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NEWS MONDAY 3rd - MONDAY 10th December 2001
Scroll down page for news - latest first
Friday
7th to Monday 10th December
FCC
favours Time Warner
NBC
gets more opposition
Murdoch
seek full control of Kirch
Ganzi,
Hearst's new CEO
Malone's
presence in Europe
WSNet/AT&T
HITS deal
RTL
signals weak advertising
Scopus
fights DTV fraud
Stop
to Italian merger
FCC favours Time Warner
Time Warner Cable's analogue won't be required to carry electronic program guide material embedded in analogue TV signals from Gemstar-TV Guide as part of its must-carry obligations, ruled the US Federal Communications Commission.
Time Warner Cable filed a petition with the FCC seeking a ruling whether or not the Guide Plus material is entitled to mandatory carriage under the FCC rules.
This became an issue in March 2000 when Gemstar accused Time Warner of illegally stripping the EPG on nine cable systems in eight states. Time Warner subsequently reversed its decision to give the FCC time to settle the dispute.
So far Gemstar, developer of Guide Plus, has entered into data carriage agreements with local broadcasters because without the programming updates, the guide EPG will not function.
Guide Plus is a proprietary electronic program guide that is built into TVs and VCRs manufactured by companies that have a licensing agreement with Gemstar. The data for updating the program listings is sent through the VBI (vertical blanking interval) of the signal of analogue over-the-air broadcast stations.
Time Warner said EPG carriage should be the outcome of private negotiations between the companies.
The FCC warned that its decision was limited to the case presented in the dispute between Time Warner and Gemstar and that it's decision did not allow Time Warner license to eliminate any EPG service provided to cable subscribers through the local TV signals.
'Gemstar uses a particular analog technology and video channels for delivery of its EPG material, and the record in this proceeding is limited to those facts,' the FCC said.
NBC gets more opposition
On Tuesday (04/12/01) US-based Paxson began an arbitration process seeking to block NBC's pending acquisition of Spanish broadcaster Telemundo or annul its agreement with NBC that gave NBC a 32% stake in Paxson and an option to increase it to a controlling 49% interest.
Paxson owns 65 TV stations and says that if NBC own Telemundo and then tried to buy the rest of Paxson, it would run into regulatory hurdles and this violates their agreement. NBC acquired its stake in Paxson in 1999 for $415 million and has an option until 2009 to buy the rest of the company. NBC provides programming for the PAX network and in many markets handles ad sales for Paxson's local TV stations.
If the arbitrator agrees to allow Paxson out of its 1999 investment agreement with NBC, MGM and Disney are among the companies being circulated as potential buyers. Alex Yemenidjian MGM Chairman and CEO said, "Paxson is an asset that would fit very well with MGM under the right circumstances and at the right price."
The National Latino Media Council also intervene and announced that it has petitioned the FCC to deny approval of the merger. Esteban Torres NLMC Chairman said, "We have come to the conclusion that the merger between NBC and Telemundo is not in the best interest of Latinos and does not serve the public interest."
The NBC responded the NLMC's allegations saying that its planned acquisition of Telemundo has received wide-spread support within the Latino community and regretted that the Council took this action without first discussing their concerns with them.
Meanwhile, Keith Turner and Ed Wilson, the remaining two NBC employees on the Paxson board, resigned Tuesday afternoon. Brandon Burgess NBC-nominated Paxson board member, had already resigned on November 2.
Murdoch seek full control of Kirch
Kirch Gruppe, the German media giant could be fully taken over by media mogul Rupert Murdoch if he uses his multi-billion dollar option on its pay-TV business to trigger a deal for control.
Murdoch is believed to have discussed the possibility of a full takeover with his advisers. If News Corporation takes over Kirch, the move will make Murdoch the most powerful broadcaster in Europe. It would transform not only the German media, but also the European broadcasting landscape, putting a non-European in charge of a leading terrestrial TV business for the first time. This could have potential political complications.
The group is Germany's largest commercial TV broadcaster, media rights owner and pay-TV operator. It also reported E 4.4bilion debt on its books in October, which would delay the take over at least until October 1 2002 when the put option can be excercised.
But the FT reported that executives at News Corporation are internally debating the possibility of a deal that goes far beyond expectations, "Rupert has really got the hots for the whole of Kirch right now," said one person who knows him well.
But some speculate that he might just be looking for a big deal after a year of disappointing talks with US satellite broadcaster Direct TV that may result in his competitors, EchoStar, getting the deal. The decision about Direct TV is now in hands of the FCC.
British Sky Broadcasting, Murdoch's UK satellite broadcasting has an option to require Leo Kirch, the 73-year-old mogul who built the german business, to buy Murdoch's 22 per cent stake in Premiere, the German group's pay-TV business. The option, which Kirch would be required to pay out in cash, could be worth roughly E2 billion ($1.8 billion), according to people close to the Kirch-Murdoch relationship. News Corp executives calculate that, if Murdoch exercises the option, the debt-laden Kirch would then struggle to pay , weakening his financial position.
Meanwhile, John Malone, the US cable pioneer and the largest investor in News Corp behind Murdoch, is looking to make his own entry into Germany, and has been sounding out Kirch about buying Murdoch's 22 per cent stake in Premiere.
Ganzi, Hearst's new CEO
Frank A. Bennack Jr, Hearst Corp. President and Chief Executive Officer, will step down next spring after 23 years on the job. In his place Victor F. Ganzi will take charge of the US media giant.
Ganzi was named executive vice president in 1997 and chief operating officer one year later and this move is just part of a succession plan.
Bennack will retire May 31 and will assume the position of chairman of the closely held company's executive committee and vice chairman of its board, both newly created positions. He has worked at Hearst for more than 40 years and served as Chief Executive longer than anyone except founder William Randolph Hearst. He will continue as a trustee of the Hearst Family Trust.
Hearst is the majority owner of Hearst-Argyle Television Inc., which owns 28 stations, and has interests in a number of other media assets, including ESPN Inc. and the A&E cable channel. Among Hearst publications are magazines Good Housekeeping and The Oprah Magazine, O. and the newspapers, the San Francisco Chronicle and Houston Chronicle.
While Hearst did not provide any financial information, it has been hurt by the reduction in advertising revenues like the rest of the industry and estimates by Hoover's Online estimate the company sales for the year 2000 at around $3.4 billion. Hearst corporation representatives made no comment.
Ganzi, a native New Yorker was an attorney prior to joining Hearst in 1990 where he has held a variety of executive level positions.
Malone's presence in Europe
The alliance between Canal Plus, French media group Vivendi Universal's pay-television subsidiary and Liberty Media, the conglomerate controlled by John Malone, the US cable pioneer could be moving forward.
Vivendi's Chief Executive Jean-Marie Messier, told a media conference in New York, "I think the best strategic outcome in Europe today would be to find a business alliance between Canal Plus and John Malone. Those two groups and sets of assets are complementary."
Although Vivendi confirmed Messier's comments, there is nothing concrete. Vivendi took full control of Canal Plus following its $34 billion purchase of Seagram, but has found it difficult to raise profitability at the pay-TV unit, partly because its merger and alliance plans have raised antitrust concerns in countries such as Italy.
Malone is trying to piece together a sprawling set of media and communications assets in Europe already and Liberty Media controls UPC, Europe's largest cable operator.
He had also held talks with Rupert Murdoch with views to buy Murdoch's 22 per cent stake in Kirch PayTV, Germany's largest TV broadcaster and is hoping to complete the purchase of cable assets from Deutsche Telekom and Deutsche Bank.
Liberty and Canal Plus already share some minor interests in Europe. Last month, Canal Plus and UPC won regulatory approval to set up a common platform in Poland. The two groups are also partners in Multithematique, which edits content for TV channels.
WSNet/AT&T HITS deal
Unwired areas in the Austin area are to have access to digital cable packages after WSNet signed an agreement with AT&T Broadband's Headend In The Sky (HITS), enabling the Texas-based company to service franchise cable systems in these areas.
Stuart Lefkowitz Chief Operating Officer at WSNet said, "Prior to this agreement, cable operators could not cost-effectively service unwired areas in their region," and added, "Now WSNet and AT&T HITS are working together to help cable operators offer a competitively-priced digital satellite programming package to these homes, overcoming limitations associated with traditionally unwired areas."
Paul Bambei, Vice President of Operations at AT&T HITS said, "We are expanding our longstanding relationship with WSNet because our collective common goal is to is to reach a large number of households whose choices have been limited until now. By cooperatively serving unwired areas through cable operators, AT&T HITS and WSNet can now provide previously hard-to-serve markets more channels at affordable prices."
Known in Satellite TV circles or its multiple-dwelling unit business, WSNet can provide analog and digital satellite-delivered programming solutions to both private and franchise cable systems, for up to 200 video, movie, music and pay-per-view channels.
RTL signals weak advertising
Predicting its full year earnings to fall more than a third below last year's levels, RTL Group, the pan-European TV broadcaster predicted the major reduction in the advertising market to carry into the first six months of the new year.
