By Liana B. Baker
NEW YORK, Oct 1 (Reuters) - French media group Vivendi, hoping to offer pay-TV service to Brazilians eager towatch World Cup soccer matches and the Olympic Games coming totheir country, said on Tuesday its Brazilian unit GVT hadstarted negotiating with satellite company EchoStar Corp to set up a pay-TV venture.
The venture with Echostar, which is owned by billionaireCharlie Ergen, would be managed by GVT and headquartered inBrazil if the deal goes through, the companies said in a jointstatement.
They said the venture should benefit from an expected risein demand driven by the FIFA World Cup in 2014 and the OlympicGames in 2016. Final details have not been set, the companiessaid, adding the joint venture is subject to governmentalapproval.
The companies said they aim to offer a national service thattakes advantage of Echostar's licenses for satellite spectrum.EchoStar spent at least $77 million acquiring Braziliansatellite spectrum in 2011, according to a U.S. regulatoryfiling. EchoStar, the sister company to Ergen's Dish Network, had said it was planning to expand its video and dataservices in South America but had not revealed any details ofits plans until Tuesday.
Macquarie analyst Amy Yong said she expects the companies toeach take a 50 percent stake in the company. She called the deala "significant positive development for EchoStar" because itgives the company a chance to make money off its investment inspectrum in Brazil. GVT may also be interested in tappingEchoStar's pay TV products such as Hopper digital videorecorders and Sling technology, she said.
GVT is a small player is Brazil pay TV market but has apresence in about 140 cities and is expanding to 50 more in thenext five years, Yong said. It already sells a "triple play"product of broadband Internet, phone and video.
Dish's rival, DirecTV had bid for GVT earlier thisyear, before the asset was pulled off the market Vivendi. Yongsaid the joint venture is negative for DirecTV because GVT willnow be able to compete better with DirecTV's Brazilian Pay TVprovider, Sky Brazil.
Shares of EchoStar were trading 4 percent higher on Tuesdayat $45.64. Vivendi shares closed 1.68 percent higher at 17.29euros in Paris trading.
- Investment & Company Information