Friday, December 14, 2001: Echostar, Vivendi Universal Form Strategic Alliance to Offer New Programming, Interactive Television Services for Consumers
- Strategic Alliance Covers All Vivendi Universal Content and Technology Assets
- Vivendi Universal to Launch Five New Channels, Including One in DISH Network’s
'America’s Top 100' Programming Package
- 'MediaHighway' Technology, Developed by Canal+, to Be Deployed On New
Generation PVR Set-Top Boxes
- Satellite-Delivered Creative New Programming Initiatives For Channels and Interactive
Services
- Agreement Includes Pay-Per-View and
Video-On-Demand Services
- EchoStar to Issue Shares for $1.5 Billion Investment from Vivendi Universal with Downside Protection
Littleton, Colo., and Paris, France - Dec. 14, 2001 - EchoStar
Communications Corporation (Nasdaq: DISH) and Vivendi Universal (NYSE: V; Paris Bourse: EX
FP) announced today an 8-year strategic alliance in which Vivendi Universal will
develop and provide EchoStar’s DISH Network satellite TV customers in the United
States a variety of programming and interactive television services. Vivendi Universal
will also make a $1.5 billion equity investment in EchoStar to provide a portion of the
funding for the pending merger with Hughes Electronics Corporation (NYSE: GMH), the parent
company of DirecTV. This agreement will provide a major distribution opportunity for
Vivendi Universal’s content and technology assets in the United States.
Investors and financial analysts are invited to participate in a
conference call with Vivendi Universal and EchoStar officials on Friday, Dec. 14, 2001, at
8 a.m. New York EST by calling
1-888-881-4892 in the U.S. International investors can call 33(0) 1 56 38 35 35; 33
(0) 1 55 69 57 51 in France; or 0800 279 2280 in U.K. Replays: In U.S., dial
1-877-289-8525, passcode 160089#; in France, dial 33(0) 1 40 50 20 20, passcode 7474; in
U.K.
44(0) 208 797 24 99, code 118310#. An audio webcast and replay of the investor call will
be available through the website at www.echostar.com.
Members of the media are invited to participate in a separate
conference call at 9:30 a.m. New York EST by calling 1-800-257-7063 in the U.S.
International press can call 33 (0) 1 56 38 35 35 or 33 (0) 1 55 69 57 51. Replays: In
U.S., dial 1-303-590-3000, passcode 426257; in France, dial 33 (0) 1 40 50 20 20, passcode
6840; in U.K. dial 44 208 797 2499, passcode 118306.
As part of the agreement, Vivendi Universal, a world leading provider
of media content, plans to offer EchoStar’s DISH Network customers five new channels
of basic and niche programming content including action, suspense, music, youth-oriented
channels and interactive game channels, with one channel in DISH Network’s
'Americas Top 100' programming package and two in 'America’s Top
150' programming package. Vivendi Universal will also offer expanded pay-per-view and
video-on-demand movies from current Vivendi Universal films, as well as certain library
films and events. These services are expected to begin in the fall of 2002, and will
complement EchoStar’s current lineup of entertainment, family, news and sports
channels. Customary fees per subscriber will be paid by EchoStar to Vivendi Universal once
the channels become available.
Vivendi Universal and EchoStar will also work together on a new
programming initiative to develop new satellite-delivered broadband channels featuring
interactive games, movies, sports, education, and music to be launched within a 3-year
period following the consummation of the agreement.
Also as part of the agreement, EchoStar will integrate Vivendi
Universal’s advanced, interactive middleware technology, MediaHighway, a Canal+
Technology, as a non-exclusive middleware solution that will provide DISH Network
customers using personal video recorders unique interactive TV services, such as movies
from Vivendi Universal and music from Universal Music Group. Such movies and music can be
downloaded, stored on a hard drive and viewed or listened to at any time. The parties will
look at the broadest possible use of MediaHighway.
Assuming the pending merger of EchoStar and Hughes Electronics is
completed, DirecTV customers will also receive the expected benefits of this strategic
alliance with Vivendi Universal.
'This alliance is very exciting news for our DISH Network
customers as they will have access to more smash-hit box office movies, niche sporting
events and the ability to order more movies or their favorite music at the touch of the
remote,' said Charlie Ergen, chairman and CEO of EchoStar. 'This agreement will
provide EchoStar with more options and will better enable EchoStar to compete in the
multichannel video programming distribution (MVPD) market. This alliance is also part of
our vision to compete against the cable companies while providing consumers, no matter
where they live in the U.S., more channel choices and the latest technologies, all at
nationwide, competitive pricing. Also, this equity investment would give us a stronger
financial footing and provide the combined company additional financial flexibility.'