According to Didier Bellens, the company's chief executive, advertising markets in Europe had continued to deteriorate since September when the company announced the highest ever interim loss by a European media company
"We now expect that the television advertising market as a whole in Germany, France and the UK will be down, year-on-year, by up to 10 per cent in the respective markets," he said.
RTL earnings before interest, tax and amortisation before restructuring and new business investment for 2001 would be down about 35-40 per cent from E 555 million last year. They are anticipating restructuring costs of E40m and new business investments of about E28m.
Bellens said that the company continued to perform well in relation to its competitors. He pointed to Germany and France, which last year accounted for 70 per cent of RTL Group's total TV revenue, where he said it had outperformed, both in terms of audience and advertising share.
"The relative strength of our performance demonstrates the competitive advantages of our unique pan-European reach and our integrated approach," he said.
The performance of RTL suggests an accelerating deterioration in the continental advertising market. The company said that it couldn’t forecast its outlook with any certainty because of poor visibility. But it warned that "based on our forward bookings thus far, we expect that advertising in the first half of 2002 will show continued weakness."
In its last trading update in July, RTL said its ebita would only decline by 10-15 per cent this year.
RTL is controlled by Bertelsmann, the German media giant and Pearson, owner of the Financial Times who has a 22 percent ownership in the company.
Scopus fights DTV fraud
Scopus, a supplier of digital platforms for the worldwide broadcast of the 2002 World Cup Games in Korea, announced this week that it is fighting digital satellite TV distribution fraud with the deployment of SatLock.
SatLock is an Integrated Security System, in its Integrated Receiver Decoder (IRD) product line. Extel Engineering of Buenos Aires worked with Scopus in developing and implementing the SatLock solution.
Satellite TV distribution fraud is growing world-wide as some broadcasters move IRDs out of facilities mandated by contractual obligation. With IRDs working in a different place, often with more subscribers, these broadcasters pay less to the vendor per subscriber than originally contracted.
To fight this fraudulent phenomenon perpetrated by some broadcasters operating IRDs at different sites from those originally contracted, Scopus and Extel have developed SatLock. SatLock combines Scopus' IRD and Extel's GPS Based Box and specialised software accurate to approximately 3/100 of a minute in both longitude and latitude. In other words, if a broadcaster moves the IRD more than 50 meters from its original position, the IRD ceases operations.
Stop to Italian merger
Both the Italian Antitrust and the Communication Authority were opposed to the merger between Telepiu and Stream. The Antitrust communicated on Wednesday (5/12/01) its not binding response, considering the merger dangerous for concurrency and pluralism.
Some expected a positive reaction from the Communication Authority. Vincenzo Vita from the left side of the Italian Parliament said, "I still trust the good faith of the Authority, but every initiative seems to be condemned if it threatens RAI or Mediaset which is owned by President Berlusconi. Maybe a single payTV, with more money and subscribers would interfere with the balance of the TV system."
Friday 7th December
OMNE
launch local TV networks
Levin leaving AOL/TW
Quiero's
takeover options
DT considers Liberty alternatives
Cuts,
cups and cash at Carlton
Broadcasters
get into texting
Norway
enters broadband arena
ExpressVu
seeks grey market ruling
WML
used for TV
Fighting
German pirates
Sky
TV Brazil interactive
Edgar
Bronfman to quit Vivendi
Nick
Jr responds to BBC kids launch
OMNE launch local TV networks
Two local TV networks are to be launched in South West Scotland and North West England by OMNE Communications. The cable start-up firm formed by ex-NTL and BT employees, is preparing to launch the TV networks after being awarded a non-exclusive local delivery service licence by the UK Independent Television Commission.
With the ITC licence OMNE will be able to provide digital services via telephone networks and broadband cable. In theory this means the company could provide multichannel TV and related services right across the UK.
The development in the two regions is part of a three-year plan, for which OMNE has secured £265 million of private funding. It will offer voice, vision and data services in bundled residential and business packages.
Levin leaving AOL/TW
Gerald Levin
has surprised the US media industry with the announcement that he is to
step down from his post of CEO of the world's largest media company, AOL
Time Warner.
He will retire at the company's board meeting in May 2002 following a
six-month transition to his successor Richard Parsons, currently co-Chief
Operating officer. Steve Case who headed AOL will remain
as Chairman,
while
the company's other co-COO, Robert Pittman, will become the sole COO.
AOL Time Warner was formed earlier this year after the $106 billion combination
of America Online and Time Warner.
Levin, 62, said he had been considering the move for the past year. He
revealed that he had put a after his son was murdered in New York, which
allowed him to bow out whenever he saw fit.
"I felt that once my work was completed and I was satisfied with the company's
direction and progress, I'd invoke that provision (a clause put in his
contract in 1997 allowing him to quit when he saw fit, introduced following
his son's murder) and turn my full energies to the moral and social issues
I feel so passionate about. That time has arrived," he said.
However, the move came as a surprise to the industry, and in a recent
New Yorker magazine interview Levin had said he had no plans to retire
and that his working life was "the best it has ever been."
Levin and Case said the new management team will maintain the Company's
current strategic focus on transforming the media and communications industries
by creating new products and services for consumers around the world.
The markets approved the succession plans and AOL Time Warner shares were
up 81 cents at $35.56 on the day (5/12/01). "There is no shift in strategy,''
Parsons said.
According to The New York Post the departure period will see AOL Time
Warner undergo a serious restructuring that could lead to the loss of
1,500 jobs.
Quiero's takeover options
Pay digital terrestrial TV (DTTV) in Spain is going through difficult times after the third most important DTTV company Quiero, learned that one of its main share holders wants to quit.
Spanish holding company Auna which owns 49 per cent of Quiero TV is considering selling its shares. The two most likely candidates to buy are diversified French group Bouygues and US satellite company Echostar.
The other two main companies in the sector, Canal Satelite Digital, controlled by Prisa and Via Digital, Telefonica's digital satellite TV will be affected by what ever happens to Quiero.
Between the possible movements there is the possibility of Canal Satellite merging with Vivendi. Also the Vivendi group could buy Prisa's 83 per cent of Canal Satellite Digital which would give way for a merger with Via Digital.
All these options are on hold until Auna makes a decision on whether to sell. So far its main associates - Endesa Spanish electricity companies and Union Fenosa, Italian telecoms company Telecom Italia and Spanish bank Santander Central Hispano - have decided they want to sell Quiero before December 15 or start to liquidate the company.
DT considers Liberty alternatives
Alternative bidders would be sought by German telecommunications group Deutsche Telekom if Liberty Media failed to conclude a renegotiation of its bid for DT's 20 million subscriber cable networks said DT's Chief Executive Ron Sommer.
If the German Cartel Office imposes severe conditions on the transaction then Liberty is expected to ask DT for a lower price that than the E5.5 billion which it bid in September.
DT and Liberty's contract is believed to include an exit clause allowing DT to consider other offers should Liberty wish to reconsider the price. The Cartel Office is believed to want Liberty to launch telephone and broadband internet services through its network earlier than planned. Other conditions for approval include a commitment by Liberty to fixed investment milestones which could require an upfront investment of up to $2bn.
"If somebody came and bid a higher price, we would get into negotiations very quickly," said Sommer.
Cuts, cups and cash at Carlton
On Wednesday (05/12/01) Carlton Communications announced a further 100 job losses for next year added to the 300 already axed and appeared to rule out any deal with BSkyB to reduce the costs of its loss-making joint venture ITV Digital.
It is understood that Granada, Carlton's partner in ITV Digital, is keen to sign a deal to hand over the management of the ITV Digital 1.2 million subscribers to its rival, Rupert Murdoch's BSkyB. David Chance, a former Sky deputy Chief Executive and now a Granada Director, has been charged with forging this agreement.
But Gerry Murphy, Carlton's Chief Executive said, "For Sky to manage the subscribers would be problematic from a regulatory perspective."
However, Murphy added that Sky would continue to have a trading arrangement with ITV Digital, as the service carries Sky channels. He said a new relationship with Sky might emerge if the so called ¬digital coalition’ is carried out for the promotion of digital television.
ITV Digital hopes to dramatically reduce its subscriber acquisition costs by convincing customers to pay for a set-top box, which enables a conventional TV to receive a digital signal. The business currently provides a subsidy so the boxes are free to consumers.
The subject was changed when Carlton expressed its hopes for the World Cup soccer tournament scoring high for ITV. The company and its partner Granada have blamed the decline of advertising in part on lack of major sporting events since last year's Olympics.
Negotiations resulted in the BBC and ITV having to pay a combined £160 million for the UK rights for both the 2002 and 2006 finals. Carlton's share of the bill is about £40 million.
"Whichever way you look at it, the World Cup is going to be a major event for free-to-air television," said Gerry Murphy, Carlton's Chief Executive. "I have been out in the marketplace, talking to advertisers and sponsors, and I can tell you there is already a lot of interest."
Viewing figures will be hit by the timetable for the 2002 competition being less convenient with games in Korea and Japan being screened live between 6.30am and midday, with highlights repeated in the evening.
