Filed by General Motors Corporation
Subject Company - General Motors Corporation
and Hughes Electronics Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and Deemed Filed Pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Commission File No.: 001-00143
On December 3, 2001, EchoStar Communications Corporation, Hughes Electronics
Corporation and General Motors issued the press release set forth below.
For Release: Monday, December 3, 2001
GM, Hughes, EchoStar File Application at FCC
Proposed Satellite TV Merger Would Bring Significant Benefits to American
Consumers
WASHINGTON - General Motors, Hughes Electronics (NYSE: GM, GMH) and
EchoStar Communications Corporation (NASDAQ:DISH) today filed their application
to the U.S. Federal Communications Commission (FCC) for approval to transfer
control of certain licenses to their proposed merged company. The FCC review is
designed to ensure that the transaction serves the public interest.
The companies state in the application that the proposed transaction would
comply with FCC rules and bring extraordinary benefits to American consumers
through more effective competition to cable television; more programming choices
including local channels in more metropolitan areas and more high definition TV
content; improved satellite-based, high-speed Internet deployment; and enhanced
service to rural communities.
In late October, the companies announced definitive agreements for a
proposed transaction in which Hughes would separate from General Motors and
merge with EchoStar. The new company would be named Echostar Communications
Corporation and would market its video products and services under the DIRECTV
brand. In today's application, the FCC is being asked to allow the transfer of
control of the satellite, earth station and other related authorizations
currently held by the companies to the proposed new entity.
"With the enormous efficiencies generated by this merger, we can accelerate
the delivery of local TV channels for more Americans, increase HDTV services and
provide for a faster introduction of high-speed Internet access. We will also
commit to continue our practice of offering uniform, nationwide pricing. This
merger is the best hope to provide true competition to cable companies," said
Charlie Ergen, chairman and chief executive officer of EchoStar.
The proposed merger will create a combined satellite television platform
better able to compete effectively with the dominant and entrenched cable
operators in the pay-television market, also known as the multichannel video
programming distribution (MVPD) market. Today's MVPD market remains dominated by
cable operators, which claim a share of about 80 percent or nearly 70 million
subscribers. In contrast, the combined Hughes-EchoStar would serve only 17
percent of the MVPD market, or approximately 15 million customers.
"One of the most compelling efficiencies of an EchoStar-Hughes merger is
elimination of the duplicative use of the radio spectrum that the FCC has
allocated for Direct Broadcast Satellite (DBS) service, freeing up use of that
spectrum for use for adding local broadcast channels, additional programming and
new services such as video on demand and high definition TV," the application
states.
By combining the resources of EchoStar and Hughes, which would free up a
significant amount of spectrum capacity, the new company would be able to
provide the most meaningful competition to cable companies, benefiting consumers
in numerous ways. For example:
o The new company would expand local network television coverage from the
current 42 total metropolitan areas the companies serve today, to more than 100
metropolitan areas. Currently, EchoStar and Hughes are limited in their ability
to serve additional metropolitan areas because of scarce spectrum and the advent
of new regulations, known as "must carry" rules, which take effect on Jan. 1,
2002.
o The combined new company would be better able to provide more programming
choices including the addition of at least 12 high definition TV channels. This
would help spur the digital transition among cable providers, programmers and
broadcasters, as well as encourage the use of digital television equipment by
consumers.
o The new company would also accelerate the availability and enhanced
quality of two-way, "always on," high-speed Internet access via satellite at
competitive prices, which would provide competition to cable modem and DSL
services. Because it would be available nationwide, satellite-based Internet
access would help bridge the "digital divide" for rural customers where cable
modem or DSL services are not available.
o Rural America would further benefit from the advantages of nationwide
pricing for video services, which would offer customers in rural areas the full
benefits of the rigorous competition occurring in urban and suburban areas.
"When measured against various components of the Commission's public
interest standard, the proposed merger is consistent with all relevant
Commission rules and policies, and will result in very significant, affirmative
public interest benefits," the application states. "It will advance the
Commission's core policies in favor of a more competitive video marketplace,
efficient use of scarce spectrum and satellite resources, and the provision of
advanced broadband services to all Americans."
