined to comment on the unit’s sale, except to say that the company was “continuing to evaluate and assess our options for our noncore businesses.”

DirecTV this year already agreed to sell its 80.1% stake in the No. 2 satellite company, PanAmSat Corp., its set-top manufacturing unit and its controlling stake in Hughes Software Systems as part of the divestiture program.

First-round bids for the unit are due this week, after which the firm will narrow the pool of potential buyers, sources said. DirecTV hopes to have a deal this summer, sources said.

Spectrum, Cerberus and Gilat executives declined to comment, as did Morgan Stanley, which is running the division’s auction.