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
THE ECHOSTAR/HUGHES MERGER
LOCAL CHANNELS AND COMPETITIVE BROADBAND
FOR ALL AMERICANS
[ECHOSTAR LOGO] [HUGHES LOGO]
--------------------------------------------------------------------------------
FEBRUARY 2002
THE BENEFITS OF THE ECHOSTAR/HUGHES MERGER
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February 26, 2002
EchoStar Communications Corporation, Hughes Electronics and General Motors
believe that consumers will reap tremendous benefits from the merger of EchoStar
and HUGHES. The companies' two services, DISH Network and DIRECTV(R), today each
transmit a total of MORE THAN 500 IDENTICAL CHANNELS. Consumers will benefit
from the massive increase in Direct Broadcast Satellite (DBS) satellite capacity
that will result from the elimination of this DUPLICATIVE PROGRAMMING. Indeed,
as a direct result of the completion of this merger, consumers across the
continental United States, Alaska and Hawaii will have access to local broadcast
channels with digital-quality television picture and CD-quality sound IN EVERY
ONE OF THE 210 TELEVISION MARKETS COVERING THE COUNTRY.
Subsequent to the announcement of the merger agreement on October 28, 2001, a
series of pre-merger transition meetings between DISH Network and DIRECTV
engineers have been held to analyze the technical and economic feasibility of a
"Local Channels, All Americans" plan by which the merged company could offer
every U.S. consumer access to satellite-delivered local television signals.
After an exhaustive examination of each company's spectrum and satellite assets,
the engineers determined that this plan could become a reality. In a satellite
application filed yesterday with the Federal Communications Commission, EchoStar
and HUGHES detailed a TECHNICALLY AND COMMERCIALLY FEASIBLE PLAN to build,
launch and operate spot-beam spacecraft that will serve all 210 Designated
Market Areas ("DMAs") in the United States, including full compliance with must
carry requirements.
New set-top boxes and satellite dishes will be deployed that will be capable of
receiving satellite signals from multiple orbital positions. The new receiving
equipment will be made available FREE OF CHARGE to all existing DIRECTV and DISH
Network subscribers who may need it in order to receive their local channels.
CONTINUED...
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2 THE ECHOSTAR/HUGHES MERGER
--------------------------------------------------------------------------------
....CONTINUED
Consumers across the country will pay the same price for services delivered by
the merged DBS service, i.e., ONE NATION, ONE RATE CARD, regardless of a
subscriber's location. Implementation of the plan will begin immediately upon
regulatory approval of the merger, and the rollout can be completed as soon as
24 months thereafter.
The merged company also will establish itself as a source of meaningful
satellite-based broadband competition to cable modem and DSL offerings,
fulfilling the mission to provide affordable high-speed Internet access to all
of America, including the most rural areas of the country. The "digital divide"
in the United States is real: some 40 million households in the United States do
not have access to high-speed Internet and data services, in large part due to
the high cost of wiring homes for these services in less densely populated
areas.
Combined, EchoStar and HUGHES will create a more robust satellite platform that
will liberate these digital "have nots" by serving every household in the
country, including every household in every state. Efficiencies from the
combined companies will provide the subscriber base and financial means to move
current Ku-band satellite broadband offerings from their status as expensive
"niche" services to a more competitive price point for consumers, and then
ensure that next-generation Ka-band satellite broadband service becomes a
reality for consumers everywhere in the United States.
The combined EchoStar-HUGHES will achieve a new level of vigorous competition to
incumbent cable operators, and will not have anticompetitive effects in any
market. As this booklet illustrates, the benefits from this merger will allow
all Americans to receive their full complement of local channels and national
entertainment networks, as well as provide a new source of meaningful
satellite-based broadband competition.
# # #
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3 THE ECHOSTAR/HUGHES MERGER
TOTAL TELEVISION VIEWING HOUSEHOLDS
--------------------------------------------------------------------------------
o In the pages that follow, you will see that the merger of HUGHES and
EchoStar benefits consumers and serves the public interest.