'Entertainment content is a fiercely competitive market,'
said Jean-Marie Messier, chairman and CEO of Vivendi Universal. 'With today’s
announcement, Vivendi Universal is securing key access to consumers, as this
‘multi-dimensional’ transaction provides us with an important distribution
system for our broad array of assets – from content to technology. This agreement is
a foundation upon which we all intend to build even more value-creation opportunities for
the benefit of our customers.'
'Vivendi Universal’s content includes movies, music, games,
education and sports, each of which has leadership positions,' Messier continued.
'Vivendi Universal is committed to providing high-quality entertainment content over
each form of distribution worldwide. The EchoStar agreement provides Vivendi Universal
distribution of up to 15 channels, including interactive services, over the entire
EchoStar footprint, which covers 100% of U.S. households. When EchoStar’s pending
merger with Hughes Electronics is approved, EchoStar subscribers will reach nearly 15
million households. In line with our alliance strategy, this deal does not put us in a
position of directly buying or controlling cable or satellite distribution. Rather, it
offers us critical distribution access through a leading distributor, with tremendous
opportunities to build upon our partnership.'
'On a personal note, I am enthusiastic about entering into this
partnership with Charlie Ergen, a very dedicated, creative and successful entrepreneur,
whom I greatly admire and respect,' Messier concluded. 'We are also looking
forward to working with the combined EchoStar when the pending merger with Hughes
Electronics is completed.'
'We are pleased that EchoStar is moving quickly to put together
the financing for our pending merger,' said Jack Shaw, president and CEO of Hughes
Electronics. 'We also fully support this strategic alliance with Vivendi Universal,
which demonstrates the commitment to introduce innovative, new service offerings on a
non-exclusive basis to benefit consumers and enhance competition.'
Under the agreement, EchoStar will issue Series D Preferred Stock, at
an issue price of approximately $26.04 per share, in exchange for a $1.5 billion equity
investment by Vivendi Universal. The stock will have the same economic and voting rights
as the shares of Class A common stock into which it is convertible and will have a
liquidation preference equal to its issue price. On consummation of the merger with
Hughes, the Series D Preferred Stock would convert into shares of EchoStar Class A Common
Stock immediately prior to the merger of EchoStar and will then be exchanged for shares of
the Class A Common Stock of the combined EchoStar/Hughes in the merger. As a result of the
transaction, Vivendi Universal will own approximately 10 percent of EchoStar, or less than
5 percent of the combined EchoStar – Hughes following the proposed merger.
Vivendi Universal will also receive contingent value rights, intended
to provide downside protection for the price of the Class A Common Stock to be issued upon
conversion of the Series D Preferred Stock. The maximum payment under the rights is $225
million if the pending merger with Hughes Electronics is completed, or $525 million if the
pending merger is not completed. Any amount owing under these rights would be settled 3
years after completion of the merger, or 30 months after the merger agreement terminates,
as applicable except in certain limited circumstances. The equity investment by Vivendi
Universal is expected to be completed in the first quarter of 2002.
As part of this alliance, Jean-Marie Messier will become a member of
EchoStar’s Board of Directors when the investment occurs, and he will continue as a
director following the pending merger of EchoStar and Hughes Electronics.
Completion of these transactions is subject to regulatory clearance
under the Hart-Scott-Rodino Act and other customary conditions. These transactions have
received requisite corporate approvals of Vivendi Universal, EchoStar, Hughes Electronics
and its parent company General Motors. However, the transactions are not conditioned on
the closing of the EchoStar-Hughes merger and will remain in effect whether or not the
EchoStar-Hughes merger is approved.
About EchoStar
EchoStar Communications Corp. and its DISH Network provide
state-of-the-art direct-broadcast satellite TV service that is capable of offering over
500 channels of digital video and CD-quality audio programming, as well as advanced
satellite TV receiver hardware and installation. EchoStar is included in the Nasdaq-100
Index (NDX). DISH Network currently serves over 6.43 million customers. For more
information, visit www.echostar.com.
