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EchoStar may pursue Hughes
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May 29, 2001: 7:17 a.m. ET
CEO reported in talks with others about forming a bid for GM's satellite unit
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NEW YORK (CNNfn) - EchoStar Communications Corp. Chairman Charlie Ergen is in advanced talks with SBC Communications Inc. and two other large telecommunications companies about jointly financing a takeover bid for Hughes Electronics Corp., the No. 1 U.S. satellite broadcaster, according to a published report Tuesday.
Ergen's move comes despite Friday's abrupt retirement of Hughes Chairman Michael Smith, whose exit was widely seen as favorable to a long-pending takeover proposal from News Corp. (NWS: Research, Estimates), the Wall Street Journal reported Tuesday. Smith, 57, opposed that deal.
In an effort to thwart a potential merger with News Corp. and its chairman Rupert Murdoch, Smith approached EchoStar's (DISH: Research, Estimates) Ergen earlier this year about a possible deal. In doing so, he waved off objections from superiors at General Motors Corp. (GM: Research, Estimates) , which owns 30 percent of Hughes shares, people familiar with the situation told the Journal.
The tension led to Smith's immediate replacement last week as Hughes' chairman by Harry Pearce, 58, a GM vice chairman who supports the News Corp. proposal. Analysts and industry officials believe Pearce is intent on closing a deal that would assure GM the $5 billion to $6 billion cash it seeks to dispose of Hughes.
EchoStar and Hughes declined comment, the paper said. Smith was unavailable and Pearce, who declined comment on how long he expected to stay at the Hughes job, told reporters "Mike made his own decision to retire," according to the Journal. Pearce said GM had a responsibility to study all "serious" offers.
EchoStar's Ergen, who remains committed to pursuing a rival bid, is in advanced discussions with BellSouth Corp. (BLS: Research, Estimates) and Germany's Deutsche Telekom along with SBC to put together a bid package, the Journal reported.
Ergen, who has spoken to other large media and other companies, is also thinking about securing a bridge loan from investment banks or other sources. SBC and BellSouth declined to comment and Deutsche Telecom couldn't be reached, according to the Journal.
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EchoStar's more widely traded class "A" shares ended up 72 cents at $34.02 Friday. News Corp.'s American depositary receipts ended up $1.37 at $37.60 and SBC shares slipped 74 cents to $42.35. GM shares fell 34 cents to $56.25. 
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