Vivendi to buy 10% of EchoStar for $1.5bn
By FT.com staff
Published: December 14 2001 13:30 | Last Updated: December 14 2001 14:39
Vivendi Universal, the French media group, on Friday said it would pay $1.5bn for a 10 per cent stake in EchoStar, the US pay-TV company, under a eight-year distribution alliance.
The companies said the investment would help EchoStar fund its pending $26bn merger with DirecTV, the rival satellite broadcaster, owned by Hughes Electronics. Following the merger, Vivendi will own less than five percent of the combined company.
Under the terms of the deal, EchoStar will issue $1.5bn worth of new shares, priced at approximately $26.04 each.
Mr Messier is to become a member of the EchoStar board, and will continue as a director following the merger with Hughes.
The deal comes as part of a long-term plan by Jean Marie Messier, Vivendi chairman, to build up the company's US distribution network.
Vivendi will provide interactive services and programming, including five new channels, for EchoStar, while gaining access to the Hughes distribution network.
It follows news that Mr Messier is in talks to buy the television programming and cable assets of USA Network, and comes just a day after Vivendi said it had raised $1.5bn from the sale of part of its stake in BSkyB, the UK pay-TV broadcaster.
"Vivendi Universal is securing key access to consumers," said Mr Messier. "The EchoStar agreement provides Vivendi Universal distribution of up to 15 channels, over the entire EchoStar footprint, which covers 100 per cent of US households. When Echostar's merger with Hughes Electronics is approved, EchoStar subscribers will reach nearly 15 million households."
