LITTLETON, CO: Pay-TV broadcaster EchoStar is to sell a 37% stake in the company to News Corp. and telecomm MCI WorldCom in return for satellites and broadcast licenses.
Shares in the Colorado-based EchoStar rose on Monday when the deal was announced. By mid-morning the stock had gained three and a half points to 38.5.
As part of the deal News Corp. will gain 24.3 million Class A shares and MCI WorldCom will gain six million.
In return, News Corp. will hand over to EchoStar two satellites and a license to broadcast 28 channels. The exchange of licenses still requires the permission of the FCC though.
EchoStar also agreed to drop its $5 billion lawsuit against News Corp.
It alleged Rupert Murdoch's company had breached an agreement to acquire 50% of the company.
The suit arose when News Corp. and EchoStar planned to launch a satellite service aimed at breaking the pay-TV monopoly of the cable companies.
However, they couldn't agree which company would gain the contract to supply consumers with the set-top-boxes needed to receive the system.
MCI has also gained the right to package its telephone service with the pay-TV system.