Filed by General Motors Corporation
Subject Company - General Motors Corporation
and Hughes Electronics Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and Deemed Filed Pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Commission File No.: 001-00143
MEDIA CALL
APRIL 9, 2003; 4:30 P.M. CDT
PAGE 1
Coordinator Good afternoon and thank you all for holding. All
participants will be able to listen only until
the question and answer session of the
conference. This conference is also being
recorded. If you have any objections, you may
disconnect at this time. I would now like to turn
the call over to Mr. Gary Ginsberg, Executive
Vice President of Investor Relations and
Corporate Communications. Thank you, sir, you may
begin.
G. Ginsberg Thank you, Holly. Hello, everyone, and
welcome to the News Corporation, General Motors
and Hughes Electronics media call, to announce a
definitive agreement our three companies have
reached today, under which News Corporation will
acquire a 34% interest in Hughes Electronics.
Participants on today's call are Rupert Murdoch,
Chairman and Chief Executive of News Corporation;
PAGE 2
Rick Wagoner, President and CEO of General
Motors; Jack Shaw, President and CEO of Hughes
Electronics; and Chase Carey, who upon the
closing of the transaction will become President
and CEO of Hughes. Also here today to answer
questions after our four participants speak are
Peter Chernin, President and CEO of News Corp.;
Dave DeVoe, CFO of News Corp.; John Devine, Vice
Chairman and CFO of General Motors; and Eddy
Hartenstein, Corporate Senior Executive Vice
President of Hughes and Chairman and CEO of
DIRECTV.
Before I turn the call over to Rupert, let me
very quickly note that under Short Form Rule
425, GM, Hughes and News intend to file a proxy
or a consent solicitation statement and other
relevant materials with the SEC in connection
with the proposed transaction. Because they will
contain important information, stockholders are
urged to read these materials which when filed
will become available free of charge at the
SEC's Web site, www.sec.gov.
Stockholders will also receive information at an
appropriate time on how to obtain
transaction-related documents for free from GM
and News. In addition, information regarding
those persons who will participate in the
solicitation of GM stockholders has or will be
filed by GM and Hughes with the SEC. This call
PAGE 3
does not constitute an offer to sell or a
solicitation to buy in connection with the
proposed transaction, which will only be made by
means of an appropriate prospectus.
On this call, we make statements that constitute
forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of
1995. These forward-looking statements involve
known and unknown risks, uncertainties and other
factors, including those described in the public
filings of GM, Hughes and News with the SEC, that
could cause actual results to be materially
different from those in the forward-looking
statements.
With that, let me introduce Rupert Murdoch.
R. Murdoch Thank you, Gary. Good afternoon, ladies and
gentlemen. To those of you who have been eagerly
waiting on hold, I'd just say, try it for three
years. Anyway, we're here to announce what is an
extremely exciting event for News Corporation,
the Fox Entertainment Group, and Hughes
Electronics. Today, after three years of patient
negotiations, but ultimately great satisfaction,
we have reached agreement with the boards of
General Motors and General Motors Hughes to
acquisition a significant 34% stake in Hughes
PAGE 4
Electronics. For all three of our companies, the
benefits of this transaction are substantial. If
it is rare to find a genuine win/win scenario in
our crowded and competitive media landscape, it
is truly exceptional to be able to create a
win/win/win scenario as promising and powerful
as the agreement we announced today. For the
shareholders and customers of News Corporation,
Fox Entertainment Group and GMH, today marks the
start of a bright future.
Let me briefly summarize the highlights of the
definitive deal that we reached today. Under our
agreement, News Corporation will acquisition GM's
19.9% stake in Hughes at a price of $3.8 billion,
or $14 a share, comprising $3,070,000,000 in
cash, and 34.3 million preferred limited voting
ordinary ADR's at a value of $22.40 each.
News Corporation will acquire an additional 14.1%
of Hughes from public shareholders, and GM's
pension and other benefit plans, at a price of
$14 a share, which we will pay using 122.2
million News Corp. preferred ADR's, using a base
ADR price of $22.40. Upon closing of the
transaction, News Corporation's 34% ownership
interest in Hughes will be transferred to the Fox
Entertainment Group, our 80.6%-owned subsidiary,
PAGE 5
in exchange for 74.2 million shares in Fox at
$27.99 per share; as well as two promissory notes
amounting to $4.5 billion.
This agreement is subject to regulatory
approvals, but we expect the transaction to close
by the end of calendar 2003. At that point, I
will become the chairman of Hughes; Chase Carey
will become the company's president and chief
executive officer; and Eddy Hartenstein will be a
vice-chairman of the board.
The board will consist of 11 members, including
myself; Mr. Carey; Mr. Hartenstein; Peter
Chernin, the President and Chief Operating
Officer of News Corporation and CEO of Fox; Dave
DeVoe, Chief Financial Officer of News
Corporation and Fox; and six independent
directors who are listed I think in the official
announcement.
Now, I know that one of the first questions you
may have is why we're housing Hughes within the
Fox Entertainment Group. The reason is simple: it
belongs there. It belongs there first of all
because it maintains the logical structure of
News Corporation. Fox was created to house News
Corp.'s American content and distribution assets,
and as a television distribution platform,
DIRECTV obviously fits within that structure.
PAGE 6
Second of all, the company's position within Fox
Entertainment Group will facilitate the mutually
beneficial relationship we look forward to
forging between Hughes and Fox.
For Hughes, this deal offers the opportunity to
work in close collaboration with Fox to provide
its DIRECTV platform with an increasingly rich
array of content, programming and technological
services. For Fox, a direct-to-home platform
capable of delivering our content to American
satellite television viewers represents an
invaluable outlet for our television products,
and our landscape of increasing choice, but also
increasing consolidation. Such an outlet is
essential if we are to ensure that our existent
content and the content that we will create in
the future continues to reach consumers.
We have built assets of immense value at Fox,
assets like our cable channels, for instance,
whose long-term viability will be greatly
enhanced by the presence of a sister
distribution platform. But that is an advantage
we do not plan to abuse. As strong a player as
we plan to be in the multi-channel television
industry, we have every intention of being a
fair player as well, both News Corp. and
DIRECTV, committed to be bound by the FCC
Program Access Regulations under which we will
make our content readily available to all
PAGE 7
satellite television providers as well as cable
and other competing platforms.
Our creative strength as a company will increase
the vitality of the American television market as
a whole, enabling the sort of fair and fierce
competition that our company was built on, and
that, quite frankly, we thrive on.
In the case of DIRECTV Television, we will thrive
by taking what I feel is one of America's great
television assets and substantially improving it.
The beneficiaries of these improvements will be
the shareholders of News Corporation, Fox and
Hughes alike. All of them will be able to watch
their asset grow faster and fundamentally
stronger whenever possible.
Certainly we have considerable strength to build
on. DIRECTV is an outstanding company with a very
strong brand and a large customer base;
furthermore, I'm going to tell you that Hughes
management has done a magnificent job running
their business and controlling costs in the
uncertain circumstances of the past two or three
years.
Over the next few years, we plan to take the
value of this great asset and grow it
PAGE 8
dramatically, by employing not only the content
we have created at Fox, but the talents, the
programming, the experience, the technology and
the expertise we have developed at our leading
television platforms in other places around the
world. We are fully confident that by doing so,
we will create greater choice and make greater
viewing experience for all Americans.
