Liberty Talk Sinks Satellites

Satellite TV stocks dipped Friday on word News Corp. (NWS Quote) is looking to get out of the business.

News Corp. CEO Rupert Murdoch and Liberty Media (LBTYA Quote) chief John Malone are in talks to swap holdings, according to published reports. If true, the deal would turn over News Corp.'s controlling interest in DirecTV (DTV Quote) to Malone's Liberty, in exchange for the 19% stake Liberty has in News Corp.

While the exchange would give media moguls Murdoch and Malone more control over their own companies, some industry analysts see it as another troubling sign for EchoStar (DISH Quote) and DirecTV.

"Given that News Corp. is one of the largest global satellite operations, and is considering selling their U.S. operations, a swap would portend a negative outlook on the satellite industry in the U.S.," Prudential Equities analyst Katherine Styponias wrote in a research note Friday. Styponias has a sell rating on DirecTV and a buy rating on EchoStar.

Satellite TV took millions of customers away from cable in the past decade by offering extensive programming selections at competitive prices.

But now that cable and phone companies have been upgrading their networks to offer service bundles including TV, fast Net and phone, satellite has been seen as a bit outgunned.

Investors had been hopeful that the increase in competition would allow EchoStar and DirecTV to merge and reap some of the estimated $3 billion in cost saving benefits through the combination of operations.