The DIRECTV Group, the parent company of Hughes Network Systems (HNS), and Thomson announced a definitive agreement for the long-term development and supply of digital satellite set-top boxes (STBs). As part of the transaction, Thomson will also acquire HNS' set-top box manufacturing assets.
The five-year supply agreement provides DIRECTV with an experienced partner for its forthcoming product and service development initiatives. Thomson will be involved in the technology development of new set-top box models during the contract period and will manufacture a full range of receivers including DIRECTV-brand high definition and digital video recorder (DVR) receivers, with an objective to deliver home receiving units that meet DIRECTV's pricing, quality and time-to-market objectives.
Based on the contract terms, Thomson expects to more than double its current annual revenues with DIRECTV. DIRECTV will receive from Thomson $250 million cash upon close of the sale of HNS' set-top box manufacturing assets. In addition, the agreement includes incentives to DIRECTV -- based on revenues and set-top box order volume to Thomson over the next five years -- that could increase the amount paid to as much as $400 million, including the up front amount. Thomson will be the lead supplier of DIRECTV System set-top receivers accounting for half of its needs.
With the sale of these assets, HNS' principal business will consist of DIRECWAY broadband satellite networks and services for customers worldwide; SPACEWAY, the next-generation Ka-band satellite system, planned for commercial launch in 2005; and satellite-based communications systems, networks, and equipment. http://www.directv.comhttp://www.thomson.net
- Thomson is the original manufacturer of DIRECTV receivers. HNS has also played a key role in the evolution of DIRECTV set-top box technology, and has continued to develop the products and the business to become a market leader with close to 16 million boxes shipped to date.