In the process, our efforts will invigorate the
multi-channel industry and help make satellite TV
a viable competitor to cable. More programming
options, greater efficiencies, richer content,
better customer service and compelling new
technologies will give satellite television its
best chance to break cable's still dominant hold
on viewers.
The person who will oversee our efforts, as I
mentioned, is Chase Carey, the President and
Chief Executive Officer of Hughes. In a few
minutes, Chase will give you a better sense of
some of the strategies and improvements that we
plan for DIRECTV.
First, I'd like to add that throughout these
negotiations, everybody at General Motors and
PAGE 9
Hughes have been open and straightforward and a
pleasure to deal with. So now I'd like to turn
the call over to General Motors' President and
Chief Executive Officer, Mr. Rick Wagoner.
R. Wagoner Thanks very much, Rupert. Again,
congratulations, and good evening to all of you
who have joined us. I'm also very happy to be
able to participate in this long-awaited and we
think very good proposal regarding Hughes. I want
to offer a little bit of a perspective on it from
General Motors' viewpoint.
I'd like to start, though, by thanking our teams
at GM and Hughes for their efforts in working
this transaction from our side. John Devine led
those with Jack Shaw from Hughes. A lot of hard
work and good work, as Rupert said, and I think
very constructive work with his team, and we
appreciate that.
Hughes has been part of the GM family in one form
or another since 1985, when we first acquired
Hughes Aircraft Company from the Howard Hughes
Medical Institute. Since that time, Hughes has
brought a lot of value to General Motors'
shareholders, and it has evolved from really what
was an engineering, manufacturing and defense
business to a high-technology, high-growth
entertainment and satellite services business.
PAGE 10
Given this transformation, the time has come when
Hughes will be better able, better served to
realize its growth potential under a different
ownership structure, and we think today's
announcement with News provides exactly the right
structure. As you know, Hughes will become an
independent publicly traded company; strong board
under the leadership of Rupert Murdoch and a
proven management team led by Chase Carey and
Eddy Hartenstein.
With this transaction, General Motors will turn
our store of value in Hughes into cash, and
significantly strengthen GM's balance sheet. I'd
like to describe the transaction structure
briefly from our perspective. It's also detailed
in the press release, which has been out now for
a little bit.
First of all, GM will separate Hughes by
splitting it off to holders of GM Class H common
stock. GM will sell its 19.9% interest in Hughes
for approximately $3.8 billion. As part of that
transaction, holders of GM Class H will exchange
about 17 1/2% of their holdings for an equivalent
of about $14 per share in News Corp. stock and/or
cash. We think this represents excellent value
for the Class H shareholders.
PAGE 11
Shareholders' remaining Class H stock will be
exchanged on a one-for-one basis for an
asset-based capital stock of Hughes. From GM's
perspective, besides the sale of our shares to
News Corp., as mentioned earlier, GM will receive
a dividend of $275 million in consideration of
the value enhancement for you shareholders which
arises from the conversion from a tracking stock
to an asset-based stock.
In the end, the majority of the equity interest
in the New Hughes, as we call it, about two
thirds of it or 66% will be held in public hands,
and News Corp. will own 34%. I should add, GM's
pension and benefit plans currently hold about
23% of the outstanding Class A stock, and as such
will remain major shareholders in the New Hughes.
As Rupert mentioned, we'll be seeking shareholder
approval of the proposal, and then concurrently
antitrust clearance and SEC clearance, and we are
highly confident, together with News Corporation,
that we can be successful in each of these cases.
Overall and in summary, we think this is a good
transaction; we think it brings substantial
benefits for both General Motors and Class H
shareholders; and we think it promises a great
future for the Hughes business.
PAGE 12
With that, let me turn it over to Jack Shaw, who
is Hughes' president and CEO. Jack?
J. Shaw Thanks, Rick. When General Motors acquired
Hughes in 1985, it was the nation's number one
supplier of communication satellites and defense
and automotive electronics, with a history of
technological achievements that range from the
first working laser to the world's first
geographic-synchronous satellite. We had 105,000
employees in sales and $9.5 billion.
Today, after divesting our automotive, defense
electronics and satellite manufacturing
businesses, we are the world's top digital
direct-to-home satellite broadcaster and private
satellite fleet operator, and a leading set-top
box manufacturer as well as the leading supplier
of data communication networks to business
enterprises around the world, with some 12,000
employees and sales of $8.9 billion.
Hughes has done well under GM, and we thank them
for their stewardship and their willingness to
work at understanding a business so different
from making automobiles. I want to commend for
its unwavering support of Hughes. We've taken
some pretty big risks over the years, including
PAGE 13
launching the nation's first high-powered direct
broadcast satellite TV service, and GM has always
stood behind us.
Getting to this day has been a long and difficult
experience for all concerned. It has been
especially difficult for the people of Hughes.
They deserve high praise for their ability to
conduct, grow, and strengthen our businesses over
the last couple of years as the company's future
hung in the balance.
I particularly want to recognize the tireless
work of Eddy Hartenstein, Pradman Kaul, Roxanne
Austin, Joe Wright, Larry Chapman and their
respective management teams, who kept our
operating companies focused on day-to-day
business while our corporate management was
engaging in planning Hughes' strategic future.
They never took their eyes off the ball.
This transaction is unique and special, in that
it brings together the two companies that, unlike
any others today, have unrivaled experience and
expertise in satellite broadcasting services. We
have a passion for satellite, and News
Corporation has a passion for satellites.
Hughes', coupled with News Corporation's existing
satellite platforms, will have unparalleled
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capability and capacity to distribute programming
worldwide and locally in the U.S.
Having Rupert Murdoch head the New Hughes is just
great. He has a fantastic track record in our
industry, and to be allied with his worldwide
broadcasting and entertainment company bodes well
for our customers, our shareholders, and our
employees. Rupert's passion for this business has
never wavered over these many years, and I have
no doubt will only increase with time.
Rupert Murdoch and Hughes are not strangers to
one another. Some of you may remember that back
in 1990, there was a partnership named Sky Cable,
involving Hughes, News Corporation, NBC and
Cablevision. The partnership didn't endure, but
DIRECTV was born as a result.
Once, somebody asked me about a relationship with
Mr. Murdoch. I said he was a customer, a
competitor, and a supplier, all at the same time.
He bought Hughes satellites to broadcast to BSkyB
subscribers in Britain. He competed with us in
Japan and Latin America, and he supplies
programming services to DIRECTV.
PAGE 15
Chase Carey, who will succeed me as Hughes' CEO,
has an outstanding record at News Corp. When he
joined the firm in 1988, it had, to quote chase,
"a two-night-a-week broadcast network, seven
stations, no cable programming, international
television operations or sports, and news
programming." Today, News Corp. is unrivaled in
its role as a global media leader. Much of that
success is due to Chase's efforts.
We at Hughes have always been big believers in
the unrivaled reach, efficiency and scale that is
inherent with a direct broadcast satellite
platform. We took a nascent idea, and despite the
naysayers - and there were many - have in nine
years built DIRECTV into the number two
multi-channel TV service in the United States,
with more than 11 million customers.
Rupert, Chase, and their News Corp. colleagues
share that common belief and recognize the
tremendous future opportunities that await the
New Hughes. When this deal closes, there will be
many winners. GM, News Corp., and Hughes will be
winners. The stockholders and employees of each
company will be winners. We believe that by
becoming an asset-based stock, Hughes will be
able to unlock its true value.