Carlton's focus on the football tournament distracted investors on Wednesday (05/12/01) from preliminary results showing a 40 pence fall in headline profits from £192.6 million to £118.3 million and the continuing costs run up by its investment in ITV Digital.
But once the £273 million net costs on digital investments were factored in, the company lost £232 million before tax. Total turnover was up five pence at just above £1 billion as ITV suffered from a 13 pence fall in like-for-like advertising revenue over the year.
Broadcasters get into texting
Broadcast text specialist Avoca Communications in the UK, said that by February it would operate a service capable of dealing with the high volumes of inbound messages generated by national TV and radio 'text-ins' across all four UK mobile phone networks.
This week a system capable of operating premium rate services has been unveiled.
Historically the huge responses generated by some broadcasts have caused problems - last year the response to one episode of ITV's Popstars crashed Vodaphone's SMS service.
Although the idea of offering text messaging services to viewers has been around for a while amongst broadcasters, many have been put off because campaigns have typically been limited to one network - as with Big Brother and BT Cellnet.
Now direct server connections to all four networks will enable Avoca to handle the increased levels of traffic.
Norway enters broadband arena
The much-talked about Nordic 'broadband craze had previously been concentrated on Sweden, with its various 'broadband Messiahs' like Jonas Birgersson and his infamous Framtidsfabriken, Framfab, and sister company Bredbandsbolaget, the Broadband Company, B2. Now, along with other vociferous broadband advocates and builders Utfors also faces difficult financial times.
But in Norway broadband appears to be finally getting off the ground. An enthusiastic report was sent out some days ago from TV2, the country's biggest private national station, which is about to celebrate its 10th anniversary next autumn. The station claims that its broadband service, frihet.tv2.no (frihet means freedom) has just registered its 200,000th user.
"We have certainly experienced an explosive growth this autumn", says Gunnar Stavrum, editor-in-chief at TV2 Interaktiv. "More than half, ie over 110,000 of our users, have visited our site more than 10 times, and some 25,000 users have logged in to us more than 100 times. In the last year some 1.9 million videos have been downloaded from our site."
About a year ago, last autumn, TV2 started investing actively and massively in its new web TV service. A new studio has been built right in the centre of Oslo at the prestigious main street Karl Johan. TV2 runs most of its traditional operations and political decision making from Bergen. Some of the content is recycled and adapted programming from the traditional TV2 schedules while other services are created specially for frihet.tv2.no.
Statistics from TV2 show that the most popular categories chosen by the site's users are news, sports and entertainment.
Using A 100 MB line from Swedish Utfors, Stavrum claims that on occasion some 15.000 users have been on line at the same programme site at the same time. Apart from using its own servers, then limiting the number of simultaneous users to some 200 'for maxiumum quality,' TV2 is now using a number of other additional broadband suppliers.
Stavrum and his team is now even looking at creating a 'premium service', "with more content and higher quality," for which Stavrum is aiming at charging its users. He is not yet ready to indicate what kind of services he and his colleagues have in mind, nor is he willing to reveal what price levels are planned.
"But one thing is clear: we had an aim to become the biggest producer of broadband content in this country. And we have now certainly achieved this."
ExpressVu seeks grey market ruling
DTH operator Bell ExpressVu appeared before the Supreme Court of Canada on December 4, in an attempt to pull the plug on grey market satellite TV.
ExpressVu estimates there may be as many one million grey market subs in Canada. ExpressVu itself has a million customers. The court battle is an attempt to reverse two lower court rulings in favour of a Maple Ridge, British Columbia-based company, Can-Am Satellites. Can-Am sells DirecTV or Dish receiving equipment and then provides accommodation addresses in the United States where Canadian subscribers are billed.
Can-Am has already bested two lower court battles to shut it down. ExpressVu will argue that the grey market infringes on content distribution and licensing agreements. The Canadian Alliance of Freedom of Information and Ideas has been granted intervener status and will argue that controlling information is a profound violation of freedom of expression.
WML used for TV
UK online local information provider UpMyStreet (www.upmystreet.com) has redesigned its service on Sky Active to make it the first of Sky's content partners to take advantage of new WML browser technology offered by the digital interactive TV service. This conversion enables UpMyStreet to deliver improved services to 14 million digital satellite viewers in 5,498,000 homes across the UK and Ireland says the company.
The WML browser technology enables UpMyStreet to offer various service improvements, including: Picture in Picture functionality, allowing Sky Active viewers to continue viewing while accessing the interactive service; multiple access points, providing direct access to specific services within UpMyStreet; as well as automatic postcode recognition and a faster response time.
Tony Blin-Stoyle, Managing Director of UpMyStreet commented, "Due to the robustness of our core platform, and the skills of our technology team, we have been able to lead the way in converting to the WML browser. Not only does the WML based technology provide an improved front end to Sky Active subscribers, it also allows us to easily develop new products and continually improve our services."
Tobin Ireland, Commercial Director, Sky Interactive added, "Working closely with UpMyStreet over the past months we've been able to develop this new platform which takes interactive television to the next generation. UpMyStreet's unique service perfectly illustrates that content can successfully be converted to the WML browser technology to offer users a superior service."
Fighting German pirates
In late November the German police searched houses and shops in several cities for illegal digital TV Smart Carts.
In many cases the authorities responded to information filed by the German digital platform Premiere World. As the company reported, more than 8,000 of these pirate cards were seized in all of Germany. Preparing the strike the local legal authorities were supported by Premiere World and a newly formed task force E-Security formed by its mother company, KirchGroup.
This task force is responsible for all steps by Kirch against digital piracy which is proving to be an increasingly serious problem for Kirch's digital ambitions. Already about two weeks prior to the legal action Premiere World changed the digital code of its legal smart cards in the middle of an important international soccer match closing out any illegal audience.
Also its legal audience, which would not have been aware of the incident, was informed about the step by a scrolled text on the bottom of the screen. Premiere World is controlled by Germany's KirchGroup. Its second largest shareholder with about 22 per cent is British BSkyB. By mid-year, Premiere World reported about 2.3 million digital subscribers.
Sky TV Brazil interactive
Net Sat, Latin America's largest provider of digital Direct-To-Home (DTH) satellite services - with over 698,000 subscribers - and provider of the Sky satellite TV service in Brazil, has launched an interactive TV offering for the platform.
Net Sat operates its service in Brazil under the SKY brand name and is owned by Organizacoes Globo, News Corporation and Liberty Media Corporation.
The service was implemented through the download via satellite of new interactive middleware from News Digital Systems direct to subscriber set-top boxes.
Edgar Bronfman to quit Vivendi
Edgar Bronfman, French media group Vivendi Universal's biggest shareholder, is to quit his executive duties, the company announced on Thursday (06/12/01).
Just a year ago Brofman completed the sale of Seagram, the Canadian group controlled by his family, to Vivendi for $34 billion, a move which has turned the group into Europe's largest media company and has given it a strong foothold in Hollywood through Universal Studios. Vivendi completed the purchase of Seagram in December 2001.
At the end of the first quarter he will resign as Executive Vice Chairman of Vivendi, although he will keep a seat on Vivendi's board and continue advising Jean-Marie Messier, Chief Executive.
Bronfman had been the head of Seagram and was put in charge of the music business of Vivendi Universal following the take over of his company - but clearly had no liking for subordinate posts.
Messier said he regrets Bronfman's decision, which he said was motivated by a desire to "return to the management of his personal and family interests."
Nick Jr responds to BBC kids launch
February will see a lot of action in the UK children's television market. The BBC has already announced the launch of two new kids channels and Nickelodeon is re-launching on 4 February 2002 a pre-school channel Nick Jr with a new look and new features. Fox Kids Europe will also launch a new schedule in February.
With interactivity as its central theme, Nick Jr will offer what it says is more engaging material set out in four programming blocks beyond the basic learning of the alphabet and counting.
Howard Litton, Nickelodeon Director of Programming said, "There is definitely an element of TV as babysitter here. This [schedule] is much more structured with an element of core shows making up the majority of the schedule." He added that mums found that the existing schedule was a lot 'bittier' and wanted a more predictable schedule with appointments to view."
The BBC is expected to launch its two children's services to air during the daytime hours of BBC Choice and BBC Knowledge.
Thursday 6th December
ITV/Sky
tie-up discussed
Cable guys fight it out for AT&T
Austar
in major cuts
New
Asian platform to launch
Eurochannel
extends reach
First
Ka-Band system using DVB-RCS
Irdeto/Canal+
patent settled
Dating
service in your remotes
EchoStar
chief Ergen under fire
AT&T
withdraws Excite bid
Paxson
sues GE's NBC
ITV/Sky tie-up discussed
The future of the UK's ITV Digital, the loss-making digital terrestrial pay-TV platform owned by Granada and Carlton Communications, may lie in a joint venture with its main competitor. Negotiations with satellite broadcaster BSkyB have already resulted on ITV Digital putting ITV1 and ITV2 on to BSkyB.
They are also talking about offering the ITV Sport service as an additional channel for Sky Sports subscribers.