About Vivendi Universal:
Media and Communications and Environmental Services: The media and
communications business is divided into five business segments: Music, Publishing, TV and
Film, Telecoms and Internet. The Music business is conducted through Universal Music
Group, the world's leading music company, which develops, acquires, manufactures, markets
and distributes recorded music through wholly owned operations or licensees in 63
countries around the world. Universal Music Group's other businesses also include one of
the world's largest music publishing companies, which involves the acquisition of rights
to, and licensing of, musical compositions. The Publishing business is a worldwide content
leader in its core markets: education/literature, games, and healthcare information. It
provides content across multiple platforms. The TV and Film business produces and
distributes motion picture, television and home video/DVD products worldwide, operates and
has ownership interests in a number of cable and pay-TV channels, engages in the licensing
of merchandising and film property rights and operates theme parks and retail stores
around the world. The Telecoms business provides a broad range of telecommunications
services, including mobile and fixed telephony, Internet access and data services and
transmission, principally in Europe. The Internet business manages the strategic Internet
initiatives and new online ventures for Vivendi Universal. Utilizing advanced digital
distribution technology, the Internet business develops e-commerce, e-services and
thematic portals that offer access to the Internet via a variety of devices, including
mobile phones, PDAs, interactive TV and computers. Vivendi Environnement is a 63-percent
owned subsidiary of Vivendi Universal, which operates the environmental services business,
with operations around the globe.
IMPORTANT DISCLAIMER:
This press release contains 'forward-looking statements' as
that term is defined in the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are not guarantees of future performance. Actual results may
differ materially from the forward-looking statements as a result of a number of risks and
uncertainties, many of which are outside Vivendi Universal’s control, including but
not limited to: the risk that recently acquired operations of Vivendi Universal will not
be integrated successfully; that the synergies expected to be created as a result of
recent acquisitions by Vivendi Universal will not materialize; that Vivendi Universal will
be unable to further identify, develop and achieve success for new products, services and
technologies; that Vivendi Universal will face increased competition and that the effect
on pricing, spending, third-party relationships and revenues of such competition will
limit or reduce Vivendi Universal’s revenue and/or income; that Vivendi Universal
will be unable to establish and maintain relationships with commerce, advertising,
marketing, technology, and content providers; and that Vivendi Universal will be unable to
obtain or retain, upon acceptable terms, the licenses and permits necessary to operate and
expand its businesses; as well as the risks described in the documents Vivendi Universal
has filed with the U.S. Securities and Exchange Commission. Investors and security holders
are urged to read those documents at the Commission's web site at www.sec.gov. Those
documents may also be obtained free of charge from Vivendi Universal.
This press release also contains 'forward-looking statements'
with respect to EchoStar and a combined EchoStar/Hughes. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that could cause our
actual results to be materially different from historical results or from any future
results expressed or implied by such forward-looking statements. The factors that could
cause actual results of GM, Hughes, EchoStar, or a combined EchoStar and Hughes, to differ
materially, many of which are beyond the control of EchoStar, Hughes or GM include, but
are not limited to, the following: (1) the businesses of EchoStar and Hughes may not be
integrated successfully or such integration may be more difficult, time-consuming or
costly than expected; (2) expected benefits and synergies from the combination with Hughes
or the strategic alliance with Vivendi Universal may not be realized within the expected
time frame or at all; (3) revenues following the transactions may be lower than expected;
(4) operating costs, customer loss and business disruption including, without limitation,
difficulties in maintaining relationships with employees, customers, clients or suppliers,
may be greater than expected following the transactions; (5) generating the incremental
growth in the subscriber base of the combined company may be more costly or difficult than
expected; (6) the regulatory approvals required for the transactions may not be obtained
on the terms expected or on the anticipated schedule; (7) the effects of legislative and
regulatory changes; (8) an inability to obtain certain retransmission consents; (9) an
inability to retain necessary authorizations from the FCC; (10) an increase in competition
from cable as a result of digital cable or otherwise, direct broadcast satellite, other
satellite system operators, and other providers of subscription television services; (11)
the introduction of new technologies and competitors into the subscription television
business; (12) changes in labor, programming, equipment and capital costs; (13) future
acquisitions, strategic partnership and divestitures; (14) general business and economic
conditions; and (15) other risks described from time to time in periodic reports filed by
EchoStar, Hughes or GM with the Securities and Exchange Commission. You are urged to
consider statements that include the words 'may,' 'will,'
'would,' 'could,' 'should,' 'believes,'
'estimates,' 'projects,' 'potential,' 'expects,'
'plans,' 'anticipates,' 'intends,' 'continues,'
'forecast,' 'designed,' 'goal,' or the negative of those
words or other comparable words to be uncertain and forward-looking. This cautionary
statement applies to all forward-looking statements included in this document.