"The merger should be evaluated in a marketplace that includes the entire
MVPD market," according to Robert D. Willig, professor of Economics and Public
Affairs at Princeton University and former deputy assistant attorney general for
Economics in the Antitrust Division of the Justice Department, in a declaration
included in the FCC application. "The relevant market for evaluating the merger
of EchoStar and DIRECTV includes cable providers," Willig said. "The primary
objective of each firm is to gain market share by luring consumers away from the
leading cable providers, and the firms accordingly price their DBS programming
services at levels based primarily on the prices charged by cable providers."
In addition to the FCC review, the transaction is being reviewed by
Department of Justice Antitrust Division to ensure the merger complies with
antitrust laws. The transaction is also subject to other regulatory review,
including by the U.S. Internal Revenue Service and Securities and Exchange
Commission.
The text of the filing will be available through company websites:
www.gm.com, www.hughes.com, www.echostar.com.
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In connection with the proposed transactions, General Motors Corporation ("GM"),
Hughes Electronics Corporation ("Hughes") and EchoStar Communications
Corporation ("EchoStar") intend to file relevant materials with the Securities
and Exchange Commission, including one or more Registration Statement(s) on Form
S-4 that contain a prospectus and proxy/consent solicitation statement. Because
those documents will contain important information, holders of GM $1-2/3 and GM
Class H common stock are urged to read them, if and when they become available.
When filed with the SEC, they will be available for free at the SEC's website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from General Motors.
Such documents are not currently available.
General Motors and its directors and executive officers, Hughes and certain of
its officers, and EchoStar and certain of its executive officers may be deemed
to be participants in GM's solicitation of proxies or consents from the holders
of GM $1-2/3 common stock and GM Class H common stock in connection with the
proposed transactions. Information regarding the participants and their
interests in the solicitation was filed pursuant to Rule 425 with the SEC by
EchoStar on November 1, 2001 and by each of GM and Hughes on November 16, 2001.
Investors may obtain additional information regarding the interests of the
participants by reading the prospectus and proxy/consent solicitation statement
if and when it becomes available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
Materials included in this document contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different
from historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of GM,
Hughes, EchoStar, or a combined EchoStar and Hughes, to differ materially, many
of which are beyond the control of EchoStar, Hughes or GM include, but are not
limited to, the following: (1) the businesses of EchoStar and Hughes may not be
integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (2) expected benefits and synergies from
the combination may not be realized within the expected time frame or at all;
(3) revenues following the transaction may be lower than expected; (4) operating
costs, customer loss and business disruption including, without limitation,
difficulties in maintaining relationships with employees, customers, clients or
suppliers, may be greater than expected following the transaction; (5)
generating the incremental growth in the subscriber base of the combined company
may be more costly or difficult than expected; (6) the regulatory approvals
required for the transaction may not be obtained on the terms expected or on the
anticipated schedule; (7) the effects of legislative and regulatory changes; (8)
an inability to obtain certain retransmission consents; (9) an inability to
retain necessary authorizations from the FCC; (10) an increase in competition
from cable as a result of digital cable or otherwise, direct broadcast
satellite, other satellite system operators, and other providers of subscription
television services; (11) the introduction of new technologies and competitors
into the subscription television business; (12) changes in labor, programming,
equipment and capital costs; (13) future acquisitions, strategic partnership and
divestitures; (14) general business and economic conditions; and (15) other
risks described from time to time in periodic reports filed by EchoStar, Hughes
or GM with the Securities and Exchange Commission. You are urged to consider
statements that include the words "may," "will," "would," "could," "should,"
"believes," "estimates," "projects," "potential," "expects," "plans,"
"anticipates," "intends," "continues," "forecast," "designed," "goal," or the
negative of those words or other comparable words to be uncertain and
forward-looking. This cautionary statement applies to all forward-looking
statements included in this document.
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