[Map of the United States with the phrase
"107 Million Households" written across it.]
--------------------------------------------------------------------------------
4 THE ECHOSTAR/HUGHES MERGER SOURCE: FCC EIGHTH ANNUAL REPORT,
"ANNUAL ASSESSMENT OF THE STATUS OF
COMPETITION IN THE MARKET FOR
THE DELIVERY OF VIDEO PROGRAMMING,"
JAN. 14, 2002, PP. 11, 87
CABLE FRANCHISE AREAS
--------------------------------------------------------------------------------
o Despite the rapid growth of DBS since 1994, cable television clearly
remains the dominant provider of multi-channel pay TV services throughout
the country.
o Over 104 million of the 107 million TV households are located in a cable
franchise area.
104 MILLION HOUSEHOLDS
[Map of the United States with certain portions
in the color grey.]
LEGEND
[Box filled with Cable Franchise Areas
the color grey.]
--------------------------------------------------------------------------------
5 THE ECHOSTAR/HUGHES MERGER SOURCE: FCC EIGHTH ANNUAL REPORT,
"ANNUAL ASSESSMENT OF THE STATUS OF
COMPETITION IN THE MARKET FOR THE
DELIVERY OF VIDEO PROGRAMMING,"
JAN. 14, 2002, PP. 11, 87;
NIELSEN MEDIA RESEARCH, SEPT. 2001
HOUSEHOLDS WITH ACCESS TO DBS WITH LOCAL CHANNELS
--------------------------------------------------------------------------------
o Today only 65 million TV households, those within the 42 television markets
served by DIRECTV and DISH Network, have a fully competitive multi-channel
alternative to cable -- with local channels.
o Competitive alternatives to cable did not seriously take form until the
launch of DIRECTV in 1994, later joined by DISH Network in 1996.
o DBS offered more channels and superior picture and sound quality compared
to cable, with one notable exception: consumers were not able to receive
their local channels via satellite.
o In 1999, Congress changed the law, allowing satellite carriers to offer
local channels. Only at this point did DBS become a viable competitive
alternative to cable, at least in those markets in which DIRECTV and DISH
Network began delivering local channels.
65 MILLION HOUSEHOLDS
[Map of the United States with certain portions
in the color grey.]
LEGEND
[Box filled with Households With Access to DBS With Local Channels
the color grey.]
--------------------------------------------------------------------------------
6 THE ECHOSTAR/HUGHES MERGER SOURCE: SKYRESEARCH, FEB. 2002;
NIELSEN MEDIA RESEARCH, SEPT. 2001;
ECHOSTAR AND DIRECTV, JAN. 31, 2002
HOUSEHOLDS WITH NO COMPETITIVE ALTERNATIVE TODAY
--------------------------------------------------------------------------------
o 42 million TV households are not served with local channels by DBS.
Residents in these markets do not have a true competitive alternative to
cable.
o Customers who live in markets in which DBS does not provide local channels
are forced to either pay additional subscription fees for a basic cable
service to receive their local channels, or install an off-air roof-top
antenna -- and hope for good reception.
o Neither DIRECTV nor DISH Network have sufficient spectrum, alone, to
provide all local channels as well as the national pay cable networks to
viewers in every one of the country's 210 local channel markets.
42 MILLION TV HOUSEHOLDS UNSERVED
[Map of the United States with certain portions
in the color grey.]
LEGEND
[Box filled with Households With No Competitive Alternative Today
the color grey.]
--------------------------------------------------------------------------------
7 THE ECHOSTAR/HUGHES MERGER SOURCE: SKYRESEARCH, FEB. 2002;
NIELSEN MEDIA RESEARCH, SEPT. 2001;
ECHOSTAR AND DIRECTV, JAN. 31, 2002
TV HOUSEHOLDS WITH COMPETITIVE ALTERNATIVE AFTER MERGER
--------------------------------------------------------------------------------
o DIRECTV and DISH Network engineering teams have developed a system that is
technologically feasible and economically viable for the merged company to
deliver full local broadcast service, in all 210 television markets,
including full compliance with federal must carry provisions.
o The merger of DIRECTV and DISH Network will enable a fully competitive
cable alternative -- DBS service with local channels -- in EVERY television
market in the country, including Alaska and Hawaii.