ITV Digital digital could also form a coalition involving the BBC and Channels 4 and 5, telecoms operator BT and utilities firm Centrica.
On Tuesday (4/12/01) after Carlton showed that ITV Digital losses are still dragging down its bottom line with a reported pre-tax loss up from £26 million to £410 million in the year to September 30, Gerry Murphy, Carlton Chief Executive, spoke of, "more creative solutions" to ITV Digital's problems than closing it down. He added that the economies of converting a free-to-air digital viewer to pay-TV are already transformed.
"I don't see any scenario [for ITV Digital] that does not see Sky as a partner," said Murphy. "If you are in the pay-television business in this country you have to partner Sky."
Tony Ball, BSkyB Chief Executive, said earlier this week, "There might be an opportunity for Sky to participate in that free-to-air service with a couple of channels."
Analysts believe ITV Digital may also cut £70 million of costs each year by outsourcing its subscriber management requirements to Sky.
This has been one of the worst financial years for the largest ITV companies Carlton and Granada. A fall in annual advertising revenue of almost 13 per cent and the cost of investing in ITV Digital resulted in the companies having to take drastic solutions. Carlton is axing 400 jobs and Granada more than 1,000 to contain costs.
Apparently the restructure would achieve annual cost savings of £45 million, of which £15 million would come from a paring back of Internet activities.
Carlton Communications claims an extra £180 million needs to be invested into ITV Digital to reach break even by 2003 or 2004 - assuming it has 1.7 million subscribers by then.
For the time being it will try to generate more revenues from its 1.2 million existing subscribers by introducing higher-priced channel offerings.
Carlo Campomagnani, media analyst at CSFB, said, "ITV Digital was supposed to be a black hole but if it can stop giving away the set-top boxes, I am convinced it can make money."
But the question is if regulators would allow BSkyB to make a direct investment in the digital terrestrial platform, which is in the middle of restructuring to help stem its huge losses.
Carlton Interactive is expected to save £8m following its reorganisation, in which online games site Jamba was sold for £1.5m and sister site Popcorn was closed after its user base was sold to FilmFour.com for an undisclosed fee. The interactive division will now focus on the supply of content for programme web sites and online games.
Cable guys fight it out for AT&T
Microsoft has abandoned plans to make a cash investment of $4 billion to $5 billion directly in the US's AT&T Broadband, leaving rival US cablecos to fight out a bidding war for control. However, Microsoft is still covering all options may still have its own deal with AT&T in whom it invested $5billion three years ago - and appears to be supporting the two main contenders as well.
Microsoft is reported to have joined cableco Comcast' (in whom it has a shareholding) in its bid for AT&T's cable operations, rather than mount its own proposal - but is also believed to have given conditional backing to rival bidder Cox Communications. Cox Communications was expected to offer AT&T's chairman C Michael Armstrong a role in the management of the new cable operation. Either way Microsoft would hope to win leverage for deployment of its set top box software, and the cablecos are both happy to remove a competitor and pocket additional investment.
Microsoft clearly doesn't want its rival, the third cable third bidder - AOL Time Warner - to acquire AT&T's cable operations, which would lead to a merger of the two biggest US cable companies. Consequently Microsoft could make another offer itself if, during AT&T deliberations this week, AOL appeared likely to win. AT&T will consider proposals this week, prior to a board meeting scheduled for Saturday. Initially AT&T had hoped to pick a winner by December 31, but recent reports say the process may now take longer to complete.
An AOL Time Warner merger with AT&T Broadband's 14 million subscribers would give a combined total of about 27 million subscribers - a third of the US cable market - resulting in considerable antitrust scrutiny. AOL Time Warner already is the second-largest cable provider, with nearly 13 million subscribers, and if it won the bid it would greatly enhance its ability to dictate terms for the distribution of its own movies, music and other programming.
AOL Time Warner, led by old cable hand Chief Executive Gerald M Levin, would limit its acquisition to 49 per cent of AT&T Broadband for tax purposes, but would run the company. The combined cable operations would then be spun off into a publicly traded unit.
AT&T already owns 25.5 per cent of Time Warner Entertainment, the AOL Time Warner division that holds its cable operations. It has been suggested that AOL Time Warner' main motive might not be to acquire AT&T Broadband, but to open the door to negotiating a deal to buy AT&T's stake in Time Warner Entertainment. AOL Time Warner included a provision in its offer to buy AT&T's stake in Time Warner Entertainment separately should its bid for the entire unit fail.
Austar in major cuts
Troubled Australian pay TV provider Austar has sacked 400 staff, a quarter of the total, and closed 23 sales offices nationally as part of measures to refinance a $200 million loan before a December 31 deadline.
The moves, announced by Chief Executive John Porter, are designed to save $45 million a year and also involve the closure its Internet backbone, outsourcing the sales and installation processes and the closure of its microwave network, although it would continue to own the spectrum.
Porter said that the changes were designed to strengthen Austar and to build its market share beyond the current 450,000 total. Austar has been linked with number three ranked platform Optus in a merger that would link the former's rural and regional operations with the latter's metropolitan one.
However Porter said that the changes meant that there was no longer any need for Austar to join forces with another company. "We are a month away from parole, so there is no point in killing a guard to jump over the wall," he added.
Some analysts were downbeat about the announcement, saying that it has only delayed Austar's takeover, or its demise, until next year.
New Asian platform to launch
A new Hong Kong-based satellite TV content provider Communications Asia Network (CAN) says it will launch a seven-channel platform with the first two services starting in mid-2002.
The new service will carry programming in Mandarin and English, although Chairman and Chief Executive Peter de Krassel said that the advertising-driven service will use its footprint spanning from New Zealand to India to introduce other languages.
He added that CAN will be offered directly to cable operators to downlink at their headends to transmit directly to their viewers. Advertising revenue would be attracted by a rate card that was as low as 20 per cent of the cost of other cable and satellite TV channels, de Krassel claimed.
The channels are a mixture of information and educational programmes 100 per cent acquired by CAN and packaged with interstitial material to make them, "very exciting and interesting for general viewers," according to de Krassel, who added that the company would start original productions in two years.
The channels are genre-based and are titled Performance TV, Inspire TV, Shelter Channel, Harvest Channel, Navigate TV, Life TV and the Heritage Channel.
CAN will be transmitted by New Skies Satellites and the company's parent Intelsat has taken a 6.5 per cent stake in the $35 million venture; de Krassel said a Hollywood studio has a 13 per cent stake, although he did not disclose its name.
Eurochannel extends reach
Eurochannel, which broadcasts original language European programmes to Brazil with Portuguese subtitles, is to start a version with Spanish subitles for the Mexican market and later for Argentina. The new version will begin on January 21, from the Panamsat satellite.
Eurochannel originally began in 1994 and was acquired in November 2000 by Multithematiques, the international channel operator owned mainly by Canal Plus along with Lagardere, Liberty Media and Part'Com.
"The aim of Eurochannel is to provide South American viewers with a selection of the best European programmes. After Brazil it is logical to supply the channel to its Spanish speaking neighbours. We hope that the channel will attract a new public who appreciate a 'European Touch' to programming, and that the channel will be carried by the majority of cable and satellite operators," declared Bruno Thibaudau, Head of Multithematiques. The Spanish version will have its own programme schedules and on-screen branding. Both versions are based in Miami.
Earlier this year Multithematiques announced that developing its international activity was to be a priority and it is planning to launch channels to North America in the not too distant future. Eurochannel will undoubtedly be the first with more to follow.
First Ka-Band system using DVB-RCS
ND SatCom has designed and implemented the BBI Network Management System for what is believed to be the world's first Ka-Band system, based on the DVB-RCS standard.
ND SatCom has integrated and tested the different subsystems of the Astra BBI (Broadband Interactive) - network into a single Internet gateway at SES Astra headquarters in Betzdorf, Luxembourg.
The BBI system, based on the new international open standard DVB-RCS (Return Channel over Satellite), will enable end-users to have two-way broadband data communication from their own premises via standard low-cost Satellite Interactive Terminals. Users can contribute data and media-rich content at transmit rates of up to 2 Mbps via Astra 1H to the BBI hub in Luxemburg via satellite. The BBI system is capable of delivering up to 38 Mbps of IP data or content to Satellite Interactive Terminals.
The Astra multimedia-platform is suitable for high performance broadband interactive IP applications. This new technology allows SES Astra to serve the growing markets for high speed web access, high-quality IP video streaming and interactive video conferencing as well as standard IP-based requirements such as file transfers, e-mail, database management and broadband Internet access in Western and Central Europe.
Martin Halliwell, Director of Communications Technology and Member of the Management Committee of SES said, "This technology is extending the multimedia capabilities of our existing Astra-NET platform tremendously. Providing broadband access for business solutions, bringing broadband interactivity to cable head-ends and enabling remote surveillance of key industrial sites, are just a few services we will be able to offer through BBI.
"Our strength includes the overall system engineering and design, the development of the specific Control and Network Management Subsystems as well as the system verification and integration," adds Dr Gerhard Bommas, Director IP Networks of ND SatCom.
