Rupert Murdoch's News Corp is said to be ready to walk away from a deal to merge its satellite operations with America's biggest satellite player.
"It comes down to control," one source said.
News Corp, whose holdings include the Fox television network, the 20th Century Fox film studio, and newspapers such as the New York Post and The Times of London, "is getting fed up with negotiations with DirecTV," a source familiar with the talks said.
News Corp spokesman Andrew Butcher said, "We're still hopeful for a deal with DirecTV but we are looking at other options as well."
A spokesman fro Hughes Electronics, which runs DirecTV, reiterated that the company was in discussions with several parties and also considering several options. He declined to comment further.
Paul Xiradis, equities director at Sydney-based fund manager Ausbil Dexia, said that he did not see many alternatives for Hughes. "I think News Corp is in a fairly strong position," he said.
Other sources said, however, that if Hughes could find a suitor with a stronger balance sheet and the ability to offer more cash, it could take that offer.
News Corp has requested a meeting with the boards of Hughes and its parent General Motors to formally present its original proposal, another source familiar with the matter said.
The parties had agreed on the outline of a complicated US$70 billion deal last month that would combine News Corp's Sky Global Networks, which holds News Corp's satellite operations in Europe, Asia and Australia, with DirecTV, the largest US satellite service, creating a potential global powerhouse.
But negotiations have bogged down over who will control the combined company and the price of the deal.
"It comes down to control," one source said.
"(Hughes Chairman) Michael Smith doesn't want to relinquish control of the company."
Under the original proposal, News Corp would own a 35 percent stake but would control the day-to-day operations.
Software giant Microsoft is believed to be committing as much as US$5 billion in cash to the deal.
In the meantime, News Corp opened negotiations with DirecTV's US rival EchoStar Communications three weeks ago about combining their satellite operations.