107 MILLION HOUSEHOLDS
[Map of the United States with cerain portions
in the color grey.]
LEGEND
{Box filled with TV Households With Competitive Alternative After Merger
the color grey.]
--------------------------------------------------------------------------------
8 THE ECHOSTAR/HUGHES MERGER SOURCE: FCC EIGHTH ANNUAL REPORT,
"ANNUAL ASSESSMENT OF THE STATUS
OF COMPETITION IN THE MARKET FOR
THE DELIVERY OF VIDEO PROGRAMMING,"
JAN. 14, 2002, PP. 11, 87;
ECHOSTAR, HUGHES, FEB. 2002
WITHOUT MERGER: INEFFICIENT SPECTRUM USE
--------------------------------------------------------------------------------
o The merger will end the inefficient use of spectrum by eliminating the need
for each company to transmit more than 500 channels of duplicative
programming.
o The merger will combine each company's spectrum and advanced satellite
assets, making the plan technically achievable.
o The merger will combine the companies' subscriber bases, making service to
smaller markets commercially feasible.
119 DEGREES 110 DEGREES 101 DEGREES
[Graphic of satellite.] [Graphic of satellite.] [Graphic of satellite.]
[Map of the United States with the phrase
"Over 500 Duplicative Channels Today"
written across it.]
--------------------------------------------------------------------------------
9 THE ECHOSTAR/HUGHES MERGER SOURCE: ECHOSTAR, HUGHES, FEB. 2002
WITH MERGER: SPECTRUM EFFICIENCIES ACHIEVED
--------------------------------------------------------------------------------
o Implementation could begin immediately following merger approval and the
rollout can be completed as soon as 24 months later, allowing delivery of
local channels to all Americans.
119 DEGREES 110 DEGREES 101 DEGREES
[Graphic of satellite.] [Graphic of satellite.] [Graphic of satellite.]
[Map of the United States filled entirely with the color grey, identifying
each state by name and with the phrase
"Local Channels, All Americans" written across it.]
LEGEND
[Box filled with DBS Households Served By Local Channels After Merger
the color grey.]
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10 THE ECHOSTAR/HUGHES MERGER SOURCE: ECHOSTAR, HUGHES, FEB. 2002
NATIONAL PRICING
--------------------------------------------------------------------------------
o Consumers across the country will pay the same price for their DBS
subscription services, regardless of where they reside. We are one nation,
and the combined EchoStar-HUGHES will offer one rate card.
o For example: a resident of Milwaukee will pay the same fee for his or her
local channel package as a customer in Cedarville, Ohio; a resident of
Burlington, Vermont, will pay the same price for HBO as a customer in Salt
Lake City; and a resident of Mountlake Terrace, Washington, will pay the
same price for a basic 125-channel programming package as a customer in New
York City.
[Map of the United States with the
phrase "One Nation, One Rate Card"
written across it.]
--------------------------------------------------------------------------------
11 THE ECHOSTAR/HUGHES MERGER SOURCE: ECHOSTAR, HUGHES, FEB. 2002
BROADBAND: THE DIGITAL DIVIDE
--------------------------------------------------------------------------------
o Another benefit of the EchoStar and HUGHES merger comes in the form of
competitively priced high-speed Internet access, and the end of the
so-called "digital divide" that exists in the "wired" world today.
[Map of the United States with the
phrase "107 Million Households"
written across it.]
