DirecTV deal raises balance sheet concerns for Murdoch's fox brands. (Media & Technology).

Wall Street is less than thrilled over Rupert Murdoch taking over DirecTV.

One day after News Corp. agreed to buy control of El Segundo-based Hughes Electronics Corp. and its DirecTV business from General Motors Corp. for $6.6 billion, Merrill Lynch & Co. analyst Jessica Reif Cohen wrote a report titled "News Corp.'s Piggy Bank?"

Reif Cohen and at least five other analysts cut their ratings on Fox Entertainment Group, a unit of News Corp. and the entity that operates the 20th Century Fox film studio, the Fox broadcast TV network and regional sports cable channels.

As part of the deal, Fox will take on $4.5 billion of debt owed to News Corp. and issue 74.2 million shares.

Investors and analysts expressed concern that Murdoch is loading down Fox with debt to finance the purchase because News Corp.'s own balance sheet couldn't support the deal.

"The lens that I was looking at the company through has changed' said Charles Ryan, an analyst at the BB&T Large Company Growth Fund, which holds 105,000 Fox shares. "Originally, Fox had a clean balance sheet, and now the deal poses a risk to that."

Gaining control of DirecTV will let News Corp. distribute its TV programming and films in the U.S. and Latin America, Murdoch said. Sydney-based News Corp. also will be able to protect Fox against pricing pressure and consolidation in the cable-TV industry.

Fox shareholders' ownership will be diluted because the company is issuing the new shares to News Corp., and Fox's cash flow will be used for $225 million in additional annual interest expense, Reif Cohen wrote. She said News Corp.'s balance sheet couldn't handle the added debt or interest costs.

News Corp. plans to buy General Motors' 20 percent stake in Hughes and a 14 percent stake from shareholders. Regulatory approval is expected to take nine to 12 months, Reif Cohen wrote.

After the deal is completed, News Corp. will transfer its 34 percent ownership stake in Hughes to Fox for 74.2 million shares and a $4.5 billion promissory note.

Murdoch, answering questions from reporters on a conference call, anticipated concerns about the transaction' structure and the wisdom of housing Hughes within Fox.

"The reason is simple: It belongs there," Murdoch said. "It belongs there first of all because it maintains a logical structure of News Corp. Fox is created to house News Corp.'s American content and distribution assets. DirecTV obviously fits within that structure."

Some investors and analysts also said the transaction would help Fox in the long term.

"The acquisition will strengthen their franchise," said William Fries, a money manager at Thornburg Investment Management who said he sold his Fox stake recently. The decline in Fox shares, he said, isn't "a fair long-term interpretation of the deal."

Fox shares rose 17 percent in the fourth quarter as the company's Fox News cable network took market share from rival CNN, and profit in Fox's broadcast television business jumped 46 percent. Fox TV's performance this year has been helped by its matchmaking "Joe Millionaire" program.

The gains prompted some institutional investors to snap up the shares. Duquesne Capital LLC, run by former Soros Fund Management chief strategist Stanley Druckenmiller, and Lone Pine Capital, controlled by former Tiger Management money manager Stephen Mandel, each bought more than 2 million shares in the fourth quarter, Securities and Exchange Commission filings show.

Murdoch has long coveted a U.S. satellite presence that would match his satellite operations in Europe and Asia.

And despite concerns raised by the deal, $6.6 billion is a substantial discount from News Corp.'s first bid for the company two years ago, when the stock was trading above $20.

That deal fell apart when Hughes' rival EchoStar Communications Corp. appeared to have trumped News Corp.'s bid at the last moment. The EchoStar play for Hughes was ultimately rejected by federal regulators on antitrust grounds.

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