PAGE 16
But the biggest winners will be the folks who
subscribe to direct broadcast satellite services.
They will be the biggest winners of all, as they
enjoy even more and better programming, increased
interactivity and every competitive pricing.
Perhaps the only folks who aren't in the winner
category are our competitors. You can be sure
that the competitive spirit that is instilled in
the Hughes company will flourish and be taken to
an even higher level in the days to come.
Finally, I want to assure you that our operating
companies will not be distracted by the legal and
regulatory process that has to occur before the
close. They will focus on their customers. My
corporate staff and I will focus on getting the
deal done as quickly as possible. Remember, we've
had a lot of practice.
I'd like to turn it over to Chase Carey now.
C. Carey Thank you, Jack, and thank you for your kind
words. Before I get into our plans for Hughes, I
want to reinforce something both Rupert and Jack
have mentioned as they spoke, and that is the
truly impressive job the management of Hughes
has done over the past few years. It's certainly
not easy running a company under any
circumstances, but it's an awful lot harder when
PAGE 17
the future of that company is in flux. So it is
with a great deal of admiration that we
recognize the accomplishments of Jack, Eddy,
Roxanne, Pradman, Joe, Larry and the rest of the
Hughes team, and we really do look forward to
supporting and working with them as we build on
the success of Hughes. We are highly supportive
of this management, and we want them to be as
successful as possible.
Clearly the cornerstone of Hughes, of course, is
DIRECTV, which has successfully established
itself as the market leader in U.S. satellite
television. Second only to ComCast in the number
of multi-channel subscription homes it reaches in
the U.S., DIRECTV has created a fabulous brand
and unique strengths in key areas like customer
service, programming and distribution.
DIRECTV has also taken a number of steps in the
past year to further strengthen its business by
addressing issues like cost reduction. Our goal
will be to bring the expertise of News Corp. to
bear as we enhance and expand on DIRECTV's plans.
We have a proven track record at building
businesses like the Fox Network and Fox News, as
well as firsthand experience in creating and
operating successful satellite distribution
businesses like BSkyB, which is generally
PAGE 18
considered the premier satellite television
platform in the world.
That expertise will be employed across the board
at DIRECTV. In the cost area, as DIRECTV's
management has acknowledged, there is
considerable work still to do, and we plan to
enhance those managers' efforts by attacking
costs like programming, marketing, churn and
set-top boxes. We will also work with DIRECTV
management on a plan to maximize the platform's
growth potential.
DIRECTV already provides a great consumer
experience, but we plan to make it even better.
Initiative scenarios like customer service,
marketing onscreen guides, program packaging and
choice will be critical as we work to further
increase the excellence of DIRECTV's offerings to
customers.
Technology too will be a crucial component of our
plans to grow the success of DIRECTV. As
technological innovations like high definition,
personal video recorders and interactivity become
market realities, we're confident that DIRECTV
will build on its leading ability to bring the
most advanced experience to consumers.
PAGE 19
Yet, while DIRECTV is a cornerstone, we also must
focus on key issues across the rest of Hughes.
HNS, already the worldwide leader in the
enterprise business, has the opportunity to take
that business to a higher level with the launch
of Spaceway, a satellite system that represents
an entirely new generation of capability.
In other businesses, like Latin America, there
are significant challenges to address, and we
will work with Hughes' management to determine
the best course in these and other issues, in a
decisive, expeditious, yet thoughtful manner.
One of the greatest strengths we'll bring to this
company is a decisiveness that will enable Hughes
to address both problem areas like Latin America
and areas of opportunity, like the launch of
interactivity and other technological
innovations. Hughes has clearly and
understandably been handicapped in executing such
plans by their for-sale status over the past few
years. The clarity that comes from the end of
that process, combined with the expertise we
bring to the business, should enable us to
energize the decision-making that is critical to
the business's growth and improvements from here.
PAGE 20
We look forward to meeting all these challenges
as we bring to this opportunity the talents, the
experience, and clearly the excitement that we've
developed in television markets all over the
world. I think that there's no greater
multi-channel television business than DIRECTV,
and I think there's no greater opportunity for
News Corp., Fox and Hughes' shareholders and
customers than this chance to make DIRECTV the
strongest distribution platform in the world.
G. Ginsberg Operator, we'll now be ready to take questions.
Coordinator Floyd Norris, you may ask your question, and
please state your company name.
F. Norris Thank you. This is Floyd Norris from the
New York Times. I'm sorry, there are a couple of
things. Did I understand GM was also getting some
extra cash out of this besides the $3 billion
that they'll get directly from News Corporation?
And related to that, why is this deal being
structured so that GM gets cash and its
shareholders don't?
PAGE 21
R. Wagoner Floyd, Rick Wagoner. Your first question,
basically what we indicated, and as noted in the
press release, the value of the 19.9% of the
shares that are being sold by GM to News Corp. is
approximately $3.8 billion, some cash, some
stock. In addition to that, GM is going to
receive a special dividend of $275 million from
Hughes, in consideration for value enhancement
for H shareholders, which arises from converting
from a tracking stock to an asset-based stock.
F. Norris That was $375 million?
R. Wagoner $275 million.
F. Norris I'm going to ask John Devine to comment on the
second question, please.
J. Devine Floyd, to answer your second question in
terms of why cash, is we have no choice. As part
of the structure we've agreed a tax-free
spin-off, which we think has considerable value
to the shareholders; and as part of that, you're
required to sell all your shares. You can do it
over a period of time, but you have to sell all
your shares; so we've elected to that as part of
this transaction, but we do it because we have
....
PAGE 22
F. Norris You couldn't take stock too?
J. Devine We could take some stock in News, you mean?
F. Norris Yes.
J. Devine We are, in some of the stock; we are taking part
of it in stock.
F. Norris You couldn't take all of it in stock without
messing up the tax benefits?
J. Devine We could. Obviously liquidity is important
to General Motors. But we've agreed to take a
combination of both cash and stock.
F. Norris So why do you have to? You don't have to
do it.
J. Devine No; we do. You don't understand. We have to sell
the Hughes share, the tracking stock, as part of
a tax-free spin-off. That's required under tax
law.
F. Norris Under tax law, the shareholders can't get cash
and make it a tax-free deal. You could take all
stock. Your decision to take cash -
PAGE 23
(Parties speaking simultaneously.)
J. Devine We have to sell the Hughes tracking stock -
F. Norris -- while the shareholders don't was your
decision.
J. Devine -- in order to qualify for a tax-free
spin-off. We're doing that. We don't have to sell
it at one time, we could sell it over a period of
time; but we don't have a lot of time to do that.
So we are doing that. We are taking some stock as
part of this transaction. But we have to sell the
Hughes tracking stock as part of the tax
structure.
G. Ginsberg I would ask that the media from this point
forward, please limit your number of questions
to one. Thank you.
Coordinator Peter Thal-Larsen, you may ask your question,
and please state your company name.
P. Thal-Larsen Peter Thal-Larsen from the Financial Times. I
have a question for Mr. Wagoner. Given that you
had an offer from Mr. Murdoch for this business
PAGE 24
something like 18 months ago at a valuation, I
think according to my calculations at least 30,
35% higher than what you're receiving today. How
do you explain to GM shareholders that you
didn't take that offer at the time, and how do
you explain the sort of reduction in value that
you've had to kind of come up with now.