In connection with the proposed merger of EchoStar and Hughes
Electronics Corporation, General Motors Corporation ('GM'), Hughes Electronics
Corporation ('Hughes') and EchoStar Communications Corporation
('EchoStar') intend to file relevant materials with the Securities and Exchange
Commission, including one or more Registration Statement(s) on Form S-4 that contain a
prospectus and proxy/consent solicitation statement. Because those documents will contain
important information, holders of GM $1-2/3 and GM Class H common stock are urged to read
them, if and when they become available. When filed with the SEC, they will be available
for free at the SEC’s website, www.sec.gov, and GM stockholders will receive
information at an appropriate time on how to obtain transaction-related documents for free
from General Motors. Such documents are not currently available.
General Motors and its directors and executive officers, Hughes and
certain of its officers, and EchoStar and certain of its executive officers may be deemed
to be participants in GM's solicitation of proxies or consents from the holders of GM
$1-2/3 common stock and GM Class H common stock in connection with the proposed
transactions. Information regarding the participants and their interests in the
solicitation was filed pursuant to Rule 425 with the SEC by EchoStar on November 1, 2001
and by each of GM and Hughes on November 16, 2001. Investors may obtain additional
information regarding the interests of the participants by reading the prospectus and
proxy/consent solicitation statement if and when it becomes available.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such jurisdiction. No
offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
Materials included in this document contain 'forward-looking
statements' within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different from
historical results or from any future results expressed or implied by such forward-looking
statements. The factors that could cause actual results of GM, Hughes, EchoStar, or a
combined EchoStar and Hughes, to differ materially, many of which are beyond the control
of EchoStar, Hughes or GM include, but are not limited to, the following: (1) the
businesses of EchoStar and Hughes may not be integrated successfully or such integration
may be more difficult, time-consuming or costly than expected; (2) expected benefits and
synergies from the combination may not be realized within the expected time frame or at
all; (3) revenues following the transaction may be lower than expected; (4) operating
costs, customer loss and business disruption including, without limitation, difficulties
in maintaining relationships with employees, customers, clients or suppliers, may be
greater than expected following the transaction; (5) generating the incremental growth in
the subscriber base of the combined company may be more costly or difficult than expected;
(6) the regulatory approvals required for the transaction may not be obtained on the terms
expected or on the anticipated schedule; (7) the effects of legislative and regulatory
changes; (8) an inability to obtain certain retransmission consents; (9) an inability to
retain necessary authorizations from the FCC; (10) an increase in competition from cable
as a result of digital cable or otherwise, direct broadcast satellite, other satellite
system operators, and other providers of subscription television services; (11) the
introduction of new technologies and competitors into the subscription television
business; (12) changes in labor, programming, equipment and capital costs; (13) future
acquisitions, strategic partnership and divestitures; (14) general business and economic
conditions; and (15) other risks described from time to time in periodic reports filed by
EchoStar, Hughes or GM with the Securities and Exchange Commission. You are urged to
consider statements that include the words 'may,' 'will,'
'would,' 'could,' 'should,' 'believes,'
'estimates,' 'projects,' 'potential,' 'expects,'
'plans,' 'anticipates,' 'intends,' 'continues,'
'forecast,' 'designed,' 'goal,' or the negative of those
words or other comparable words to be uncertain and forward-looking. This cautionary
statement applies to all forward-looking statements included in this document.
MEDIA CONTACTS:
EchoStar – Judianne Atencio, 303-723-2010
EchoStar – Marc Lumpkin, 303-723-2020
Vivendi Universal – NY - Anita Larsen, 212-572-1118
Vivendi Universal – NY – Mia Carbonell, 212 572-7556
Vivendi Universal – Paris – Antoine Lefort, 011 33 1 71 71
1180
Hughes – George Jamison, 310-662-9986
INVESTOR CONTACTS:
Vivendi Universal - NY- Eileen McLaughlin – 212-572-8961
Vivendi Universal – Paris – Laurence Daniel - 011 33 1 71 71
12 33
EchoStar – Kim Culig – 303-723-1277
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