Irdeto/Canal+ patent settled
Irdeto Access Inc, a subsidiary of international subscriber platform and software solutions group MIH Limited, and Canal+ Technolgies have settled their patent-related disputes in the United States, the United Kingdom, and France, concerning the Canal+Technologies' digital Mediaguard conditional access system used in pay television systems.
Both parties say they are satisfied with the outcome. Under the settlement, whose terms are confidential, the parties have agreed to terminate their lawsuits and to pursue their respective business interests world-wide, without any admission by either party of wrongdoing.
Graham Kill, CEO of Irdeto Access Group, said, "We are pleased to have settled this matter by reaching a mutual satisfactory agreement. We are committed to continuing to generate patentable intellectual property through innovation."
Dating service in your remotes
Static, part of the US giant TV software company, Open TV, is launching a flirt TV channel, called Yo Yo initially in the UK. The channel will enable viewers to flirt, chat and play games with one another through their television sets.
The dating service powered by Static software will be broadcast by satellite operator Sky Digital but also hopes to be available on cable.
The users will be able to have a digital presentation of theirself on the TV screen. The software that enables this also allows other viewers to browse through the pictures of everyone who is watching at the time and interact with them through email, text messaging and the telephone, which will then be converted to text on screen.
The channel claims to be the first to integrate the TV with email and telephone technology. Chatting, dating, playing games against one another and participation in mass events all come in the same package. New viewers will be asked to create a profile, including a 30-second voicemail message and their personal details.
Static hopes to generate revenues through affiliate marketing partnerships and merchandising as well as premium-rate telephone lines. It has already launched the successful interactive games service, Playjam, in the US and also hopes to roll out Yo Yo across the world, allowing viewers in different countries to communicate with one another.
"An aggressive rollout strategy is already being pursued and we are in talks with a number of key broadcasters to take Yo Yo into new markets," said Jasper Smith, Static's Chief Executive.
Yo Yo is aimed at 18 to 35-year-olds, but the technology developed to support the channel could be applied to other channel concepts or leased to other broadcasters for integration into their programming.
EchoStar chief Ergen under fire
Charles Ergen, EchoStar's Chief Executive, was accused on Tuesday (04/12/01) by the Chairman of the US House of Representatives Judiciary Committee, of giving misleading and contradictory testimony on his proposed $26 billion take over of rival DirecTV.
Wisconsin Republican James Sensenbrenner's attack centred on the role that providers of large, 10ft satellite dishes have in the market. He also said that Ergen's testimony on the competitiveness of the pay-TV market was directly contradicted by claims EchoStar made in a federal antitrust lawsuit the company brought against DirecTV last year.
Sensenbrenner said, "I would urge you to figure out which is right," and added, "You should let the committee know which is right - the testimony before the court or the testimony before the committee."
In the federal lawsuit, EchoStar said the so-called 'C-band' companies - which have only 850,000 subscribers - were not big enough to provide competition to DirecTV. In his testimony before the judiciary committee, however, Ergen listed C-band companies as important competitors in the market.
Justifying the apparent inconsistency Ergen said that while C-band had little role in the US as a whole, it remained important in rural areas, where customers had no access to cable. He told reporters after the hearing that the market had changed dramatically since the lawsuit was brought.
"What people did in private litigation several years ago has no bearing on this merger," Ergen said.
Robert Pitofsky former Chairman of the Federal Trade Commission and one of the US's most respected scholars of competition law said the merger faced insurmountable antitrust problems. He works for a Washington law firm that represents Pegasus, a competitor to Echo- Star, but insisted he was appearing as an antitrust expert and not an advocate for clients.
He said antitrust guidelines did not allow any mergers that led to monopolies or near-monopolies, even if they did create new efficiencies. "Railroads and airlines compete, but that doesn't mean you allow airlines to merge to monopoly," he said.
AT&T withdraws Excite bid
Excite@Home, the bankrupt US broadband Internet provider, hoped to have a better bid from AT&T by cutting off service to more than 850,000 AT&T customers that relied on Excite's network for broadband internet access - but its move didn't work and AT&T cancelled its bid to buy on Tuesday (04/12/01).
The telecommunications group had offered $307 million for Exite but after last weekend's events it decided that the best solution was to migrate its affected customers to other parts of its own network. By Tuesday (04/12/01), AT&T said it had returned service to about 80 per cent or 500,000 of its customers.
AT&T, Excite's controlling shareholder, had invested nearly $4 billion in the company before Internet crash.
Last week Excite won approval from a California bankruptcy judge to close its network if the company's cable partners - including AT&T, Cox and Comcast - did not negotiate service contracts that were more favourable to Excite. This would mean that about a third of all US residential broadband users were at risk of having service interrupted.
On Friday night AT&T and the other cable companies offered Excite a deal worth $490 million. AT&T was willing to pay $125 million of that amount to Excite in return for continued service, if it had the assurance that the company's creditors would agree to the terms of the deal.
Comcast and Cox continued to negotiate with Excite reaching an agreement to continue service over the next three months, worth about $230 million - once the costs of maintaining its high-speed network are factored in. At face value, the agreements are worth $320 million.
Excite said it intends to cease operations after the 90-day transition period to allow its corporate clients to transfer their subscribers to other high-speed Internet service systems.
Paxson sues GE's NBC
Paxson Communications Corp, owners of the family oriented Pax television network in the US, asked On Wednesday (05/12/01) for an arbitrator to end its business relationship with NBC, General Electric Co's unit, or to block NBC's acquisition of Spanish-language broadcaster Telemundo Communications Group.
In 1999 NBC purchased a minority stake of 32 per cent in Paxson. The deal also stated that after February 1st 2002, if federal rules restricting ownership of media outlets in individual markets were relaxed, the GE unit would have the right to acquire up to a total of 49 per cent of Paxson, including Chairman Lowell Paxson's controlling stock, and then have operating control of the company.
If NBC carries out the proposed acquisition of the entire equity of Telemundo for $1.98 billion, half in cash and half in GE stock, this will violate the terms of the agreements governing the investment and partnership between Paxson and NBC.
Telemundo is privately owned by Sony Pictures Entertainment, Liberty Media, and a consortium of financial investors.
The Pax TV network operates a series of smaller broadcast and cable stations. It is seen in 84 per cent of the nation's television house holds.
Paxson has made two filings with the Federal Communications Commission to verify its legal position. Paxson's arbitration claim asserted that NBC agreed it would take no action to create additional regulatory hurdles to complete the acquisition of Paxson.
"The Telemundo transaction, if consummated, would make it virtually impossible for NBC to complete its path to control of Paxson," the company said.
Paxson believes that an NBC/Telemundo/Paxson combination would require major market station divestitures of Paxson's stations in New York, Los Angeles, Chicago, Miami and Dallas, thus severely cutting into the national coverage of the PAX network and destroying the ability to create multiple nationwide networks on Paxson's digital TV station platform.
A second FCC filing seeks to deny FCC approval of NBC's acquisition of the Telemundo TV stations.
Wednesday 5th December
Liberty buys control of UPC
Court lenient on cable rules
Shaw in talks with AOL
Rogers contradictory stance
Globecast TV debut on Sirius
Excite agreement in broadband
EchoStar merger filed
Carlton profits fall 40%
AOL T-W eyes AOL Europe Stake
Quiero's new children's channel
Liberty buys control of UPC
US media pioneer John Malone's Liberty Media Corporation has increased its stake in UnitedGlobalCom Inc, parent of Dutch-based cableco United Pan-Europe Communications (UPC), from 44 to 76 per cent, now owning some 297.8 million shares. Liberty will provide UnitedGlobalCom with $200 million in cash, an $896.1 million loan and $1.44 billion in United Pan-Europe Communications bonds.
Liberty Media has been increasing its stake in European cablecos, with bids in on the majority of Deutshe Telekom's German cable operations. UnitedGlobalCom shares rose $1.62 to $3.02 in late trading yesterday (3/12/01). Liberty's shares rose five cents, to $13.20.
In exchange UnitedGlobalCom will issue 274.7 million Class C common shares to Liberty. Liberty Media will also retain its South American cable assets.
Court lenient on cable rules
Deregulation seems to be the key word for Media player when it comes to looking at media's near future in the US. The US Supreme Court on Monday (03/12/01) let stand a lower court ruling declining to reinstate government restrictions on the number of subscribers that a cable operator can have. The decision by the US Court of Appeals for the District of Columbia last March was a victory for AT&T, the biggest cable operator. The company had 41 per cent of the market which meant it was already in violation of the rules which forbid one company from serving more than 30 per cent of all US cable and satellite subscribers.
In addition, the appeals court questioned FCC limits on the number of channels a cable operator can carry with programming in which it has a financial interest or it outright owns. The court said that the limitations were unconstitutional and ordered the FCC to review its rules.
Dealmakers wanting to set up mergers and acquisitions expect a favourable decision - which would trigger a flurry of new deals.