R. Wagoner You'd better recheck your math. The
economic value to GM is about the same. The
reason we took the other proposal at the time,
because our board determined that it offered
higher value to both sets of shareholders. That
wasn't approved. We then began this second-round
process to try to come up with what was the best
transaction for Hughes and General Motors and
their shareholders, and News came up with what we
thought was the best value transaction.
It is a much simpler transaction than the initial
proposal that we looked at, the initial round of
proposals, for a variety of reasons. The economic
value is roughly the same for General Motors; and
we think for the Hughes' shareholders, actually,
this is going to work out better for two reasons.
In the interim period, Hughes has frankly got its
business running much better, which is a plus;
and as I say, because the transaction I think is
much simpler, some of this is all tax-related
from the GM side, so it was us that set those
PAGE 25
rules. I think it's going to enable us to, with
the support of obviously News under this new
structure, going to run better; so from our
perspective, I think we're better off with this
proposal than if we had taken the initial
proposal from News, but obviously there has been
a delay in time. I think from a value
perspective, though, it works out about the same.
P. Thal-Larson Sorry, can you clarify, how do you work out the
economic value is the same to GM at this price
as it was at the end of 2001?
R. Wagoner Just do the math. We just did the math. It just
adds right up, if you do the total math value.
P. Thal-Larson Can you go through that calculation?
R. Wagoner Incidentally, I'm not sure we ever
announced the News deal that we did not accept
the first time; so I think maybe the problem is,
you might not have the initial base point that GM
had, because we didn't announce that. Obviously
we announced the offer that we had chosen at the
time.
PAGE 26
Coordinator John Lippman, you may ask your question, and
please state your company name.
J. Lippman Wall Street Journal. I was wondering, Mr.
Murdoch, what sort of concrete plans News Corp.
has to try to grow the DIRECTV subscriber base.
As you may be aware - surely are - growth rates
for DBS had been slowing down; the business has
been maturing. Some analysts and consulting firms
are now cutting back their projections for DBS
growth in the face of broadband being offered
from cable. In what sort of ways can News Corp.
revitalize the growth of DIRECTV?
R. Murdoch I think there are a lot of ways to make it more
exciting, but I'd challenge what you said there,
John. The growth of satellite television is
going on apace. Both companies are growing by
about a million a year, let's say two million
together, whereas cable is going down by about
one million. I think they lost a million last
year. So I wouldn't think there's any maturing
at all going on; and particularly now with the
growth of putting local stations in, in the
local-to-local business, it's making satellite
again more attractive and...growth. But there
are many things - you look at what we're doing
in London - that really enhance the viewing
experience, putting interactivity capacity into
the set-top boxes and of course putting PVR's in
PAGE 27
as well, although Hughes has just started doing
that here with TiVo, I believe.
J. Lippman Putting what in? I'm sorry, I didn't catch that.
R. Murdoch PVR's.
J. Lippman Yes.
R. Murdoch Which will grow more powerful every year,
probably double in power, the capacity of the
hard disks.
J. Lippman You think those will attract new customers to -
R. Murdoch John, we're not frightened by broadband.
We'll be providing broadband for those that want
it, but I think there will be many platforms for
broadband; and the supply of broadband may well
become a commodity, whether it's by satellite or
... or cable or DSL. It is not a killer app for
cable.
J. Lippman Broadband's not a killer app.
PAGE 28
R. Murdoch No.
G. Ginsberg Again, I'd just please remind people to
keep your questions to one. We'll get through
more questions that way, and then we can come
back for follow-ups if we have time.
Coordinator Bill Koenig, you may ask your question, and
please state your company name.
B. Koenig Bloomberg News. This is a question for
either Rick Wagoner or John Devine. As part of
the deal, as you said, you're getting mostly cash
but some shares; is it News Corp. ADR's, I think?
How long do you anticipate holding onto those
shares?
J. Devine This is John. We haven't made a decision on
that, so we'll decide that sometime in the
future after the deal is completed.
B. Koenig All right, thank you.
PAGE 29
Coordinator Steve Hansen, you may ask your question, and
please state your company name.
S. Hansen Millennium Partners. I would like you to
explain, or how you can explain the $275 million
dividend payment as being value-enhancing when it
seems like there's no benefit to the GMH
shareholders, and a truly value-enhancing deal
would have been to just create an asset-based
stock and then tender for 33% of the shares.
Thank you.
R. Wagoner We don't agree with your view, obviously; and I
think, in fact with significant input from a
range of investment bankers, there's a fairly
broad-based consensus that an asset-based stock
is worth more than a so-called letter stock. As
an example, when EBS was spun off, moved from a
letter stock to an asset stock and spun off from
GM, there was a comparable distribution made
actually on a percentage basis, about twice as
high. If you look at other kinds of M&A
transactions which involve things such as
differential voting rights, you find similar
kinds of premiums, so I guess we would challenge
your premise; and we think, again, these
decisions are made by each set of board of
directors, both H and GM, and there is a capital
stock committee which judges fairness. Those
committees and boards have met a number of times
PAGE 30
on this transaction, and to be honest, there are
gives and takes; and Jack and his team represent
Hughes' management with the support of two
independent investment bankers, and this is, if
you will, the negotiated settlement which
balances the interests of all parties.
I want to be clear, we think this is - Jack
should be able to speak for himself here, but
from the Hughes' shareholder perspective, this is
really a nice deal, because they basically, with
the asset-based stock and with the help of News
now, we think the business is going to be in a
position to grow much more rapidly than we could
under the letter structure with General Motors,
for reasons which have been discussed over the
years.
Jack, you may want to add to that.
J. Shaw Yes; I agree with what you say, Rick. From
our perspective, there are the three companies
involved in a transaction like this, and it's a
difficult transaction to come up with a final
deal. We at Hughes and our board felt it was very
important that we become an asset-based stock,
and this $275 million is something that we
thought was a reasonable contribution from the
Hughes side to get the deal done.
PAGE 31
We do have the cash. As you know, we went out on
a debt offering as well as a bond offering, and
so we do have the cash; so this was not a
difficult decision from the Hughes side.
Coordinator Sinead Carew, you may ask your question, and
please state your company name.
S. Carew I'm from Reuters. Can I ask what's going to
happen with PanAmSat and Network Services now?
Also, I'm sorry, it wasn't clear, when you were
talking about broadband. On the one hand you were
saying you're going to offer broadband, but on
the other hand you were saying, well, it's not -
it could become a commodity. Maybe if you can
explain your plans a little bit more.
C. Carey Sure. This is Chase Carey. Right now our
plans for the HNS and PanAmSat business is to
operate them, keep them, and drive them to their
full potential. They're businesses we're excited
about, and we look forward to working with.
As it relates to broadband, which Rupert spoke
about, I think what we're saying is we will have
a broadband satellite option, but broadband
PAGE 32
really, there will be an array of choices for a
consumer. DSL is out there today, beyond cable,
cable modems; there are new technologies coming
that people talk about .... I think what we
expect in broadband is to have an array of
choices for the consumer in the marketplace.
Satellite will be one of them, but there will be
an array, and we'll work with the various players
to create an attractive opportunity for the
customer to pursue broadband side by side with
video.
S. Carew So basically you're saying that you're going to
do partnerships for your broadband.
