01-07 November 2000

			FOREIGN FOCUS Microsoft and Murdoch in talks on Sky Global stake Bill Gates: In talks with Sky Global for a minority share amounting to some USD1 billion Microsoft is in discussions with Rupert Murdoch about taking a substantial minority stake in Sky Global, the new digital television company to be spun off from News Corporation, in a deal that could be worth as much as $1bn (Lm465 million). Mr Murdoch has been keen to win Microsoft's backing to gain access to the software giant's expertise in set-top box technology and to help settle investors' nerves ahead of what is likely to be the largest ever media flotation. Microsoft would be interested in gaining access to the millions of customers world-wide expected to use Sky Global's digital television products and services. Microsoft sees digital television as one of the main threats to its dominant position in the personal computer market, and has signed several deals in an attempt to ensure that its operating software is used in set-top box decoders. However, it is lagging behind more specialist rivals, such as Liberate and OpenTV. News Corp had hoped to complete the flotation of Sky Global before the end of the year, but doubts over exactly who would invest in the new company and the recent volatility in technology stocks have forced the Australian media giant to delay the IPO until early next year. Uncertainty over the likely shareholders was particularly highlighted after it emerged that Vivendi would have to divest its 22.7 per cent stake in BSkyB, News Corp's UK satellite broadcaster, to satisfy European Union regulators investigating the Vivendi/Seagram merger. Mr Murdoch has indicated that Vivendi could roll its BSkyB stake into Sky Global, although that approach risks raising further objections from the EU. He has revealed that News Corp would also discuss bringing DirecTV and/or Echostar, the two leading US digital satellite broadcasters, into Sky Global. News Corp has previously held talks with various potential investors in Sky Global, including Yahoo! and Nokia. Sky Global will be a holding entity for News Corp's digital broadcasting businesses, including its 37.6 per cent stake in BSkyB, its Star TV arm in Asia, Stream in Italy, Sky Brazil and Sky Mexico. News Corp's Australia-listed shares rose A$0.82 to close at A$20.58 on Monday, after its New York-listed American Depositary Receipts rose 1.5 per cent to close at $41-3/16 on Friday.

---

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: [email protected]