General Motors Corp has agreed to sell its satellite television unit for nearly $26 billion (€28.7 billion) to EchoStar Communications Corp, one day after Mr Rupert Murdoch's News Corporation walked away with its rival offer.

EchoStar is offering cash and shares to buy Hughes Electronics Corp and will create a US pay television behemoth covering more than 16.7 million subscribers or 17 percent of the US market.

EchoStar's victory followed a weekend of high drama in New York at the start of which both News Corp and EchoStar were almost evenly poised to win one of the most coveted prizes in the US pay TV industry.

But Mr Murdoch, who never hid his desire to buy DirecTV, the digital television service, left the negotiating table after GM failed to decide on a winner at an earlier board meeting on Saturday.

GM owns 30 per cent of Hughes. GM also seems to have helped EchoStar in getting the deal.

Apart from giving EchoStar DirecTV's more than 10 million subscribers, the deal will also allow it to derive cost savings and additional revenue of $56 billion.

"The combination of EchoStar and Hughes is expected to generate very substantial synergies utilising the advantages of direct-broadcast satellite television, and cost savings from the elimination of costly duplicate satellite bandwidth and infrastructure," said EchoStar's chief executive, Mr Charlie Ergen.

On the other hand, the deal is a big blow to Mr Murdoch, who wanted to combine DirecTV assets with his global broadcasting assets, which already span the world.

Analysts have described it as the last dream deal of his career.

News that News Corp was finally out of the deal drove down its shares in Sydney, Australia.

Its stock plunged more than 6 per cent to close at 13.67 Australian dollars (€7.69) in Sydney on Monday.

Analysts said News Corp would try to ensure the deal receives the sharpest scrutiny from the regulators and would drum up enough opposition among opinion makers against the EchoStar-Hughes deal.