C. Carey I think it remains to be seen how it all
evolves. To what degree are there simply offers
in the marketplace. I don't think partnerships
are necessarily required. I don't think it's
been proven that bundling is critical, that
people want to see one bill. I think to some
degree there is obviously price competition
between the players that are offering these, but
I think it's going to be a vibrant, evolving
marketplace, and we will make sure there are
offers for the consumers that enable us to
compete fully.
S. Carew Okay. You didn't really explain how PanAmSat and
Network Services fits with the News Corp.
business.
PAGE 33
R. Murdoch Oh, yes, I can. I think it's a -
S. Carew Who is this? I'm sorry.
R. Murdoch Murdoch here. The satellite business has been
consolidating very strongly, and DIRECTV of
course have their own satellite and their own
spectrum; but it could well be of interest to us
in our other operations in other parts of the
world, and we don't really want to become a
victim of one European monopoly or duopoly
having all the satellite services in the world,
which is where it's heading at the moment. But
we've got an open mind about it. It makes a
steady cash flow of - I think it's rising
towards $500 million a year - and we're not
going to walk away from that in a hurry.
S. Carew From PanAmSat or Hughes Network Services? I want
to make sure which one you were referring to
when you said that.
R. Murdoch I was talking about PanAmSat.
S. Carew Okay, thanks.
PAGE 34
Coordinator Luke Collins, you may ask your question, and
please state your company name.
L. Collins Luke Collins from the Australian Financial
Review. This is for Mr. Murdoch. Both you and
Mr. Shaw have spoken about the synergies, if you
like, between DIRECTV and the other
satellite-based pay-television operations of
News Corp., which makes it seem reasonably
compelling to have DIRECTV housed within, say, a
Sky Global Network structure, which Mr. Carey
was going to be the head of. So I'm wondering
whether or not this is simply - the current
structure is a way of getting this transaction
done, and you might then revert to an integrated
satellite/pay-TV distribution entity.
Secondly, I wanted to get your personal thoughts
about finally realizing your 20-year attempt to
crack into the U.S. market.
R. Murdoch The second question, I just said it's
very satisfying, or will be when we get through
Washington. What was your first question; I'm
sorry?
PAGE 35
L. Collins It was just about, it seems reasonably
compelling to house Hughes within Sky Global
Network -
R. Murdoch Yes. I think the Sky Global Network idea,
we've sort of moved on from that. But there will
be mutual interest, I believe, between the
various platforms in the design and purchase of
set-top boxes and equipment, maybe even in
programming from third parties. There's a whole
array of things in which there may be some very
worthwhile economies to be made.
C. Carey Yes. I think there really still is very
much a win/win opportunity to find ways to work
together to take advantage of the breadth of
reach that these multiple satellite platforms
have, whether it's new operating systems,
interactivity such as BSkyB has today. I think
we'll be very opportunistic about finding win/win
opportunities.
L. Collins Might you create, perhaps, for example,
an executive committee of the various chiefs of
those satellite entities to further coordinate
that?
C. Carey I'm not your big believer in committee
management. I think we know the various players,
PAGE 36
and I think we're knowledgeable about the
business, and I think can act without committee
creations to find opportunities that make sense
for everybody.
L. Collins Great. Thank you.
Coordinator Nic Hopkins, you may ask your question, and
please state your company name.
N. Hopkins This is a question for Mr. Murdoch. It's
Nic Hopkins from the Times of London. I'm just
curious to know what are the regulatory issues
you would expect to encounter, given that
obviously Hughes is an international business;
you have some competition with DIRECTV in Latin
America; and would you also anticipate any
interest from the European Commission?
R. Murdoch Certainly not from the European Commission; this
is not a big enough business in Europe in any
way to attract that attention. As for
Washington, the only possible thing that could
have attracted criticism, we have addressed in
our statement, which is to have completely open
access to our platform to all suppliers, and not
to use it in any way for exclusive Fox or News
Corporation product. That was the only thing
that could have been raised at all. We don't see
PAGE 37
anything else. It is vertical integration, but
that has been fought and won by Time-Warner, by
ComCast, by plenty of other companies in this
country already. That bridge has been crossed.
So we don't see any serious legal problems at
all.
N. Hopkins If I may, there is the issue, though, of Latin
America where -
R. Murdoch Yes, there will be some regulatory things there
to do, which we haven't addressed yet; in Mexico
and in Brazil and the various countries.
C. Carey We don't view those as being issues with regards
to the larger transaction.
N. Hopkins Do you think you might be pressed into making
smaller divestments of any sorts?
C. Carey No.
R. Murdoch We'd have to see that.
C. Carey All right, thank you.
PAGE 38
Coordinator Paul Chavez, you may ask your question, and
please state your company name.
P. Chavez The Associated Press. I had a question about the
total value of the deal, and how the $6.6
billion figure was gained.
R. Murdoch It was a result of hard negotiations. We try to
pay less and they try to get more....
P. Chavez I mean, I know that there's a $3.8 billion
figure and that $275 million, switching it over
to an asset-based stock; but how do you reconcile
those figures with the larger 6.6 figure?
M It's 34% of the company at $14 a share.
M We're acquiring 470 million shares at $14 a
share. If you do the calculation, it's roughly
$6.6 billion.
J. Shaw The $17.1 billion is the market cap of Hughes,
though, at today's price.
PAGE 39
R. Murdoch How much?
J. Shaw Seventeen billion is the market cap of Hughes at
today's price. It's in the GM press release. I
think that's what the questioner is referring
to?
P. Chavez Right.
R. Murdoch This puts a price, I think, of like 19 1/2on it.
J. Shaw Right. There's a statement; I don't know if
you've had a chance to read our press release,
Rupert. I suppose not, since we just finished it
up before we got on the call here; but basically
we just highlight that today, based on the
closing price today, the market value of the
Hughes shares in total, including those held by
the GM family, is about $17 billion; and I think
that's maybe what the questioner was picking up
on.
Coordinator William Cavaller, you may ask your question, and
please state your company name.
W. Cavaller Bill Cavaller, Commerce Bank. I'm a GMH
shareholder. I'm not an investment banker and I'm
not a business person, and I can see that from
PAGE 40
the investment banking and business people's
side, this is a great deal. But from a GHM
shareholder perspective, you loaded $3 billion of
debt on the company; you're taking another $275
million in what sounds like a bribe to GM. What
do I get out of this? I don't really understand
why I would ever vote for this transaction. Can
you explain it to me?
G. Ginsberg If I could interrupt for a second, this
is a media call. There will be investor calls
beginning, for News Corp., tonight; and GM and
GMH will be having investor calls tomorrow. So
could we please defer your question to tomorrow,
to the appropriate call, and take the next call
from the press. I'm sorry to interrupt that, but
this is a press call.
W. Cavaller There is no answer to the -
J. Shaw -- we'll be glad to answer it, because we have a
very good answer to it.
Coordinator John Lippman, you may ask your question, and
please state your company name.
J. Lippman Wall Street Journal. Perhaps this is a
question for Dave DeVoe. Do you see, as you begin
to absorb DIRECTV, are there any sort of
PAGE 41
rationalizations or cost savings that you can
effect, and if so, do you have any estimates as
to what it might be and how you might go about
it?
