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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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