Dish Network in the News

Vivendi Invests in EchoStar

PARIS (AP) - 12/14/2001 - Entertainment giant Vivendi Universal is investing $1.5 billion in the No. 2 U.S. satellite TV company, EchoStar Communications, as part of a deal that would widen Vivendi's ability to distribute its films, TV programs and music in the United States.

The French media company described the deal announced Friday as a strategic alliance that "will provide a major distribution opportunity for Vivendi Universal's content and technology assets in the United States,''

Under the agreement, Vivendi Universal - which owns the U.S. film and TV program producer Universal Studios - will create five new basic and niche channels to be broadcast on EchoStar's DISH Network.

They will include action, suspense, music, youth-oriented and interactive channels.

Under the eight-year alliance, Vivendi and EchoStar will also work together on developing new channels, possibly involving sports, music or interactive games. EchoStar will also integrate Vivendi Universal technology into its services.

Vivendi said EchoStar will issue preferred stock to the French group in exchange for the investment, the statement said. The stock would represent a stake of about 10 percent in Echostar, which is based near Denver in Littleton, Colo.

EchoStar's channels already have about six million subscribers in the United States, but that could soon expand greatly.

EchoStar is set to buy Hughes Electronics, the owner of rival satellite TV service DirecTV from General Motors in a $30 billion deal. The combined EchoStar-Hughes Electronics entity will have an audience of 16 million if U.S. competition authorities clear the proposed deal.

If that transaction is completed, Vivendi Universal would own less than 5 percent of the combined entity, the companies said in a statement. The Vivendi-Echostar deal does not depend on Echostar's completion of its purchase of Hughes Electronics, however.

As a result of the Vivendi-Echostar deal, Vivendi Universal chairman and chief executive Jean-Marie Messier will become a member of EchoStar's board.

The deal was announced days after Vivendi said it was in talks with U.S. media and e-commerce group USA Networks Inc. The French group wants to take control of USA Networks' cable and film production assets.

The two deals give Vivendi Universal, which has been repeatedly pointed at for its lack of U.S. distribution channels, a strong foothold in the U.S. TV market via both satellite and cable.

"Vivendi Universal is securing key access to consumers,'' Messier was quoted as saying. He added that "this deal does not put us in a position of directly buying or controlling cable or satellite distribution.''

In the past, Messier has repeatedly stressed that he favors alliances over big buys.