Vivendi in US$1.5B interactive TV deal with Echostar

Vivendi Universal SA Friday announced it would make a US$1.5 billion equity investment in satellite television provider EchoStar Communications Corp., purchasing about 10 percent of the company in return for a deal to distribute Vivendi content and to use the interactive TV middleware produced by a Vivendi subsidiary.

The Vivendi Universal investment will help provide funding for EchoStar's pending merger with Hughes Electronics Corp., including Hughes' DirecTV satellite service. Vivendi will own less than 5 percent of the Hughes-EchoStar merged company.

The deal also calls for an eight-year technology alliance, under which EchoStar will use MediaHighway interactive middleware technology on its TV set-top boxes for subscribers to its DISH Network. MediaHighway -- developed by the Vivendi subsidiary Canal Plus Technologies SA -- can be used as a platform to develop applications for personal video recorders and interactive TV services, permitting movies and music to be downloaded, stored on a hard drive and viewed or listened to at any time.

"We've had the technology for interactive TV over satellite for years now," said Charlie Ergen, EchoStar's chairman and chief executive officer, in a conference call with analysts Friday morning. "What we've needed are applications."

Oslo-based browser developer Opera Software S/A made a five-year agreement in October to supply Canal Plus with a browser for its set-top box software.

Vivendi Universal and EchoStar also plan to work together to develop new satellite-delivered broadband channels with interactive games, movies, sports, education, and music, to be launched within a three-year period following the consummation of the agreement.

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