--------------------------------------------------------------------------------
12 THE ECHOSTAR/HUGHES MERGER SOURCE: FCC EIGHTH ANNUAL REPORT,
"ANNUAL ASSESSMENT OF THE
STATUS OF COMPETITION IN THE
MARKET FOR THE DELIVERY OF VIDEO
PROGRAMMING," JAN. 14, 2002,
PP. 11, 22, 87; THE BUXTON
COMPANY, "BROADBAND DEPLOYMENT,"
JAN. 2002
BROADBAND: THE DIGITAL "HAVES"
--------------------------------------------------------------------------------
o Approximately 67 million households have access to a terrestrial high-speed
Internet service.
o These represent the digital "haves" who are located primarily in the major
metropolitan areas.
67 MILLION HOUSEHOLDS
[Map of the United States with certain portions
in the color grey.]
LEGEND
[Box filled with Households With Broadband Access
the color grey.]
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13 THE ECHOSTAR/HUGHES MERGER SOURCE: FCC EIGHTH ANNUAL REPORT,
"ANNUAL ASSESSMENT OF THE
STATUS OF COMPETITION IN THE
MARKET FOR THE DELIVERY OF
VIDEO PROGRAMMING," JAN. 14,
2002, P. 22; THE BUXTON COMPANY,
"BROADBAND DEPLOYMENT," JAN.
2002
BROADBAND: THE DIGITAL "HAVE NOTS"
--------------------------------------------------------------------------------
o 40 million households, located primarily in rural areas, have no access to
wired broadband services.
o This map clearly shows the number of digital "have nots" -- those
households with no access to DSL or cable modem service.
o The primary reason for this is simply the expense of rolling out "wired"
technologies, such as DSL and cable modem service, to millions of homes,
particularly to those beyond the boundaries of urban and suburban markets.
o Both EchoStar and HUGHES believe many of the "have nots" would be
interested in fairly-priced, bundled video and high-speed data services.
40 MILLION HOUSEHOLDS
[Map of the United States with certain portions
in the color grey.]
LEGEND
[Box filled with Households Without Broadband Access
the color grey.]
--------------------------------------------------------------------------------
14 THE ECHOSTAR/HUGHES MERGER SOURCE: FCC EIGHTH ANNUAL REPORT, "ANNUAL
ASSESSMENT OF THE STATUS OF
COMPETITION IN THE MARKET FOR THE
DELIVERY OF VIDEO PROGRAMMING,"
JAN. 14, 2002, P. 22; THE BUXTON
COMPANY, "BROADBAND DEPLOYMENT,"
JAN. 2002
MERGER BRIDGES THE "DIGITAL DIVIDE"
--------------------------------------------------------------------------------
o The merger will bridge the "digital divide" by providing consumers in every
community with a competitively priced high-speed "broadband solution"
available to them regardless of their location.
o The efficiencies gained from the merged company's combined customer base
will enable the offering of a high-speed Internet service that is not only
price-competitive with existing providers in urban settings, but also a
tremendous benefit for rural customers for whom DSL and cable modem service
are unlikely to be available for years to come, if ever.
o The merger will provide the technical and economic infrastructure to
convert every household in the country to a digital "have."
[Map of the United States with the
phrase "107 Million Households"
written across it.]
--------------------------------------------------------------------------------
15 THE ECHOSTAR/HUGHES MERGER SOURCE: FCC EIGHTH ANNUAL REPORT,
"ANNUAL ASSESSMENT OF THE STATUS
OF COMPETITION IN THE MARKET FOR
THE DELIVERY OF VIDEO
PROGRAMMING," JAN. 14, 2002,
PP. 11, 22, 87; ECHOSTAR AND
DIRECTV, JAN. 31, 2002
ONE NATION, ONE DISH
--------------------------------------------------------------------------------
o Bringing all local channels and broadband service to all consumers' homes
is not a simple endeavor. However, the DIRECTV and DISH Network engineering
teams have designed a system that enables the receipt of local channels,
other entertainment services AND high-speed Internet access using one
consumer-friendly mini-dish.
o An 18 x 22-inch dish will enable the receipt of signals from the merged
company's three orbital slots.
o New equipment will process signals from existing spacecraft as well as
advanced satellites the merged company will launch to deliver the remaining
local broadcast channels and high-speed Internet services to consumers in
all states.
o Equipment will be provided to existing DBS customers AT NO CHARGE --
including free service call and installation -- to receive their new local
channels.
