DirecTV`s increased stake in Sky Brasil "neutral and natural"

DirecTV’s increased stake in Sky Brasil "neutral and
natural"
Friday, 14th January 2011 by Joe Rowley
Souza, Cescon, Barrieu & Flesch Advogados and Debevoise & Plimpton LLP have advised Globo
Comunicação e Participações, or Globo, in a cash for stock transaction with California-based digital
satellite television company DirecTV, worth US$604.8 million.
DirecTV was advised by Weil, Gotshal & Manges LLP, with Koury Lopes Advogados giving counsel to
subscription TV company Sky Brasil.
Announced on 16 December, the transaction sees DirecTV's stake in Sky Brasil increase to just under 93 per
cent through its purchase of an additional 18.9 per cent from Globo, the Brazilian media conglomerate.
Globo retains the remaining 7 per cent in Sky Brasil and will continue to provide it with programming under preexisting agreements.
DirecTV was notified of Globo's intention to exchange its shares in June last year.
Whilst all four firms declined to comment on specific details of the negotiations, a spokesman from DirecTV could
confirm that the deal was enabled by an exchange agreement negotiated between Globo and other equity
holders of Sky Brasil in 2004.
Under the agreement, Globo retains the right to exchange all of its remaining equity interests in Sky Brasil until
January 2014.
As previously reported by Latin Lawyer, the agreement was one in a series of separate transactions stretching
over two years that saw DirecTV acquire a 74 per cent stake in Sky Brasil in 2006.
With the merged company enjoying a 95 per cent share of the satellite-TV market, the deal was eventually
cleared by Brazil's telecoms regulator in 2006, although conditions were imposed to stop the merged company
from maintaining exclusive rights to premium content.
According to Cristianne Saccab Zarzur, a partner at Pinheiro Neto Advogados who advised Sky in the original
deal, conditions imposed in 2006 mean that the latest acquisition of stock by DirecTV "should not generate any
type of regulatory concern" within the sector.
"Considering that DIRECTV already holds a majority shareholding in Sky prior to this acquisition, the deal will not
significantly affect the sector and should be seen as confirmation of Globo's intent to focus its activities on
content production," she says.
"It is an important deal in the sense that it represents the consolidation of an important pay TV player in Brazil
under the control of DirecTV, but given that the deal does not change the current competitive structure of the pay
TV market, reaction to its announcement was largely neutral and natural".
Counsel to Globo
• In-house counsel - Gabriela Tavares and Mariane Medeiros
• Souza, Cescon, Barrieu & Flesch Advogados
Partner Maria Cristina Cescon and associates Fernanda Bastos and Octavio Amaral
• Debevoise & Plimpton LLP
Partner Michael Gillespie and associate Matthew Leonard
Counsel to Sky Brasil
• In-house counsel - Ricardo Lagreca and Cynthia Valle
• Koury Lopes Advogados
Partners Henrique Lopes, Melissa Kano and Tania Liberman and associate Bruno Prata
Counsel to DirecTV
• In-house counsel - Michael Hartman
• Weil, Gotshal & Manges LLP
Partner Michael Lubowitz and associates Arman Kuyumjian and Ramon Mercedes
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