D. DeVoe John, it's probably a question for Chase,
but from -
J. Lippman Okay, Chase, then.
D. DeVoe -- News Corp.'s perspective with respect to
the transaction and its effect on both Fox and
the News Corporation in the first fiscal year
that we will own the business, which is fiscal
'05, a whole year of operation, we would expect
the transaction on News and at Fox to be
somewhere between marginally dilutive to slightly
accretive at both companies. Chase, do you want
to -
C. Carey Yes; I think in terms of costs - and I touched
on it up front - clearly costs are an issue at
DIRECTV. They have been, and DIRECTV
acknowledges it, and they've made real strides
to address the cost issues. They've made real
progress, and as they said, there are still
initiatives they have underway. I think what we
would really bring to them is an
across-the-board set of insights and experience
and expertise from operating this array of
businesses that would hopefully enhance their
ability to really achieve the type of margins we
PAGE 42
think are possible in this business. I think
that really is every area you look at. It's
programming, it's marketing, it's churn, it's
SAC, it's set-top box costs. Various
technological innovations that you bring in, as
you bring on new technologies and the costs
related to them. I think all of those are areas
where we'd look to enhance the initiatives that
DIRECTV has been working hard on, and making
real progress on; and that we would be able to
help them take those savings beyond where
they've been and to where we think they should
be.
J. Lippman Can you put a number on it?
C. Carey I don't think it's the type of thing I'd
quantify. It's a lot of different initiatives
across really almost every area that the company
operates in, but it's not something that I'd
quantify to a specific number. It's an ongoing
process that we'll deal with.
Coordinator George Szalai, you may ask your question.
G. Szalai The Hollywood Reporter. A question for Mr.
Murdoch. I was wondering, since you have to write
down the line to increase your stake from 34%, if
PAGE 43
currently you would expect to take advantage of
that option, and what the advantages to News
Corp. would be of increasing its stake.
R. Murdoch First of all, we're limited in this
agreement not to buy any more shares for at least
12 months. I think after that we'll address the
question. But we have certainly no plans to.
We're very satisfied with the governance clauses
here. We think we can have all the influence that
we need to have with our 34%.
G. Szalai Are you expecting that Liberty Media is going to
use its option to increase its stake in News
Corp., or have you talked to them at all? Would
you expect to exercise your option to bring in
some cash from their side to help finance this
deal?
R. Murdoch I think it's probable that, yes, they'll either
exercise their option or we'll exercise our
call. That's probable.
G. Szalai Thank you.
Coordinator George Mannis, you may ask your question, and
please state your company name.
PAGE 44
G. Mannis It's George Mannis from thestreet.com. Two
things. One is, first off, for Mr. Murdoch, what
mechanism or safeguards do you expect to have in
place to ensure that equal access for other
programmers? Second, you talk about the
difficulty without this distribution channel for
getting Fox programming to the audience in the
U.S. Can you talk a little more about why you
would have that difficulty, and also what
specific things you expect to be doing with your
programming to make sure it gets that audience?
R. Murdoch We're doing pretty well now with our
audiences everywhere. We're very happy with them.
As to the first part of your question, we don't
need a mechanism. I can assure you, if we don't
follow through on this pledge, you'll get such a
scream from every supplier and from all of
Hollywood that you'll hear about it.
G. Mannis No, but you said yourself at the very
beginning that you wouldn't be able to reach the
audience for your current and future programming
- or at least your ability to reach that audience
with current and future programming would be
assisted by this transaction; and can you talk
specifically -
PAGE 45
R. Murdoch I don't think I did say that.
G. Mannis "In the landscape of increasing choice,
doing this is essential if we are to assure that
our existing content and the content we will
create gets to an audience." I believe that was
part of your speech.
R. Murdoch I think if we were to create very
compelling content and it was to be launched on
DIRECTV, that cable companies would want to buy
it on the same terms very quickly, and it will be
available to them. We're not going to keep
anything exclusive in that way.
G. Mannis But how will it increase - like what type - are
you going to do new channels, to start them out
on the satellite programming?
R. Murdoch We don't have any specific plans at the
moment, but that's one alternative, certainly.
I'd just say this: it's taken us six or seven
years to get what is about 90% distribution of
the Fox News Channel, and I think with this sort
of exposure, that sort of thing will happen a lot
faster.
Coordinator John Higgins, you may ask your question, and
please state your company name.
PAGE 46
J. Higgins Broadcasting & Cable Magazine. Rupert,
could you give us some detail of the approach by
Charlie Ergen to possibly sell EchoStar a couple
of months ago? And Rick, are you disappointed
that you weren't really able to gin up much of an
auction, that you didn't get much of a bidding
war going on?
R. Murdoch To answer the first part, I don't know
how serious Charlie was, whether he was just
testing the waters. I don't believe that - I know
Charlie well enough now to think that he would be
definitely lost without EchoStar; he lives that
business and he runs it very well. I expect him
to be a very healthy competitor.
R. Wagoner On my half of the question there, I think we
came to a transaction here which, from our
perspective, is very, very satisfactory, as we
went into this and looked at the options post
the defeat of the initial proposal down in
Washington. We had some ideas of what we thought
was fair value for GM and Hughes, and we wanted
to make sure that a transaction achieved that;
and I think in this sense it worked out just
fine. I think we've got a great transaction for
both of us, and I think we have a buyer on the
other side who brings a huge amount of expertise
to this business. So from our perspective, we
PAGE 47
were able to satisfy, if you will, all the
buckets quite nicely, and we're very happy with
the transaction.
I want to be clear: We didn't have to go ahead.
There was no requirement that we proceed with
this transaction now, so we did it very much on
the basis that we thought this was a good deal
for all the parties that we have to represent,
and we feel good about, as we send Hughes off, if
you will, into other hands, we feel very good
about their future. So we're very pleased with
the way it came out.
Coordinator Russ Britt, you may ask your question, and
please state your company name.
R. Britt I'm with CBS Market Watch. I have actually
a two-parter. Speaking of EchoStar, they got a
good long look at DIRECTV operations over 14
months as a result of the due diligence process.
Are you at all concerned, Mr. Murdoch, about
that? Are you making any plans for steering the
business as a result of what they got a look at?
And if you could also comment on the significant
of being the only major broadcast network with a
major pay-TV distribution operation now.
PAGE 48
R. Murdoch First of all, as far as Charlie Ergen
having a good look, no; I think this is a pretty
small world and there aren't many secrets. I
think we know what he's up to, what his
possibilities are and how he thinks, and I think
he knows the same about us. But on the broadcast
network, no; there's just no crossover there at
all, really.
R. Britt I guess I'm not really talking about crossover;
I'm talking about you as a media company, having
both of those operations at -
R. Murdoch Well, the two are quite different. One is
something that we create and drive and promote
within - it's creative programming, creative
scheduling, and that's something which we're
totally responsible for. Here, we're really a
carrier for the whole industry, and there's
really no conflict in that at all.
R. Britt Does that give you a strategic advantage
over other media companies?
R. Murdoch I can't see it.
R. Britt Thank you.
PAGE 49
Coordinator Bob Sherman, you may ask your question.
B. Sherman I'd like to ask Rupert and Chase the one
question that I've gotten from people inside
DIRECTV time and time again over the last few
weeks, and since they can't ask it, I'll ask it
for them. When can we expect a specific regime
change inside DIRECTV specifically? Can you map
out - you've given a little conflicting
information on the call. Who's going to be
running DIRECTV and when?
R. Murdoch We would expect really to leave everybody
where they are, and they'll be reporting to Chase
Carey after the changeover, rather than to Jack
Shaw, whom we understand is planning his
retirement.
