General Motors on Tuesday halted plans to sell its Hughes Electronics division to the EchoStar Communications Corporation, two months after United States federal and state regulators moved to block the deal, the New York Times (NYT) reported.

However, GM will receive a $US600 million break-up fee from Echostar that was included in the original purchase agreement, the NYT said.

According to a November 27 Bloomberg News report, the agreement said that Hughes could end the accord if the Federal Communications Commission had not approved the deal by January 6 or if the transaction had not been completed by January 21. If either company backed away from the purchase before those deadlines, it could be liable for the break-up fee, analysts told Bloomberg.

The NYT said Hughes includes DirecTV, the top satellite TV provider in the US. Last year, General Motors spurned News Corporation head Rupert Murdoch, who wants to enter the US satellite TV market, and agreed instead to sell Hughes to EchoStar for $26 billion.

The deal would have combined DirecTV with EchoStar's Dish Network, the No. 2 satellite carrier, to dominate the US satellite TV market, the NYT said.

The newspaper said that prospect led antitrust regulators to oppose the deal and, on October 10, the Federal Communications Commission refused to approve the acquisition, the first time in 36 years that the agency had challenged a large corporate deal as anticompetitive and against the public interest.

The NYT said that EchoStar tried to save the deal by agreeing to transfer some satellite TV frequencies and the use of at least one satellite to Cablevision Systems, a cable television company with satellite ambitions. EchoStar and Cablevision argued that such an arrangement would create a third competitor in pay TV (two satellite providers and cable).

The Justice Department and 23 state attorneys general did not agree, the NYT said, and in late October, they sued to block the deal, all but killing the acquisition.

The New York Times said that, as well as agreeing to pay the $600 million breakup fee, EchoStar in the original agreement had agreed to pay $2.7 billion for GM-owned Hughes's 81% of the PanAmSat Corporation, a commercial satellite company, whether the larger deal went through or not.

But, in recent weeks, General Motors agreed to release EchoStar from its PanAmSat obligation in exchange for a quick end to the deal, people close to the negotiations told the New York Times.

General Motors spokeswoman Toni Simonetti told the newspaper: "The point is that we have the $600 million in the bank now, rather than later. Now we can move on."

The NYT speculated that ‘moving on’ may take the form of resuming talks with Murdoch who, for a decade, has been trying to get into the satellite TV business in the United States but has been blocked by various financial and regulatory difficulties.

The New York Times said GM’s original idea behind selling Hughes was to reduce debt and that rationale still existed today.

Patti Reali, a principal telecommunications analyst for research firm Gartner Dataquest told the newspaper on Tuesaday that "you can't discount the chance that News Corp will want to pick up with GM just where they left off."