Viacom Inc President and Chief Operating Officer Mel Karmazin, who has a particular interest in winning its law suit to have the 35 per cent TV station ownership cap thrown out, recently told FCC Chairman Michael Powell that the broadcasting industry needs to be able to consolidate further to remain strong in an era where a company like AOL Time Warner may bid for AT&T Broadband.
Karmazin said he was interested in further relaxation of both the TV and radio duopoly, charging that in the case of radio, the eight-stations-to-a-market limit is arbitrary. The rule limiting a company to owning one of the big-four networks is also 'archaic,' he said.
Under the current duopoly eight-voice test, two stations that are not both in the top four in a single market can merge so long as after the combination there are still eight independent owners of TV stations.
But not everybody agrees with need for change. Consumer groups, fearing that media concentration could manipulate and reduce public debate in cities where they dominate print and broadcast, want the rule to remain unchanged. "What we're doing here is tampering with the central nervous system of our democracy," said Jeff Chester, Executive Director of the Center for Digital Democracy, a non-profit advocacy group in Washington. But most observers said the court's move wasn't a surprise.
Shaw in talks with AOL
Canadian MSO Shaw Cable is in strategic alliance talks with AOL-Time Warner. Shaw and AOL executives met last month and expect to do so again in the coming year.
Shaw is attractive to AOL because of its cable modem penetration rate. Shaw has roughly 2.2 million cable subs and more than half a million cable modem subscribers for a penetration rate that is now hovering over the 25 per cent rate, the highest in North America. Shaw has already launched an enthusiastic campaign to raise that number to a million cable modem subs. The speculation is that AOL would provide Shaw with content and a default portal.
While Shaw can provide the means to boost AOL's Canadian penetration from its current 200,000 to 800,000, the only way the deal makes sense to Canadian analysts would be if AOL makes an investment in Shaw, which is currently looking for money. Shaw Cable President Peter Bissonnette has been quoted as saying that it would be fantastic if AOL made an equity investment. A similar deal with Microsoft fell apart in the past.
Rogers contradictory stance
Canadian MSO Rogers Cable has finally said that it is going to sever all connections to the floundering Internet service provider @Home.
However, Rogers Cable CEO John Tory said on Sunday that Rogers will attempt to negotiate a deal with @Home to provide a few more months of connectivity while Rogers finishes its new arrangements. Rogers' new provider will be Teleglobe, a Bell Canada Enterprises subsidiary.
While some may argue that Rogers will be forced into an eventual bind by dealing with its chief competitor in the high speed market, Bell, Rogers has left itself little leeway. While MSO Shaw saw the writing on the wall a year or more ago and has set up its own infrastructure, Rogers did nothing.
Globecast TV debut on Sirius
GlobeCast Northern Europe has launched its first TV distribution services on the Sirius satellite with the migration of 11 Discovery feeds from HotBird. GlobeCast already uplinks business information services through Sirius, which is owned by SES Global.
Located at five degrees east, Sirius is described by GlobeCast as a more cost-effective way to reach cable audiences than satellites that are targeted more at the direct-to-home broadcasting market.
DNE's director of engineering, Paul Newman says that GlobeCast's ongoing relationship with Discovery Networks Europe (DNE) and its ability to migrate the TV portfolio to Sirius were reasons for the choice, adding, "It was more efficient for us to reach cable head-ends through Sirius and GlobeCast is one of the few companies that can uplink TV channels to it, it was a very smooth transition for us."
GlobeCast's head of TV channel distribution, Nigel Gibson said, "GlobeCast believes in offering the widest possible choice for clients and the fact that we can uplink to Sirius demonstrates our flexibility and commitment. This migration strengthens our relationship with Discovery."
Discovery Networks Europe (DNE) currently operates nine channels on twelve networks; Discovery Channel, Discovery Home & Leisure, Animal Planet, Discovery Travel & Adventure, Discovery Civilisation, Discovery Sci-Trek, Discovery Kids, Discovery Health, Discovery Wings, Discovery +1, Home and Leisure +1 and Animal Planet +1.
Excite agreement in broadband
US cablecos Cox Communications and Comcast whose broadband services are provided through Excite@Home - which cut off broadband service to more than 850,000 AT&T US customers last weekend - have secured a deal on Monday (03/12/01) to continue supplying internet access to their customers.
Over the next few months Cox is aiming to roll out its own network. Until then will continue to offer its high-speed Internet service through Excite@Home. Cox will pay $160 million to Excite@Home for three months of uninterrupted service for its 555,000 Cox@Home subscribers and more than 20,000 commercial business customers. This amount will be in lieu of the monthly subscriber fees previously paid to Excite@Home.
Comcast's accord is similar as it will also pay $160 million to Excite@Home for three months of high-speed Internet service. Comcast anticipates that all of its high-speed Internet customers will be transferred to a new Comcast-owned and managed network well in advance of the expiration of the three-month period.
Judge Thomas Carlson, presiding over Excite@Home's bankruptcy proceeding, has still to approve the deal.
AT&T dealt with the Excite failure by migrating its customers to an alternative network. On Monday (03/12/01) it had already moved 330,000 users, or about 40 per cent of those affected by the outage, to a new AT&T high-speed internet network. The company said the remainder of its customers would be migrated by Friday (7/12/01).
Exite's objective after the blockage of the service was to increase a $307 million bid for the company's network assets to more than $1billion. This is the latest manoeuvre in a legal wrangle between Excite's creditors and the US telecoms giant AT&T after the former filed for Chapter 11.
EchoStar merger filed
The US Federal Communications Commission received application from General Motors, Hughes Electronics and EchoStar for the approval to transfer control of licences connected to their proposed merger.
The companies say their application complies with FCC rules and that the merger would bring benefits to consumers through more effective competition to cable television. In late October, the companies announced the proposed $26 billion transaction, in which Hughes would separate from General Motors and merge with EchoStar. The new company would be named EchoStar and would market its video products and services under the DirecTV brand.
The FCC is being asked to allow for the transfer of control of satellite and earth station licenses and other related authorisations currently held by the companies to the new entity.
Charlie Ergen, Chairman and CEO of EchoStar moved to head off regulatory objections saying, "With the enormous efficiencies generated by this merger, we can accelerate the delivery of local TV channels for more Americans, increase HDTV services and provide for a faster introduction of high-speed Internet access. "This merger is the best hope to provide true competition to cable companies."
But EchoStar Communications is facing mounting opposition in Washington. Ergen, was scheduled to defend the deal in back-to-back congressional hearings on Tuesday (04/12/01).
The head of the Senate Commerce Committee - and a key player in telecommunications issues - Ernest Hollings, has already announced his opposition to the merger.
In addition to the FCC review, the transaction is being reviewed by the Department of Justice Antitrust Division to ensure the merger complies with antitrust laws. The transaction is also subject to other regulatory reviews, including by the Internal Revenue Service and the Securities and Exchange Commission. Commentators suggest that the deal may well be blocked.
Carlton profits fall 40%
UK broadcaster Carlton Communications reported a 40 per cent fall in core profits on Tuesday (04/12/01). This was attributed to falling advertising sales and the economic drag of ITV Digital the lossmaking digital terrestrial venture with Granada.
The company said it would cut a further 100 jobs, on top of the 300 already shed in 2001, as it sought further cost-savings. The 400 jobs represent about 12 per cent of the company's workforce.
Carlton reported pre-tax profits, before goodwill and digital investments, of £118 million for the year to the end of September, a 39 per cent fall from the £193 million profit it made last year reported the FT.
Adding in exceptionals, the company saw pre-tax losses widen to £232 million, from £39 million last year.
The company said advertising sales had declined 13 per cent year-on-year and had continued into the first quarter of its new fiscal year, without being able to give estimates beyond the first quarter
Gerry Murphy, Carlton's Chief Executive said, "Visibility beyond this quarter remains limited, although there is great interest amongst the advertising community in next summer's World Cup football tournament."
The situation had been predicted by Granada last week as well as estimates by Zenith Optimedia, whose advertising forecasts, said on Monday it was expecting US advertising spending to continue falling by 1.5 per cent in 2003 while in the rest of the world spending would edge up only 0.8 per cent. However an upturn could be expected in the fourth quarter.
Carlton said its share of losses at ITV Digital and the ITV Sport channel rose to £175.7 million, from £143.2 million last year.
The company said it expected costs at ITV digital to be reduced by £100 million in 2001/2002, and said that across the group, it was expecting to achieve £45 million in annual cost savings, including £15 million for digital media operations.
Overall revenues for the year rose five per cent to £1.04 billion.
AOL T-W eyes AOL Europe Stake
Bob Pittman AOL Time Warner Inc's Co-Chief Operating, unveiled on Monday (03/12/01) plans to buy German company Bertelsmann AG's stake in AOL Europe - when the company exercises its option to sell its stake.
The reason for this intention, Pittman said, is because it is important in the company's plans for international expansion. At the moment Bertelsmann owns a 49.5 per cent stake.
Bertelsmann had informed AOL Time Warner that the company may have to buy back the stake between December 15 and January 15 2002, according to a recent regulatory filing.
The German media giant has the right to sell 80 per cent of its stake for about $6.8 billion before January 31 and has the right to sell its remaining stake by July 1 2002, reports Reuters.
