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May 29, 2001, 2:51 a.m. EDT

EchoStar pursues Hughes without ally

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By CBS.MarketWatch.com

NEW YORK (CBS.MW) -- EchoStar Communications Corp chairman Charlie Ergen is in advanced talks with SBC Communications and two other telecom companies about financing a takeover bid for Hughes Electronics, and isn't letting the loss of an ally in Hughes chairman Michael Smith deter him, the Wall Street Journal reported in its online edition Tuesday.

Smith, who has been opposed to News Corp's bid for the satellite broadcaster, had initiated talks with the EchoStar /zigman2/quotes/207505872/composite DISH +0.75% chief but ran into resistance from his superiors at General Motors /zigman2/quotes/205226835/composite GM +2.13% , the Journal said, citing people familiar with the matter.

GM owns 30 percent of Hughes shares.

The new chairman at Hughes Harry Pearce is said to favor News Corp's /zigman2/quotes/204787942/composite NWS -0.39% bid and analysts say Pearce is looking to close the deal and get GM the $5-6 billion in cash it seeks, the report said.

Besides SBC, EchoStar's Ergen is in advanced talks with BellSouth and Germany's Deutsche Telekom , it said.

Colorado-based EchoStar is the U.S.'s second biggest satellite TV provider after number one player DirecTV, which is controlled by Hughes Electronics.

A successful bid by EchoStar for Hughes would deal a major blow to Rupert Murdoch, who desperately wants DirecTV to give a U.S. presence to his global satellite holding company, Sky Global Networks.

News Corp. has been seeking a $70 billion merger of Sky Global with DirecTV for months.

An EchoStar bid does pose risks. Its proposal would raise antitrust issues related to the future of television entertainment and the state of escalating competition between cable and satellite providers.

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