Filed by General Motors Corporation
Subject Company - General Motors Corporation,
Hughes Electronics Corporation
and Echostar Communications 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
[EchoStar Logo]
[Hughes Logo]
A Powerful Combination
Safe Harbor
Materials included in this filing 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
General Motors Corp. ("GM"), EchoStar Communications Corporation ("EchoStar"),
Hughes Electronics Corp. ("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 filing.
[General Motors Logo]
R. Wagoner
CEO and President, General Motors
A Powerful Combination
o Win / Win / Win transaction for
all shareholders
o Creates strong competitor
to cable
o Substantial benefits to consumers
o Full support from GM and Hughes
management teams
What's In It For Shareholders?
GMH Shareholders GM $1 2/3 Shareholders
---------------- ----------------------
o Significant premium (20% o Improved liquidity
at 10/26 prices)
o Equity in a growth
o Excellent partner with company
proven track record
o Tax-free transaction
o Sufficient capital to
grow the business o Management focus on core
business
o Significant subscriber
base
o Substantial potential
synergies
Opening Remarks
J. Shaw
CEO, Hughes
[Hughes Logo]
E. Hartenstein
Chairman and CEO, DirecTV
Hughes
--------------------------------------------------------------------------------
100% 75% 100% 81%
DirecTV DirecTV Hughes Network PanAmSat.
Latin America Services
$5.5-5.6B Revenues $0.7B Revenues $1.3B Revenues $0.9B Revenues
8.7M Owned-and- 1.6M Subscribers Satellite Publicly Traded
Operated Broadband ($3.4B Market Cap)
Subscribers DTH Service Services
21 Satellites
DTH Service
Satellite Services
Note: Revenues and subscribers are 2001E figures.
Building on Recent
Operating Momentum
Hughes 3Q01 Results
Revenue: $2,103M
EBITDA: $141.8M*
[Bar chart showing subscriber growth (in millions of subsribers) from 1994 to
2001E.
Rapid Subscriber Growth
Total Subscribers (M)
0.4 1.2 2.3 3.3 4.5 8.0 9.5 10.6
---------------------------------------------------------------------
'94 '95 '96 '97 '98 '99 '00 '01E
Key Financial Metrics
o Hughes Revenue: Up 24.6% year-over-year
o Hughes EBITDA: Up 31.4% year-over-year
o 425,000 net subscriber adds in the U.S.
[Pie chart showing Hughes' U.S. industry-leading Average Revenue
Per User of $56 allocable $4 to Programming Packages, $43 to
Pay-Per-View and $9 to Other]
*Excludes one-time charge
Transaction
Summary
C. Ergen
Chairman and CEO, EchoStar
A Powerful Combination
Hughes EchoStar
o 100% digital nationwide platform with more than 16.7 million subscribers
(including 14.9 million owned-and-operated)
o Creates stronger competitor to large, U.S. cable and
broadband providers
o 100 million U.S. households offer powerful growth
opportunity
o Leverages already compelling DBS economics
o Substantial synergy opportunities--both costs and revenues
o Superior management team with proven success
Transaction Summary
o Hughes and EchoStar to merge
- EchoStar shareholders to receive about 1.37 Hughes
shares for each EchoStar share
- Equivalent to 0.73 EchoStar shares per Hughes share, a
premium of approximately 20%
o Immediately before the merger
- Hughes redeems up to $4.2 billion of GM's interest in
Hughes for cash
o Prior to closing, GM may exchange up to 100 million shares of Class H stock
for GM debt securities
o Fully-committed financing totaling $5.5 billion
Pro Forma Economic Ownership
[Diagram illustrating pro forma economic ownership of Newco (EchoStar): GM Class
H Shareholders (53%), EchoStar Public Shareholders (18%), Charles Ergen (18%)
and GM $1-2/3
Shareholders (11%).]
Note: Assumes $4.2 billion redemption by GM at an illustrative price of
$18.44 based upon the implied deal value. Does not include the
exchange of up to 100 million GM Class H common stock for GM
outstanding debt.
