Disney, News Corp. Vying for Hughes Stake

The potential America Online (AOL Quote) merger with Time Warner (TWX Quote) was supposed to spell the beginning of the end for so-called old media.

But it now appears increasingly likely that if the deal goes through it will pave the way for at least one old-media monster, probably News Corp. (NWS Quote) or Walt Disney (DIS Quote), to stake out a leading role in the digital future.

The key to this transformation lies with Hughes Electronics (GMH Quote), the General Motors (GM Quote) unit that owns the biggest satellite television company in the U.S., DirecTV. Talks between federal regulators and AOL/Time Warner have stirred rumors that the feds want AOL to divest itself of its 5% stake in Hughes. News Corp. and Disney are both seen as possible bidders for Hughes.

A Hughes deal would give either company a huge advantage in distributing its valuable content, an area whose importance will only grow when AOL and Time Warner finally hook up. Accordingly, a deal could boost the stock of these companies, which have lagged behind the broader market in recent years.

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