updated 2/18/2004 8:40:09 AM ET 2004-02-18T13:40:09

Hughes Electronics, the broadcasting group controlled by Rupert Murdoch, is exploring a sale of Panamsat, its US-listed satellite subsidiary. 

According to bankers and lawyers familiar with the situation, Hughes Electronics has hired Credit Suisse First Boston to advise it on the strategic options for its 81 per cent stake in Panamsat. 

Although the discussions are still at an early stage, the most likely outcome is expected to be a sale of Panamsat, possibly to a private equity buyer. 

The decision follows the acquisition late last year of a 34 per cent stake in Hughes by News Corporation, Mr Murdoch's global media group. News Corp's main interest in pursuing Hughes was to get its hands on DirecTV, the largest US satellite broadcaster. 

Panamsat, which operates a fleet of 22 satellites around the world, is not seen as central to Mr Murdoch's ambitions and a sale could release cash which Hughes could reinvest in building up DirecTV's subscriber base. 

Panamsat, which is separately listed on the Nasdaq stock market, has seen its market value almost double to $3.3bn over the past year as investors reassessed the prospects for the global satellite industry. 

People familiar with the matter said strategic players such as Intelsat and SES were unlikely purchasers because of the regulatory concerns they would face in acquiring a rival satellite operator. 

But private equity groups are increasingly interested in satellite businesses. In the past 12 months, two satellite companies - Eutelsat and Inmarsat - have fallen into the hands of private equity consortia. In an apparent attempt to boost Panamsat's value, News Corp earlier this month awarded the group a 15-year contract to transmit all the programming for its Fox television unit. 

Panamsat and CSFB declined to comment. But last week Chase Carey, Hughes' president and chief executive, said on a conference call that the company had "begun to evaluate" how Panamsat fit into a "DirecTV-driven strategic vision".

© The Financial Times Ltd 2013. "FT" and "Financial Times" are trademarks of the Financial Times.


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