Pittman said the company's cable and Internet units both had room to grow, in the US and abroad - addressing some of the recent concerns about slowing growth in the company's key units.
The company plans on getting half of the new subscribers - estimated at about six million to eight million - in the year. He also said the units would see growth by selling more services and features to its subscribers.
"In our basic DNA is product and new company creation," Pittman said to a group of investors. "That's the way to the growth of the company going."
While AOL Time Warner currently gets about $50 per cable subscriber, Pittman envisions garnering about $230 from cable customers who use new services that will be developed such as video-on-demand, telephony, interactive television and long-distance phone service.
Quiero's new children's channel
Spanish digital terrestrial television platform Quiero in a joint venture with Menudos Multimedia has incorporated a new Children's Channel to its television Internet portal. The channel will be dedicated to children between five and 12 years of age and it is meant to entertain and educate the children whilst familiarising them with use of the Internet.
Tuesday
4th December
Italian
employment channel planned
GlobeCast
considers third transponder
ABC
/ 'Potter' Deal
BSkyB
not selling Man U stake
No
to Indian service tax
NAB
for 2002 DV workshop
Media
giants eye India
Narad's
new broadband service
Copyright
versus pirates
NATPE
December 12
@Home
collapse hits Rogers, Shaw
Orbital
builds PanAmSat satellites
Philips/Harmonic
CA integration
Italian employment channel planned
Raisat,
the Italian satellite channel, owned by public broadcaster RAI, has signed
a deal with Manpower, the employment agency to create a TV channel for
recruiting staff. Luigi Matteucci, Raisat's President said that the group
will end the year 2001 with three billion lire(£1million) of income and
they are ready to invest in the new project.
Another deal dedicated to providing services for viewers has been concluded
between Eutelsat and HiT Internet Technology, who plan to collaborate
in the field of multimedia applications and distance e-learning via satellite.
In this market, HiT works through HiT son et Lumiere, which specialises
in audio, video and graphic transmission via internet, satellite and fibre
optic. It has a particular focus on bi-directional communication, enabling
anyone anywhere to interact with text, voice and video.
GlobeCast considers third transponder
GlobeCast
Northern Europe has filled two multiplexes on Eutelsats Eurobird satellite
with 17 channel launches since April. The imminent launch of Abu Dhabi
TV from the United Arab Emirates will complete the second multiplex, which
was activated on Eurobird
just two months ago. Other broadcasters on the same transponder include
Muslim TV, Ekushey TV and UCLanka.
Positioned at 28.5 degrees east, the satellite serves 5.5million homes
equipped with Sky Digital, offering an alternative to the Astra satellite.
Nigel Gibson, GlobeCast's Head of TV Channel Distribution, attributes
niche broadcasters' switch to Eurobird to the low cost 'one-stop' package
of encoding and distribution services launched by GlobeCast earlier this
year.
"We’ve never signed up so many channels in such a short space of time,"
commented Gibson. "We're seeing broadcasters moving away from Astra because
the package we offer is a more competitive way to reach the same audience."
The end-to-end service includes digital encoding, multiplexing, uplinking
and monitoring the satellite's output, as well as providing encryption
services and integration with the electronic programme guide operated
by Sky Digital.
Gibson adds, "We are actively considering taking a third transponder because
the demand for the service has been so good."
ABC / 'Potter' Deal
US-based ABC - Walt Disney's broadcasting arm, last week paid $130 million to Warner Bros for the television rights to the blockbuster 'Harry Potter and the Sorcerer's Stone' and the first continuation for a10-year licensing agreement.
The films fit with parent Walt Disney Co's family fare and could help draw advertisers and viewers to its newest cable network, company executives said Friday (30/11/01). But rivals say the price paid is too high.
ABC paid $70 million for the first movie and at least $60 million for the second instalment - one of the highest prices ever paid for broadcast rights to event movies. Critics say that by the time ABC airs the first 'Potter' film, the property could be overexposed after appearing in theatres and on pay TV, videos and DVDs.
Before airing on ABC in 2004, the 'Potter' film will be broadcast on HBO, the pay-TV network owned by AOL Time Warner.
Mark Pedowitz, Executive Vice President of ABC Entertainment TV Group, dismissed any suggestion that they overpaid for the two films. "I believe it's more sour grapes than anything else," he said and added "From where we sit, a property like this has greater value than you can ever imagine."
Disney plans to air the films on the ABC network, as well as on family-oriented cable outlets Disney Channel and the newly acquired ABC Family.
Steven Bornstein, President of the ABC Broadcast Group said, "The 'Harry Potter' deal will add enormous value to three key programming platforms, the television network ABC Family and the Disney Channel both from an advertiser and viewer perspective."
Executives at the other major networks say that they had not bid aggressively to license the 'Potter' films and that ABC overpaid. Some network officials questioned the escalating fees being paid for movie rights.
Norman Horowitz, a consultant who has previously overseen domestic distribution for MGM and Columbia Pictures, said the shortage of true family hits - and the enduring value of perennials such as 'The Wizard of Oz'- makes a movie such as 'Harry Potter' particularly valuable.
BSkyB not selling Man U stake
UK satellite operator BSkyB has no plans to sell its 9.9 per cent stake in Manchester United the company announced, denying reports in the UK press that Irish racing entrepreneurs JP McManus and John Magnier were planning a bid to buy BSkyB's Manchester United shareholding to up their own 8.65 per cent stake
The Observer newspaper had reported that McManus and Magnier - who have built up their 8.65 per cent stake through their jointly owned Cubic Expression vehicle - have ruled out trying to buy Manchester United outright. Instead they plan to increase their holding 'significantly' and assemble a coalition of more than half of Manchester United's shareholders, which would then mount a determined effort to gain control of the club.
The report said if McManus and Magnier succeed in gaining control they would ask team manager Sir Alex Ferguson to postpone his planned retirement next May.
Manchester United's closing share price of 130 pence on Friday valued the club at £338 million - just over half the £623.5 million BSkyB was prepared to pay for the club in 1999 until the government blocked the agreed sale.
No to Indian service tax
Last week in a meeting in Mumbai, Indian Advertising community and broadcasters decided to jointly lobby with the Finance Ministry for removal of five per cent service tax. Both the industries have taken conflicting stands over who bears the burden of the tax remains.
The Indian Broadcasting Foundation believed that the service tax being indirect in nature, would have to be borne by the end-user, namely the advertiser. Taxation on broadcasting services is part of 16 new services brought under the ambit of the service tax net in this year's budget. The tax became effective from July this year.
The counter argument from the advertising community, especially the Indian Society of Advertisers and Association of Advertising Agencies of India, is that the extra burden would add to its costs and have an adverse impact on total advertisement spend by the industry.
However, following the meeting, the industry bodies have decided to join hands on the issue of impressing on the government the adverse impact of the tax on the broadcasting and advertising industry.
"We would appeal to the government to remove the tax in the next financial year," said a representative of broadcasting industry who attended Tuesday's meeting.
For the current year the broadcasters would bill the tax and pass it on to the advertisers. But if the advertiser do not pay the bill, the broadcasters would be expected to increase advertising rates to factor in the tax.
Advertisers warned that if they alone have to pay the tax, the move may lead to a reduction in ad spend over the coming year.
Media analysts feel that given the soft advertising market and general lull in business environment, the way forward could be both the industries sharing the burden of the tax between themselves, reported the FT.
The television advertising market in India is currently pegged at around Rs 3,500 crore on an annual basis. A five-per cent tax would help the government gain around Rs 175 crore in revenue.
The broadcasting industry has been impressing on the government the adverse impact of the tax on the industry. Various industry associations including Ficci and CII were also not in favour of taxing the entertainment sector. Removal of the service tax is high on the pre-Budget wish list of the broadcasting industry this year.
NAB for 2002 DV workshop
The US National Association of Broadcasters (NAB) announced on Monday (03/12/01) that it has teamed with the Digital Video Professionals Association (DVPA) to create the new NAB 2002 Digital Video Production Workshop (DVPW) to be held April 6 & 7 in Las Vegas, said Videography.
The aim is to create a program that better meets attendees' needs, based in a survey from last year's event. The NAB2002 DVPW will range from the traditional lecture-type sessions and bring the attendees and experts together with 'how-to' sessions and hands-on activities.
The Workshop will be about the secrets of successful video production, including lighting techniques for digital video, digital audio for video encoders, encoding and compression for the Web and DVD authoring.
Media giants eye India
Zee Telefilms, India's largest media company seems to be a target for Mediacoms, the US media group of AOL Time Warner which is in advanced talks to acquire a stake of about 26 per cent. However, Zee is also said to be exploring options with the French media group Vivendi and Viacom of the US is also reported to be interested.
The possible tie-up of AOL Time Warner and Zee was brought to the table as part of an Indo-US business initiative discussed last week.
Subhash Chandra, Chairman of Bombay-based Zee Chandra is flexible on the size of the dilution in Zee Telefilms, say bankers close to the situation.