[Photo of man installing a DirecTV satellite
dish on the side of a house.]
--------------------------------------------------------------------------------
16 THE ECHOSTAR/HUGHES MERGER SOURCE: ECHOSTAR, HUGHES, FEB. 2002
CABLE INDUSTRY REMAINS DOMINANT MULTI-CHANNEL VIDEO PROVIDER
--------------------------------------------------------------------------------
o Eight years after the introduction of DBS services, 78% of multi-channel
video subscribers still receive their programming from a franchised cable
operator.
o Cable operators' market dominance has been strengthened by their upgrades
to digital video and cable modem services.
o The cable industry's market dominance is further evidenced by its continual
price increases to consumers: 37% on average since 1996.
o The spectrum constraints which exist today will forever keep a separate
DIRECTV and DISH Network at a competitive disadvantage to cable for those
consumers who live in markets where local channels are not offered by DBS.
[Map of the United States identifying each
state by name and with certain portions in the color grey.]
LEGEND
[Box filled with Households With No Competitive Alternative
the color grey.]
--------------------------------------------------------------------------------
17 THE ECHOSTAR/HUGHES MERGER SOURCE: FCC EIGHTH ANNUAL REPORT,
"ANNUAL ASSESSMENT OF THE STATUS
OF COMPETITION IN THE MARKET FOR
THE DELIVERY OF VIDEO PROGRAMMING,"
JAN. 14, 2002, PP. 11, 87;
ECHOSTAR AND DIRECTV, JAN. 31,
2002; "REPORT ON CABLE INDUSTRY
PRICES," FEDERAL COMMUNICATIONS
COMMISSION, FEB. 14, 2001, P. 9,
AND DEC. 15, 1997, P. 7
58
LOCAL CHANNELS AND BROADBAND FOR ALL AMERICANS
--------------------------------------------------------------------------------
o The merger of spectrum at the three orbital slots eliminates these
disadvantages through the addition of an enhanced satellite infrastructure
that will enable delivery of local channels in EVERY one of the 210
television markets across the country.
o The merger of EchoStar and HUGHES ensures that prices for video and data
services will be the same throughout the country, whether the market is
rural or urban/suburban: "one nation, one rate card."
o The merged company will bridge the "digital divide" by moving satellite
high-speed Internet access from its current high-priced niche to being
price-competitive with existing providers -- a tremendous benefit for rural
customers where DSL and cable modem service are unlikely to be available
for years to come.
o The EchoStar and HUGHES merger merits broad scale support for the clear and
definitive benefits it will bring to all Americans.
[Map of the United States with the
phrase "107 Million Households"
written across it.]
--------------------------------------------------------------------------------
18 THE ECHOSTAR/HUGHES MERGER SOURCE: FCC EIGHTH ANNUAL REPORT, "ANNUAL
ASSESSMENT OF THE STATUS OF
COMPETITION IN THE MARKET FOR THE
DELIVERY OF VIDEO PROGRAMMING,"
JAN. 14, 2002, PP. 11, 87;
ECHOSTAR AND HUGHES, JAN. 31,
2002
THE ECHOSTAR/HUGHES MERGER
--------------------------------------------------------------------------------
o Local Channels, All Americans
o One Nation, One Rate Card
o Eliminates the "Digital Divide"
TRUE COMPETITION FOR 107 MILLION HOUSEHOLDS
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19 THE ECHOSTAR/HUGHES MERGER
SEC LEGEND
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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 GM. Such documents
are not currently available.
GM 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,
EchoStar, Hughes, 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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20 THE ECHOSTAR/HUGHES MERGER