EchoStar provides instant synergy

Deal to last eight years, includes p'gramming channel

NEW YORK — Vivendi Universal’s joint venture with EchoStar — like its deal with USA — reps immediate programming synergies for the conglom, and boosts firm’s ability to develop and distribute interactive services such as video-on-demand, gaming and music.

Messier lauded such benefits in conference calls with press and analysts after announcing the deal — which includes a $1.5 billion cash infusion for the Denver-based satcaster — in Paris on Friday.

“This has been our strategy all along in looking at the U.S. market — to build partnerships, not to own or to control distribution,” he said. “This agreement represents for us an opportunity to create or accelerate the development of channels for the U.S. market and gain access to a large base of subscribers.”

Under the terms of the eight-year pact, Vivendi U gets the right to one channel of programming on EchoStar’s flagship “America’s Top 100” subscription package, two on its “Top 150” offering and another two to be offered to customers a la carte. Messier said the channels are expected to go on the air by next fall and will be programmed with action, suspense, general entertainment and maybe sports.

Vivendi and EchoStar will jointly offer an array of broadband interactive services via satcaster’s set-top receiver boxes. EchoStar topper Charlie Ergen said the company would use MediaHighway, the interactive programming software developed by Vivendi U’s pay TV division Canal Plus, to power the system.

The Vivendi U-EchoStar pact isn’t contingent on the completion of EchoStar’s merger with DirecTV, which is facing close scrutiny from regulators over concern the deal would produce a monopoly over U.S. satcasting. Deal would create a single entity with access to more than 16 million homes – 2 million more than the biggest U.S. cabler AT&T Broadband.

If the EchoStar-DirecTV combo is approved, the Vivendi U-EchoStar venture will extend to DirecTV’s customer base as well. Vivendi U’s investment amounts to an almost 5% stake in the merged entity, or an 11% interest in EchoStar on its own.

Vivendi’s cash infusion should improve EchoStar’s balance sheet, allowing it to pay off a portion of a $5.5 billion bridge loan it took out to finance the DirecTV deal. Vivendi U drummed up cash for its side of the deal through a deal, announced Thursday, to sell off part of its 22% stake in British satcaster BSkyB for roughly $1.5 billion.

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