EchoStar, Vivendi Universal Form Strategic Alliance To Offer New Programming, Interactive Television Services For Consumers

17-Dec-01

EchoStar Communications Corporation (NASDAQ: DISH) and Vivendi Universal (NYSE:V; Paris Bourse: EX FP) announced an eight-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 DirecTVÆ. This agreement will provide a major distribution opportunity for Vivendi Universal's content and technology assets in the United States. 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 three-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 percent 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."" 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. For more information about EchoStar, visit www.echostar.com.

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