NEW YORK, Sept. 25 (Reuters) - Hughes Electronics Corp. , owner of the largest U.S. satellite television service DirecTV, on Wednesday debunked a media report that DirecTV executives were considering a management buyout.
"Any implication that the leaders of any Hughes operating company are working on plans for an independent future are just plain false," Hughes Chief Executive Jack Shaw said in a statement.
Hughes is the subject of a $17 billion stock-based takeover offer from EchoStar which would combine the two dominant U.S. satellite TV providers, leaving cable operators as the only pay-TV competitors in many markets. The combined firm would have a monopoly in rural areas that don't have cable access.
U.S. Justice Department antitrust staff are recommending the government block the $17 billion deal, legal sources close to the matter told Reuters on Tuesday.
The Los Angeles Times, quoting unnamed sources, reported on Wednesday that DirecTV president Roxanne Austin had told her managers that an improved performance gave the company several alternatives, including a management buyout, if the deal was blocked.
Hughes, parent General Motors Corp. , and EchoStar have all said that the regulatory review is continuing and the Justice Department has made no decision. They have argued that the deal would increase competition by creating a stronger rival to cable companies and Shaw said all were focused on achieving this.
"The leaders of General Motors, Hughes, and all of its operating businesses, including DirecTV, are firmly and fully committed to our proposed merger with EchoStar," Shaw said.
"Rumors or speculation about a management buyout are simply that," Shaw said in the statement. "No such alternative is being considered. The future of Hughes and its subsidiaries, including DirecTV, is a matter that always will be determined by the leaders of General Motors and Hughes.
Blocking the EchoStar-Hughes merger could provide an opening for rival media giant News Corp . It dropped out of the race to acquire Hughes in October last year after nearly three months of battling with EchoStar.
The value of the EchoStar-Hughes deal has fallen 35 percent from $26 billion when the deal was announced in late October, as the value of EchoStar's stock has declined. GM's stake in Hughes is currently worth about $5 billion.
News Corp coveted DirecTV as a U.S. component for its Sky Global network of satellite TV service stretching from Europe to Asia and Latin America.
GM has been seeking to generate cash for its automotive operations and a sale of its 30 percent stake in Hughes would go a long way toward satisfying that need.
The proposed deal has run into resistance from some consumer groups and lawmakers in Congress. Some states have also lined up against the deal.
Antitrust regulators traditionally have been reluctant to approve mergers reducing a market to two competitors and almost always sue to block mergers that create a monopoly.
EchoStar and Hughes counter that the deal would allow them to reduce duplication and make more efficient use of spectrum, providing local broadcast channels across the entire country for the first time, along with other new services such as high-speed Internet and high-definition television.
To soothe concerns about rural areas, the companies have promised a national pricing plan that would link prices in rural areas to prices in markets with cable competitors.