The POWER of
the Combination
EchoStar Hughes
Multi-Channel TV Providers
By Number of Subscribers (In Millions)
[Bar chart showing number of Subscribers (in millions) of major multi-channel TV
providers:
AT&T has 15.1M
while combined with
other companies it
could have between
18.1 and 27.8M 14.9(1) 12.7 8.5 (1) 8.3 6.9 6.4 6.2 5.7 3.0
------------------------------------------------------------------------------------------------------------------
AT&T + Any Pro Forma Time DIRECTV Comcast Charter EchoStar Cox Adelphia Cablevision
Major Cable Warner
Pro Forma Cable
Note: Subscribers are as of September 30, 2001, pro forma for all announced
transactions. Adelphia, Charter, Comcast and Cablevision are as of June
30, 2001.
(1) Excludes 1.8 million NRTC and affiliate subscribers.]
Multi-Channel TV Providers
By Revenue ($ in Millions)
[Bar chart showing revenue ($ in Millions) of major multi-channel TV providers:
AT&T has $9,572,
while combined with
other companies it
could have betwen
$11,864 and $16,648 $9,151 $7,076 $5,452 $5,140 $4,528 $3,714 $3,699 $3,106 $2,292
------------------------------------------------------------------------------------------------------------------
AT&T + Any Pro Forma Time DIRECTV Comcast Charter EchoStar Cox Adelphia Cablevision
Major Cable Warner
Pro Forma Cable
Note: Revenue figures reflect core cable or DBS revenue for the pro forma
quarter ended September 30, 2001, annualized, except for Adelphia,
Charter, Comcast and Cablevision which are as of June 30, 2001.]
EchoStar / Hughes vs. Cable
Keys to Success Who Has the Advantage?
--------------- ----------------------
Fattest pipe Satellite
Nationwide footprint Satellite
Cost per home passed Satellite
100% Digital quality Satellite
Channel capacity Satellite
Plant upgrades Satellite
Customer service Satellite
Incumbency Cable
Broadband ?
Substantial Potential Synergies
[Pie chart showing that Cost Savings account for 57% and revenues account for
43% of synergies.]
Total estimated annual synergies of $5 billion by 2005.
Estimate of Potential
Cost Synergies
($ in Millions)
Estimated 2005
Assumption Synergies
--------------------------------------------------------------------------------
Reduced SAC Standardization of set-top boxes $900-1,200
Increased production volumes
$125 / Gross add (blended)
Reduced Churn 0.3% reduction 750-850
Increased services and higher
customer loyalty
Reduced Programming Costs 5% cost reduction in 2002 600-700
Additional 5% reduction thereafter
Reduced G&A Elimination of duplicative overhead 400-450
--------------------------------------------------------------------------------
Subtotal - Cost Synergies $2,650-$3,200*
Note: Excludes approximately $75-125 million of CapEx synergies.
Estimate of Potential
Revenue Synergies
($ in Millions)
Results
------------------- Estimated 2005
Assumption Subs ARPU Churn Synergies
--------------------------------------------------------------------------------------------
Advertising Incremental revenue Up Up Down $900-$1,000
Interactive o $30 / Year by 2005
Local Service Approx. 60 new markets Up Up Down 700-800
$5.99 / month
Digital Divide Offer broadband to more areas Up Up Down 250-300
ARPU from $70 down to $55
VOD / PPV Offer more content Up Up Down 75-125
Additional 0.5 buy / month
$3.99 / buy
HDTV More content, $10 / month -- Up Down 50-100
--------------------------------------------------------------------------------------------
Subtotal - Revenue Synergies $1,975-$2,325*
--------------------------------------------------------------------------------------------
Note: Excludes approximately $625 million of cost to swap boxes, which is
non-recurring.
