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Hughes Completes Primestar Acquisition

Hughes Electronics recently finalized the purchase of Primestar’s medium-power DBS business for $1.1 billion in cash plus 4.87 million shares of General Motors Class H stock valued at about $25.8 million.

The deal makes Hughes’ subsidiary DirecTv “the nation’s third-largest multichannel video distributor,” according to Hughes chairman Michael Smith, who was comparing DirecTv’s now more than 7 million total subscribers with the leading cable operators.

Meanwhile, rival DBS provider EchoStar wasted no time in announcing an expansion of its One-Rate Plan promotion that offers a free satellite system and various levels of installation service in exchange for a minimum monthly subscription rate.

The new One-Rate Plan option offers a $298 rebate, good for the price of a multiroom-capable Dish system and either professional installation service or a second satellite receiver when a customer agrees to a minimum rate of $56.98 per month – which covers the America’s Top 100 CD basic service package and three premium movie packages.

EchoStar continues to offer a $199 rebate for a $48.98 commitment (AT 100 plus two premium movie packages) and a $100 rebate for a $39.98 commitment (AT 100 plus one premium movie package).

The One-Rate Plan promo has been credited with helping EchoStar surpass Hughes’ subsidiary DirecTv in monthly new subscriber totals in recent weeks.

However, through the Primestar acquisition, DirecTv adds Primestar’s 2.3 million subscribers to its own existing 4.8 million subscribers.

DirecTv said Primestar’s subscribers “will be seamlessly transitioned to its high-power service” using Primestar’s national network of agents, master agents and full-service providers.

DirecTv said it will operate Primestar’s medium-power business from Primestar’s Denver headquarters for two years, during which time it will transition Primestar subscribers to the DirecTv high-power DBS platform. Primestar’s distribution and service network will continue to serve Primestar subscribers through the transition period.

Still to be completed is the second phase of the announced transaction, which involves the acquisition of the in-orbit Tempo II high-power DBS satellite and 11 frequencies at the 119 degrees West Longitude orbital slot. That phase still awaits Federal Communications Commission (FCC) approval.