EchoStar Communications ( DISH) and Hughes Electronics ( GMH) may have junked their merger, but their separate dealmaking continues apace. On Wednesday, Hughes reached a five-year extension of a key National Football League programming deal, an exclusive package of games that has been a major draw for Hughes' DirecTV direct broadcast satellite service. The company said the agreement includes the launch of a yearround, 24-hour-a-day NFL Channel that will be "fully dedicated to the NFL and the sport of football." Meanwhile, speculation is growing that EchoStar will reach a deal to buy back a stake that it sold to Vivendi Universal ( V) only 11 months ago. On Wednesday, Hughes shares slipped 15 cents to $10.90, while EchoStar's rose 4 cents to $21.23.
The new deal, which Satellite Business News said could be worth more than $2 billion in guaranteed rights payments, continues DirecTV's near-decadelong role as the only place for NFL fans to go to get complete access of all televised pro football games each weekend. About 1.5 million homes, amounting to more than 13% of DirecTV's roughly 11 million subscribers, subscribe to the Sunday Ticket service. EchoStar and cable operators had been seen as challenging Hughes' exclusivity, but EchoStar chief Charlie Ergen, for one, has recently complained about the money the NFL has been asking for the rights.
Although the exact terms of the deal aren't clear, Ergen indicated earlier this year that EchoStar has right of first refusal if Vivendi were to sell its EchoStar preferred stock. New Vivendi CEO Jean-Rene Fourtou has said that the company has escaped the cash crunch it suffered earlier this year, but Vivendi is still on a program to dispose of billions of euros' worth of assets. A research note issued by Bear Stearns Wednesday morning reports that Vivendi has already factored the proceeds from its EchoStar stake into its debt-reduction targets. Speaking on condition of anonymity, an EchoStar shareholder called EchoStar the obvious buyer for Vivendi's stake. The shareholder pointed out that after paying its breakup fee to Hughes, EchoStar has about $3.6 billion in cash and equivalents on hand, with no apparent place to spend the money. Buying the stock back from Vivendi at a cut-rate price would be "opportunistic," says the shareholder.