NEW YORK (CNNfn) - Subscribers to the DirecTV-USSB satellite broadcasting services are going to get more choices and simplified - but not increased - billing as a result of the merger agreement announced Monday between their parent companies.
Under terms of the deal, Hughes Electronics Corp., a subsidiary of General Motors Corp. and the operator of DirecTV, is acquiring United States Satellite Broadcasting Company for about $1.3 billion. The transaction offers about $38 a share in cash or stock to USSB shareholders - provided that not more than 70% of the total payout be in the form of GM Hughes stock.
The two companies already have a joint marketing arrangement, with DirecTV providing 185 primarily basic channels and USSB offering 25 channels of premium entertainment from Time Warner's Home Box Office and Viacom's Showtime. The new arrangement will combine the offerings into one 210-channel service.
"Now, because they're separate services, consumers have to pay two bills and make two calls to customer service," said Bob Marsocci, a DirecTV spokesman. "Now, they'll pay just one bill and make one call to customer service."
While DirecTV expects to increase per-customer revenue by about $12-$12.50 a month, it will not come as a result of a rate increase among customers, Marsocci said. He said the revenue will be generated from the existing USSB service, which will remain optional and not part of an increased DirecTV basic price, according to the spokesman.
Marsocci said the transaction would boost DirecTV's annual revenue by between $800 million and $900 million in the first full year after the merger closes. Currently, the satellite operator has annual revenue of about $1.2 billion.
The DirecTV-USSB package is the top satellite TV service in the U.S., with approximately 4.3 million subscribers. Its primary competitors are PrimeStar, a venture of several major communications companies, which has about 2.3 million subscribers, and EchoStar Communications' (DISH) Dish Network, with about 1.8 million subscribers.
GM Hughes shares were down 1-1/16 to 37-1/16 in Monday afternoon trading on the New York Stock Exchange. USSB shares were up 2-7/8 to 12-1/2 in Nasdaq trading.