Hispanic media giant Univision will be a major supplier of content when satellite operator DirecTV DTV.O launches an Internet-delivered service aimed at a Hispanic audience, according to two people with knowledge of the agreement.
Univision's content would be a crucial offering for DirecTV's online service, which is expected to launch later this year. It would also help the satellite operator to counter smaller rival Dish Network Corp (DISH.O), which is creating a multichannel Internet TV service that would be a cheaper alternative to traditional cable and satellite services.
In addition to Univision, DirecTV is talking with other Spanish language media companies, according to the two people, who are not authorized to speak publicly.
The Hispanic service would be the first of a series of lower-priced niche online channels CEO Mike White has said the satellite provider would launch.
White had previously discussed the possibility of an Internet channel aimed at Latinos, but neither the timing nor the fact that Univision had agreed to provide content for the service had previously been revealed.
Both the multichannel Dish offering and the more targeted DirecTV service are aimed at potential subscribers for whom traditional satellite service is too expensive.
The lure of a Hispanic channel is the thriving Spanish-language market that is generally younger and more likely to bypass cable or satellite to go online for entertainment, said Macquarie Research analyst Amy Yong, who covers DirecTV.
"This would serve the millennials," she said.
DirecTV, which has accepted a $48.5 billion takeover offer from AT&T Inc (T.N), secured Internet rights to Univision content as part of a previously disclosed agreement signed in March 2013.
The companies at that time did not specify that the agreement - which included the rights to its flagship Univision broadcast network, its 62 local TV stations, cable channel Galavision and the sports cable channel Univision Deportes Network - also allowed the satellite provider to use the programming in an over-the-top service.
DirecTV's planned online service, to be called YaVeo, joins a growing number of companies signing deals with media companies to offer content for new online, or over-the-top, services. Viacom and Sony announced on Sept. 10 an agreement for Viacom's 22 cable channels, including MTV and Nickelodeon, to be offered online through Sony Internet-connected devices.
Verizon Communications Inc (VZ.N) CEO Lowell McAdam said on Thursday that the telecoms provider plans to launch an Internet-based television service in the first half of 2015.
Dish plans to offer a service by the end of the year, Dish Chairman Charlie Ergen told analysts during an August 6 earnings call. The company has signed deals with Disney and A&E Networks to provide ESPN, the Disney Channel and Lifetime, among others.
Univision spokeswoman Monica Talan and DirecTV spokesman Robert Mercer had no comment.
The plan to name the service YaVeo was previously reported by Gigaom.
(Reporting By Ronald Grover; editing by Gunna Dickson)