Liberty Media/EchoStar May Make Surprise Bid for Satellite Service Provider -- WSJ

Liberty Media and EchoStar Communications will make a surprise joint bid in the auction of satellite provider Intelsat, which ends today, the Wall Street Journal reports. People familiar with the matter say Intelsat is expected to draw bids between $4.5 and $5.5 billion. Liberty and EchoStar each run satellite-to-home TV broadcast systems that compete. But the sources say the companies are now looking to cut costs by cooperating, and Intelsat ownership would provide substantial savings for both companies. Intelsat is the industry leader in providing satellite services, and its main customers are cable broadcasters, who compete with companies like Liberty and EchoStar -- which will likely raise regulatory flags. The sources say that since Intelsat's and Liberty/EchoStar's segments are different (satellite broadcast vs. satellite services), Intelsat's owners believe the bid would gain regulatory approval. Liberty is slated to take over satellite-broadcaster DirecTV in the coming months, and the joint venture could pave the path for EchoStar/DirecTV cooperation or even a merger -- a proposal strongly opposed by consumer groups. All interested parties declined to comment.

Sources: Wall Street Journal
Commentary: DirecTV, EchoStar Enjoy Free Cash Flow Growth • Consumer Spending Uptick Points to Satellite TV • TiVo vs Echostar: The Court Wants an Explanation
Stocks/ETFs to watch: Liberty Media Capital (LCAPA), EchoStar Communications Corp. (DISH), DirecTV Group Inc. (DTV). Competitors: Time Warner Inc. (TWX), Comcast Corp. (CMCSA), Cablevision Systems Corp. (CVC), CBS Corp. (CBS)
Conference call transcripts: EchoStar Communications Q4 2006, DIRECTV Q1 2007

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