Vivendi Universal is to buy 10% of the US's number two satellite broadcaster Echostar.
The deal is expected to help Echostar in its ongoing bid to acquire the biggest satellite player DirecTV. But it is not conditional on the takeover going through.
The $1.5bn investment is seen by Vivendi Universal as the basis for an eight year distribution alliance. This will give Vivendi Universal secure outlets for its film and TV content, the ability to launch five new channels on Echostar's DISH Network and a massive new home for the Canal Plus-developed Mediahighway set-top box technology. Echostar and Mediahighway are expected to jointly develop new interactive products.
The new channels are likely to include basic and niche programming content including action, suspense, music, youth-oriented channels and game channels. One channel will be in DISH's Americas Top 100 programming package and two in the America's Top 150 programming package. Vivendi Universal will also offer expanded pay-per-view and video-on-demand movies from its current line-up, as well as certain library films.
"This alliance is very exciting news for our DISH Network customers as they will have access to more smash-hit box office movies, niche sporting events and the ability to order more movies or their favourite music at the touch of the remote," said Charlie Ergen, chairman and CEO of EchoStar.
"Vivendi Universal is securing key access to consumers, as this 'multi-dimensional' transaction provides us with an important distribution system for our broad array of assets - from content to technology," said Vivendi chairman and chief executive Jean-Marie Messier.
The Franco-US conglomerate is buying a slice of new shares at $26.04 each and if the DirecTV acquisition is approved will see its holding diluted to less than 5% by the issue of further new Echostar shares. Earlier this week Vivendi Universal raised a similar $1.5bn through the sale of a third of its holding in UK satellite broadcaster BSkyB.
Today (Dec 17) Vivendi Universal is expected to unveil details of plans that see the buyback of USA Networks, which were mortgaged by Universal prior to its acquisition by Vivendi, and Barry Diller elevated to a position that gives him control over Universal Studios.