Pro Forma Leverage
Total Debt Basic Subs Total Debt /
($M) (M) Subscriber
---------- ---------- ------------
AT&T $17,202 15.1 $1,139
Comcast 11,699 8.3 1,410
Charter 15,571 6.9 2,243
Cox 9,114 6.2 1,478
Adelphia 13,061 5.7 2,291
Cablevision 7,667 3.0 2,556
------------
Average $1,853
EchoStar / Hughes $700-800
Note: Total debt includes convertible notes. All statistics are as of June 30,
2001. Subscribers are pro forma for all announced swaps. AT&T, Adelphia
and Cablevision debt per Wall Street estimates.
EchoStar / Hughes total debt per subscriber estimate is as of 9/30/02.
Road Map to Completion
Proposed Process Expected Timing
------------------------------------- ---------------
o Execution of Definitive Agreements Immediate
o GM and GMH Shareholders Meeting 4-6 Months
o Receive Regulatory Clearances 9-12 Months
- DOJ, FCC
o Close Transaction 9-12 Months
A Powerful Combination
Hughes EchoStar
o 100% digital nationwide platform with more than 16.7 million subscribers
(including 14.9 million owned-and-operated)
o Creates stronger competitor to large, U.S. cable and broadband
providers
o 100 million U.S. households offer powerful growth opportunity
o Leverages already compelling DBS economics
o Substantial synergy opportunities--both costs and revenues
o Superior management team with proven success
In connection with the proposed transactions, General Motors, Hughes and
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, and Hughes, and
certain of its 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 about the
directors and executive officers of GM and their ownership of GM stock is set
forth in the proxy statement for GM's 2001 annual meeting of shareholders.
Participants in GM's solicitation may also be deemed to include the following
persons whose interests in GM are not described in the proxy statement for GM 's
2001 annual meeting:
John M. Devine Vice Chairman and CFO, General Motors
Jack A. Shaw Chief Executive Officer, Hughes
Roxanne S. Austin Executive VP, Hughes; President and COO, DIRECTV
Eddy W. Hartenstein Senior Executive VP, Hughes; Chairman, DIRECTV
Michael J. Gaines Corporate VP and CFO, Hughes
Mr. Devine beneficially owns 139,204.80 GM $1-2/3 shares and 27,177 GM
Class H shares. Mr. Shaw beneficially owns 3,604 GM $1-2/3 shares and 1,415,915
GM Class H shares. Ms. Austin beneficially owns 2,804 GM $1-2/3 shares and
860,454 GM Class H shares. Mr. Hartenstein beneficially owns 2,622 GM $1-2/3
shares and 1,138,899 GM Class H shares. Mr. Gaines beneficially owns 337 GM
$1-2/3 shares and 165,329 GM Class H shares. The above ownership information
includes shares that are purchasable under options that are exercisable within
60 days of October 15,2001. In addition, Mr. Devine holds options to acquire
shares of GM $1-2/3 common stock that are not exercisable within 60 days of
October 15, 2001, and each of Mr. Shaw, Ms. Austin, Mr. Hartenstein and Mr.
Gaines holds options to acquire shares of GM Class H common stock that are not
exercisable within 60 days of October 15, 2001.
Each of Mr. Shaw, Ms. Austin, Mr. Hartenstein and Mr. Gaines has a
severance agreement with Hughes that provides for severance in the event of an
involuntary termination after a change in control, and each also has a retention
agreement that provides for certain payments in the event of a change in
control.
EchoStar and certain of its executive officers may be deemed to be
"participants" in GM's solicitation of consents from the holders of GM $1-2/3
and GM Class H shares in connection with the proposed transactions. Information
about the executive officers of EchoStar is set forth in the proxy statement for
EchoStar's 2001 annual meeting of shareholders. As of Oct. 28, 2001, EchoStar
held approximately 1,000 shares of GM $1-2/3 common stock and 185,000 shares of
GM Class H common stock. Mr. Ergen beneficially owns approximately 1,000 shares
of GM $1-2/3 common stock and approximately 10,000 of GM Class H common stock.
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 filing 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
General Motors Corp. ("GM"), EchoStar Communications Corporation ("EchoStar"),
Hughes Electronics Corp. ("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 filing.