Under the agreement, DirecTV Latin America will have exclusive broadcasting, radio and closed circuit television rights in Argentina, Chile, Colombia, Mexico, Uruguay and Venezuela for the World Cup tournament, one of the most widely watched sports events in the world.
The satellite broadcaster won the rights amid heavy bidding from other major Latin American rivals, according to ISL Worldwide, a marketing unit of ISMM Group that licensed the rights on behalf of Federation Internationale de Football Association (FIFA). Executives declined to name the other bidders.
“Prior to today, these premier sports properties were the exclusive domain of terrestrial broadcasters,” Michael Smith, chief executive of Hughes Electronics Corp, said in a conference call with reporters, referring to conventional cable and broadcast networks.
“This deal marks a coming of age for DirecTV’s service and our Latin American viewers, he said.
Hughes owns DirecTV and a 74 percent stake in DirecTV Latin America.
Kevin McGrath, chairman of DirecTV Latin America said he expected the deal to be profitable for the company, although he declined to make any earnings or revenue projections.
“We’ve got several revenue streams as a result of this deal,” he told Reuters in an interview. “We will be able to resell broadcast rights. We’ll be able to grow our subscriber base. We’ll have radio and closed circuit rights and we expect advertising revenue.”
DirecTV plans to resell rights to broadcasters for the opening, semi-final and final matches for the two tournaments. It will also resell rights for national team matches for each of the home countries.
McGrath said the events planned for resale are equivalent to what local broadcasters had covered in previous years.
“This is a bigger deal than the National Football League is in the U.S.,” said Gustavo Cisneros, chief executive of Venezuela’s Cisneros Group and co-owner of DirecTV Latin America. “Soccer is the ultimate experience that every Latin American child wants to have.”
Virtually every major outlet in Latin America bid for the rights for the tournaments, said David Schiller, managing director of ISL Television.
“It wasn’t just the money,” said Schiller, explaining why the group picked DirecTV. “There were few parties that shared our vision for the event. DirecTV was one of them. No one offered a greater choice to customers in the market and provided the range of services that DirecTV offered.”
McGrath said the company would offer interactive features and a variety of language options, in addition to providing all 32 matches in each tournament.
The 2002 World Cup is being held in Korea and Japan beginning in Seoul, South Korea, on May 31, 2002, and ending in Yokohama, Japan, on June 30. The 2006 World Cup is slated to take place in Germany.
The deal also covers the rights to the biennial Under-17 World Championships, World Youth Championships and Confederations Cup through 2005, plus the 2003 Women’s World Cup.
DirecTV currently has 11 million subscribers, including 1.2 million in Latin America.
Hughes CEO Smith meanwhile declined to comment on the status of negotiations to sell DirecTV, other than to confirm that talks were taking place with several companies. “We hope to make an announcement in the not-too-distant future,” he said.
Rupert Murdoch, chief executive of News Corp., has made no secret of his interest in the satellite broadcaster.
Hughes shares were trading at $24.85, up 5 percent or $1.20, on the New York Stock Exchange. Shares reached a high of $45.50 in March and a low of $21.60 in late last month.