C. Carey I meant it when I said we're very
supportive of this management. They've done a
great job in building this business in a very
tough environment. Look, they've built the market
leader. I do think we believe we can enhance that
management, but our initiatives are going to be
to enhance what the management is undertaking,
not the change. We believe we can bring some
expertise and perspectives, but that's really how
I'm planning to run it.
PAGE 50
B. Sherman Is Tony Ball going to be brought over from Sky
to run DIRECTV?
C. Carey No.
B. Sherman So there are no plans to bring anybody in from
outside, other than you at this point, Chase?
C. Carey The only plans I have right now are to work
with the management in place to determine how we
can take the business to its full potential,
enhance their performance, and drive it forward.
B. Sherman Since everyone else got nine questions,
let me just ask two very specific things: Is this
going to be, in the strictest legal sense, both
at the FCC and from a corporate governance
situation, change of control?
M Technically, under the FCC rules, it would be.
That's why you're going down for approvals.
That's just assumed, in connection with the
application process.
B. Sherman So you will be filing this at the FCC as well as
Justice?
PAGE 51
M That's correct.
B. Sherman Then also, I assume at this point there will be
a standstill agreement fairly quickly in the
litigation between NDS and DIRECTV?
C. Carey There's not a standstill on that. I think
obviously all of us would prefer to work
something out on a business basis as opposed to
litigation, but there's not a standstill; though
I think we all recognize we'd prefer to find a
business solution here.
B. Sherman Yes, but if you guys wind up owning DIRECTV,
you're not going to sue yourselves.
G. Ginsberg We have to move on. Operator, we have time for
one last question.
Coordinator Jane Schultz, you may ask your question, and
please state your company name.
J. Schulze Jane Schulze at The Australian. Mr.
Murdoch, the question for you is, have you now
achieved everything you ever set out to when you
... so long ago, and do you have any other
challenges left?
PAGE 52
R. Murdoch There are always new challenges, but I don't
have any in mind at the moment, Jane.
L. Murdoch The Australian's circulation is the one I
can think of.
R. Murdoch Just make that paper look better, will you?
J. Schulze But Mr. Murdoch, do you see this as the
culmination of what you've always set out to
achieve?
R. Murdoch I think for a long time we've had
ambitions to be in the distribution business here
and elsewhere; we think it's a great business. We
think the growth of multi-channel television and
choice of the public is something that's very
popular, and it's something to base a very sound
business on.
G. Ginsberg Thank you very much, everybody, for
participating in today's call.
**********************************
The following letter was sent to all employees of DIRECTV Latin America, LLC:
[DIRECTV LOGO]
April 9, 2003
TO ALL EMPLOYEES OF DIRECTV LATIN AMERICA:
As you may now be aware, General Motors has announced today that it intends to
sell its remaining interest in Hughes Electronics Corporation to News Corp. and
split off Hughes from General Motors. The details of this transaction are
described in the accompanying press release and letter from Jack Shaw.
It is important for you to know that the proposed transaction, which is subject
to multiple regulatory approvals, does not provide for a combination of DIRECTV
Latin America with Sky Latin America and is not contingent on such a combination
of these companies. We all know that there are many complex ownership,
regulatory and strategic issues pertaining to the direct-to-home satellite
business in Latin America. All of these issues would need to be addressed as
part of any discussions involving the combination of the DIRECTV and Sky Latin
American businesses. Although there are many possible alternatives, no preferred
outcome has been determined at this time.
What does this mean for our business? While the proposed transaction does not
have a direct impact on our operation, it will certainly make all of our jobs
more challenging. We must continue to provide our customers across Latin America
and the Caribbean with the best programming and service. We are continuing our
restructuring activities under the Chapter 11 process to improve the near and
long-term viability of our business. And finally, we must continue to operate an
independent DIRECTV Latin America business that competes vigorously against both
cable and Sky Latin America.
We recognize this news, particularly in combination with the recent Chapter 11
filing announcement, may create concerns on a personal level. During this time,
we ask you to stay focused on doing your job to the very best of your ability.
The reasons for this are simple - our performance over the next few months will
not only strengthen our ability to emerge successfully from Chapter 11, but will
also strongly influence decisions on how the Latin American direct-to-home
business will be operated in the future. As part of this, it is more important
than ever for us to reassure current and prospective customers that they will
continue to receive the high-quality services they expect from DIRECTV.
We should not lose sight of the real opportunities presented to all of us by
this proposed transaction. The proposed transaction has the potential to provide
all of us with an enhanced ability to grow our direct-to-home satellite business
on both a distribution and programming basis. We will be working hard over the
next few months to identify the best options for exploiting these opportunities.
We are committed to providing all of the employees of DIRECTV Latin America and
its affiliated companies with timely updates on this process as it evolves. We
recognize that the DIRECTV Latin America business has been built through your
dedication and passion. As always, we will continue to make DIRECTV Latin
America a fulfilling and rewarding place to work.
Sincerely,
Eddy Hartenstein, Chairman Larry Chapman, President and COO
DIRECTV Latin America DIRECTV Latin America
--------------------------------------------------------------------------------
In connection with the proposed transactions, General Motors Corporation ("GM"),
Hughes Electronics Corporation ("Hughes") and The News Corporation Limited
("News") intend to file relevant materials with the Securities and Exchange
Commission ("SEC"), including one or more registration statement(s) that contain
a prospectus and proxy/consent solicitation statement. Because those documents
will contain important information, holders of GM $1-2/3 common stock and GM
Class H common stock are urged to read them, if and when they become available.
When filed with the SEC, they will be available for free (along with any other
documents and reports filed by GM, Hughes or News with the SEC) at the SEC's
website, www.sec.gov, and GM stockholders will receive information at an
appropriate time on how to obtain transaction-related documents for free from
GM. Such documents are not currently available.
GM and its directors and executive officers and Hughes and certain of its
executive officers may be deemed to be participants in the solicitation of
proxies or consents from the holders of GM $1-2/3 common stock and GM Class H
common stock in connection with the proposed transactions. Information about the
directors and executive officers of GM and their ownership of GM stock is set
forth in the proxy statement for GM's 2002 annual meeting of shareholders filed
with the SEC and available free of charge at the SEC's website at www.sec.gov.
Investors may obtain additional information regarding the interests of such
participants by reading the prospectus and proxy/consent solicitation statement
if and when it becomes available.
Participants in GM's solicitation may also be deemed to include the following
persons whose interests in GM are not described in the proxy statement for GM's
2002 annual meeting:
Jack A. Shaw Chief Executive Officer, Hughes
Roxanne S. Austin Executive VP, Hughes; President and COO, DIRECTV
Patrick T. Doyle Corporate VP and Treasurer, Hughes
Michael J. Gaines Corporate VP and CFO, Hughes
Sandra A. Harrison Senior VP, Hughes
Eddy W. Hartenstein Senior Executive VP, Hughes; Chairman, DIRECTV
Larry D. Hunter Senior VP and General Counsel
Mr. Shaw beneficially owns 4,084 shares of GM $1-2/3 common stock and 2,244,987
shares of GM Class H common stock. Ms. Austin beneficially owns 3,293 shares of
GM $1-2/3 common stock and 1,632,071 shares of GM Class H common stock. Mr.
