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EchoStar sweetens merger pot with Vivendi deal

Thu, 12/13/2001 - 7:00pm
Anne Kerven

EchoStar Communications Corp. is sweetening the pot for its pending merger with Hughes Electronics Corp. in a programming and middleware deal with Vivendi Universal. The sweetening extends to EchoStar, as well, with a $1.5 billion investment from Vivendi that will help fund EchoStar's merger plans.

The deal also contains a non-exclusive agreement for EchoStar to use MediaHighway middleware from Canal+ Technologies, a Vivendi subsidiary.

Under the 8-year deal, Vivendi will supply EchoStar's U.S. DISH Network customers with programming and iTV services, including five new channels of basic and niche programming content.

The two will launch services in fall of 2002, they say.

Over a three-year period, the two also will team on an effort to develop new satellite-delivered broadband channels with games, movies, sports, education and music.

EchoStar Chair and CEO Charlie Ergen used the chance to stump for the hard-sought merger. The deal would, in part, allow EchoStar to compete better in the multichannel video programming distribution market and against the cable industry, he says in a statement. The $1.5 billion equity investment gives the company "a stronger financial footing and provide(s) the combined company additional financial flexibility," he says.

The two also say EchoStar will use MediaHighway for its iTV services for DISH customers with PVR, although not exclusively. But, "The parties will look at the broadest possible use of MediaHighway," Vivendi says.

The statement also notes all new services would be available to DirecTV customers, should EchoStar's merger with Hughes go through.

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