PARIS – Vivendi Universal is investing $1.5 billion in the U.S. satellite TV company EchoStar Communications in a move designed to boost distribution of the French entertainment giant's music and films in the United States.
Under the eight-year deal announced Friday, Vivendi will feed EchoStar's six million DISH Network satellite customers in the United States with a range of television programming, films and music.
In return for its investment, the French group gets a 10 percent stake in EchoStar — money that will help the No. 2 satellite television company in the United States fund a planned $30 billion merger with rival satellite TV service operator Hughes Electronics, a division of the automaker General Motors Corp.
Speaking in a conference call with reporters and analysts Friday, Vivendi Universal chairman and chief executive Jean-Marie Messier said the move was consistent with his alliance strategy.
"We do not need to own our content distributors," he said, adding that his group will make no other equity investment in U.S. distributors in the future.
The partnership will leave Vivendi with a holding of just less than 5 percent in a merged EchoStar-Hughes Communications should that deal be approved by U.S. regulators. The combination of the EchoStar's DISH satellite TV service with Hughes' DirecTV service would have about 16 million U.S. subscribers.
Vivendi pledged to create five new television channels for EchoStar's DISH Network next year. Three of them will be part of EchoStar's product packages. In addition, the two companies promised to work together to develop new television channels in the education, music and interactive games.
EchoStar also plans to integrate Vivendi's MediaHighway technology — interactive TV software that will allow viewers to download movies, music and TV programming onto personal video recorders.
Vivendi's deal with EchoStar comes just three days after the French group disclosed it was in talks to buy cable TV and film production assets from USA Networks Inc.
Earlier this week, Vivendi sold off part of its 22 percent stake in the pay-TV group British Sky Broadcasting.