Doyle beneficially owns 746 shares of GM $1-2/3 common stock and 511,149 shares
of GM Class H common stock. Mr. Gaines beneficially owns 482 shares of GM $1-2/3
common stock and 298,745 shares of GM Class H common stock. Ms. Harrison
beneficially owns 1,632 shares of GM $1-2/3 common stock and 916,136 shares of
GM Class H common stock. Mr. Hartenstein beneficially owns 3,036 shares of GM
$1-2/3 common stock and 1,962,614 shares of GM Class H common stock. Mr. Hunter
beneficially owns 0 shares of GM $1-2/3 common stock and 485,130 shares of GM
Class H common stock. The above ownership information includes shares that are
purchasable under options that are exercisable within 60 days of April 9, 2003.
In addition, each of Mr. Shaw, Ms. Austin, Mr. Doyle, Mr. Gaines, Ms. Harrison,
Mr. Hartenstein and Mr. Hunter holds options to acquire shares of GM Class H
common stock that are not exercisable within 60 days of April 9, 2003.
Each of Mr. Shaw, Ms. Austin, Mr. Doyle, Mr. Gaines, Ms. Harrison, Mr.
Hartenstein and Mr. Hunter has a severance agreement with Hughes that provides
for severance in the event of an involuntary termination after a change in
control, and each also has a retention agreement that provides for certain
payments in the event of a change in control.
Investors may obtain additional information regarding the interests of the
participants by reading the prospectuses and proxy/solicitation statements if
and when they become available. This communication shall not constitute an offer
to sell or the solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities shall be
made except by means of a prospectus meeting the requirements of Section 10 of
the Securities Act of 1933, as amended.
Materials included in this document contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause actual results to be materially different from
historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of GM,
Hughes and News to differ materially, many of which are beyond the control of
GM, Hughes or News include, but are not limited to, the following: (1) operating
costs, customer loss and business disruption, including, without limitation,
difficulties in maintaining relationships with employees, customers, clients or
suppliers, may be greater than expected following the transaction; (2) the
regulatory approvals required for the transaction may not be obtained on the
terms expected or on the anticipated schedule; (3) the effects of legislative
and regulatory changes; (4) an inability to retain necessary authorizations from
the FCC; (5) an increase in competition from cable as a result of digital cable
or otherwise, direct broadcast satellite, other satellite system operators, and
other providers of subscription television services; (6) the introduction of new
technologies and competitors into the subscription television business; (7)
changes in labor, programming, equipment and capital costs; (8) future
acquisitions, strategic partnerships and divestitures; (9) general business and
economic conditions; and (10) other risks described from time to time in
periodic reports filed by GM, Hughes or News with the SEC. You are urged to
consider statements that include the words "may," "will," "would," "could,"
"should," "believes," "estimates," "projects," "potential," "expects," "plans,"
"anticipates," "intends," "continues," "forecast," "designed," "goal," or the
negative of those words or other comparable words to be uncertain and
forward-looking. This cautionary statement applies to all forward-looking
statements included in this document.
*********************************
The following e-mail was sent to all DIRECTV employees:
SUBJECT: GM / HUGHES / NEWS CORP. AGREEMENT
Dear DIRECTV Employee,
Today represents an important milestone for all of us at DIRECTV. As you've now
heard from HUGHES CEO Jack Shaw, General Motors, Hughes and News Corp. have
reached an agreement for News Corp. to purchase 34 percent of the ownership of
HUGHES and its subsidiary companies, including DIRECTV, after the split-off of
HUGHES from GM.
The executive leadership team and I are excited about this development because
of the incredible potential it brings to DIRECTV. The agreement with News Corp.
offers tremendous opportunity - not only for our company's continued profitable
growth, but also for the value of our stock, both of which benefit you as an
employee.
You probably have many questions about this agreement and how it will affect the
company, your department, and you personally. Since we already had an employee
broadcast scheduled next week to update you on our strong performance in the
first quarter and our priorities for the second quarter and beyond, I look
forward to using that opportunity to provide you with more information on this
agreement.
Over the next few days, you'll be able to submit questions electronically that
will be answered in periodic communication updates. Watch E-News for more
details.
In addition, we'll keep you informed on a continuing basis via E-News, the DEN,
future employee broadcasts and employee meetings. As is our custom, we want to
communicate to all employees as quickly as possible regarding major changes in
the company.
We expect to receive the necessary regulatory approvals for the General Motors /
News Corp. transaction by the fourth quarter of this year or the first quarter
of 2004.
Many of you have been through this process before, so you know firsthand how
important it is to stay focused on maintaining DIRECTV as a strong and
competitive force in the marketplace. The competition is fierce, and we can't
afford to lose momentum. This is the time to continue concentrating on our
annual priorities and second quarter initiatives so we can over-perform during
this period.
Thank you for all you've done - and are doing - to make DIRECTV such a success.
The leadership team and I look forward to embarking on the next chapter in the
DIRECTV story and all of the additional successes that will bring.
- Roxanne
In connection with the proposed transactions, General Motors Corporation ("GM"),
Hughes Electronics Corporation ("Hughes") and The News Corporation Limited
("News") intend to file relevant materials with the Securities and Exchange
Commission ("SEC"), including one or more registration statement(s) that contain
a prospectus and proxy/consent solicitation statement. Because those documents
will contain important information, holders of GM $1-2/3 common stock and GM
Class H common stock are urged to read them, if and when they become available.
When filed with the SEC, they will be available for free (along with any other
documents and reports filed by GM, Hughes or News with the SEC) at the SEC's
website, www.sec.gov, and GM stockholders will receive information at an
appropriate time on how to obtain transaction-related documents for free from
GM. Such documents are not currently available.
GM and its directors and executive officers and Hughes and certain of its
executive officers may be deemed to be participants in the solicitation of
proxies or consents from the holders of GM $1-2/3 common stock and GM Class H
common stock in connection with the proposed transactions. Information regarding
the participants and their interest in the solicitation was filed pursuant to
Rule 425 with the SEC by each of GM and Hughes on April 10, 2003. Investors may
obtain additional information regarding the interests of such participants by
reading the prospectus and proxy/consent solicitation statement if and when it
becomes available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
Materials included in this document contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause actual results to be materially different from
historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of GM,
Hughes and News to differ materially, many of which are beyond the control of
GM, Hughes or News include, but are not limited to, the following: (1) operating
costs, customer loss and business disruption, including, without limitation,
difficulties in maintaining relationships with employees, customers, clients or
suppliers, may be greater than expected following the transaction; (2) the
regulatory approvals required for the transaction may not be obtained on the
terms expected or on the anticipated schedule; (3) the effects of legislative
and regulatory changes; (4) an inability to retain necessary authorizations from
the FCC; (5) an increase in competition from cable as a result of digital cable
or otherwise, direct broadcast satellite, other satellite system operators, and
other providers of subscription television services; (6) the introduction of new
technologies and competitors into the subscription television business; (7)
changes in labor, programming, equipment and capital costs; (8) future
acquisitions, strategic partnerships and divestitures; (9) general business and
economic conditions; and (10) other risks described from time to time in
periodic reports filed by GM, Hughes or News with the SEC. You are urged to
consider statements that include the words "may," "will," "would," "could,"
"should," "believes," "estimates," "projects," "potential," "expects," "plans,"
"anticipates," "intends," "continues," "forecast," "designed," "goal," or the
negative of those words or other comparable words to be uncertain and
forward-looking. This cautionary statement applies to all forward-looking
statements included in this document.