The suggested price, according to market speculation, is Rs175 to Rs185 a share, which would raise about $400 million from the sale of a 26 per cent stake. Under Indian corporate rules, a 26 per cent holding is sufficient to block board policy, said the FT.
Analysts say Zee is also exploring a second option of structuring a new entity, such as a joint venture, to undertake specific projects with AOL Time Warner which presence in India is via its Turner unit, whose channels include CNN, HBO and TNT. The company has good reach in southern India but is weak in the north and west, where Zee is strong.
Zee has been looking for a foreign partner after it was forced to abandon an ambitious American depository receipt issue last year. Investors and Zee's management regard an overseas partnership as crucial to stabilise the group, which has been hit recently by share scandals, poor ratings and political controversy for televising an expose of graft in India's defence establishment.
While the gap between market leader Star TV and Zee has been narrowing, this is predominantly simply due to viewers deserting Star TV - and pay-TV entirely.
Narad's new broadband service
On Wednesday (28/11/01) Narad Networks released a new broadband services operating system for cable operators during the US Western Cable Show in the USA.
The Narad Services Operating System (NSOS) is described by Narad Networks CEO Dev Gupta as a comprehensive software product that creates, provisions and manages broadband services, and allows cable operators to offer integrated broadband solutions to their customers.
"NSOS opens the door for cable operators to establish a business selling differentiated services and generating new revenue, as opposed to relying on a bandwidth battle that will eventually become a non-valued, unprofitable commodity," Gupta said.
Copyright versus pirates
Content copyright holders in the US will be able to use new technology to protect films, music, and other copyrighted material from digital piracy after a Federal Appeals Court ruled the first significant challenge to America's new digital copyright law last Wednesday (28/11/01).
A panel of judges from the second US circuit court of appeals in New York issued a unanimous and vigorous vindication of the constitutionality of the law, which gives owners of copyrighted works new weapons to protect intellectual property in the digital age. Hollywood film studios, which brought the case to challenge software, which can be used to make unauthorised copies of DVDs (digital versatile disks), will particularly benefit.
The industry says current software on the market could facilitate mass DVD piracy. The court upheld a lower court ruling barring the publisher of a hacker website from publishing or linking to copying software.
Under the new digital copyright law, distribution devices (such as software) which can be used to break the security surrounding copyrighted materials will be illegal.
The debate has been a key subject between content owners, who want to protect their contents from threats of digital copying, and civil liberties advocates who think the new law limits creativity and free expression online.
NATPE December 12
Following cancellation of New Orleans hotel bookings for events scheduled in 2002, 2003 and 2004, NATPE - the US National Association of Television Program Executives - is due to explain future plans for the events and organisation at a December 12 press conference.
The 2002 convention is to be held in Las Vegas in January.
@Home collapse hits Rogers, Shaw
Roughly 40,000 Rogers cable modem customers in Canada were shut down at the end of last week as a California bankruptcy court judgement allowed @Home to cut off cable customers.
While the eventual fate of @Home is still up in the air, Rogers' customers were jamming call centre switchboards to complain. Rogers is the only Canadian MSO caught out. Shaw Cable has been transferring cable modem clients to its own data centre for some time and has enough excess capacity that Cogeco Cable was able to climb on board and transfer all of its high speed subs to Shaw infrastructure before the end of last month.
Only Rogers has been left in the dark, due to the company's late start in seeing the inevitable. The bankruptcy judgement allowed @Home to shut off service because the company was losing US$6 million a week. Oddly enough the court ruled that @Home could still provide services to Shaw, because @Home is making money from its arrangement with Shaw.
Both Shaw and @Home are preparing legal suits against each other based on breach of contract. Shaw, because @Home has failed to provide the services contracted for and @Home because Shaw has lowered the royalty rates it pays. AT&T has offered US$307 million for @Home, however creditors are attempting to double the fees charged by @Home in an attempt to increase AT&T's bid. @Home has provided 'spotty' service since it was launched.
Orbital builds PanAmSat satellites
Orbital Sciences Corporation is to build two additional reduced-sized geostationary satellites for PanAmSat Corporation.
PanAmSat took up a contract option to buy the two additional spacecraft, based on Orbital's STAR-2 platform. Financial details of the exercised options were not disclosed.
The first of the two new PanAmSat satellites is due for delivery in the fourth quarter of 2003, and a delivery date is due to be set for the second.
Philips/Harmonic CA integration
During the Western Show in California last week Harmonic Inc and Philips Digital Networks, part of Royal Philips Electronics confirmed that the Philips CryptoWorks conditional access (CA) system has been validated as fully interoperable with Harmonic's digital video headend.
Harmonic says that its headend system is now fully integrated with Philips CryptoWorks in addition to CA systems from other suppliers. Philips' CryptoWorks product line is a CA system in the pay-TV and IP domains.
Integrating Philips' CryptoWorks with Harmonic's digital headend equipment is achieved via the DVB SimulCrypt interface protocol. SimulCrypt permits DVB-compliant conditional access systems, such as CryptoWorks, to coexist in the same network. The ability to simultaneously support more than one CA system in a headend enables operators to lower costs and increase revenue by supporting new set-top boxes and offering more services.
"The convergence of video, voice, and data is bringing significant new revenue sources and, at the same time, more competition to incumbent providers. Open systems offer an exceptional platform for cost-effectively delivering new value-added services," said Nicolas Pry, Director of Broadcast Solutions for Harmonic's Convergent Systems division. "The interoperability between CryptoWorks, Philips' powerful conditional access system, and Harmonic's digital headend is a major step forward for open systems."
"This successful integration with Harmonic reflects the growing demand for open systems within the digital television arena," says Mathieu Goudsmits, Business Manager for CryptoWorks at Philips Digital Networks. "Operators are finding it necessary to innovate at their own pace rather than that allowed by proprietary solutions. Together with Harmonic, we can contribute to the widespread realisation of a truly open platform in digital TV technology."
Monday
3rd December
Compere
bid for German cable
Microsoft
AT&T Broadband deal
Microsoft
suffers digital TV blow
Concerted anti-piracy attacks
ARD
€767m surplus?
AT&T
customers loose broadband
NTL
tower valuation questioned
Compere bid for German cable
London-based finance house Compere Associates is reported by the FT to be considering a bid for parts of German telco Deutsche Telekom's cable network if the German regulators prevent John Malone-led Liberty Media of the US from completing cable assets purchases currently on the table.
"We would
be prepared to enter straightaway to make an offer," Phil Mochan, founder
of Compere was reported as saying, confirming that he found the E5.5bn
price agreed with Liberty as "appropriate."
A deal with Deutsche Telekom could occur by mid-2003 with upgrading of
the network to carry broadband digital services taking between three and
seven years and costing about E7bn - if the offer were made next month..
Miranda Curtis, President of Liberty Media International, said in September
that the upgrade would cost E500m-E700m annually until 2010. "Liberty's
plans are very conservative. We are far more aggressive," Mochan.
"Our financial sources insist on strict discretion. Should Deutsche Telekom
invite us to make an offer we will immediately put the names forward,"
said Mochan - though it is believed that the investment would be backed
by a mixture of German and international banks. Deutsche Telekom needs
a sale of its cable assets to reduce its vast debt.
Compere Associates is currently believed to be working with WestLB, the
German state-owned bank, to make a bid to acquire the local telephone
network of UK telco British Telecommunications.
Microsoft AT&T Broadband deal
After all the speculation over who would buy US telecommunications giant AT&T's cable network, AT&T Broadband, the company may now not need to sell if software giant Microsoft completes a reported restructuring of its existing $5 billion investment - plus injects a further $4 billion to $5 billion cash.
Microsoft
made its initial May 1999
investment in AT&T when shares were worth $40 - compared to $17.50 now,
hence a $5billion investment would give a significant stake in the 14
million subscriber business.
Bid proposals are due to be submitted by tonight (3/12/01) with the Microsoft
offer joining that from Comcast - which made the original unsolicited
bid in June - along with AOL Time Warner and Cox Communications.
AT&T is expected to favour the Microsoft bid, if it materialises, as it
would help AT&T cut its debt while retaining control of the broadband
unit, enabling it to later issue a separate security for the cable business
before a spin-off, which is what it originally planned.
Microsoft's AT&T Broadband investment would be expected to give it leverage
in the deployment of its TV server and set-top software for interactive
television. However, Microsoft TV's investment in cablecos has not always
resulted in a direct return in this way - see Microsoft/ UPC story Today's
news below.
Microsoft
suffers digital TV blow
Pan-European cableco UPC (United Pan-European Communications), in which
Microsoft has a six per cent stake, says it is no longer planning to use
Microsoft software in its digital service's set top boxes despite having
tested and trialled the software for 18 months.
There had been rumours of difficulties in the three year relationship
between Holland-based UPC and Microsoft since last April, with delays
in the roll out of interactive services partly blamed on delivery times
of the software.
Today's FT (3/12/01) reports 'a source close to UPC' as saying, "We have
taken Microsoft off the trials and are re-evaluating what we are going
to do." This appears to be the end of the line in this relationship, which
is a significant blow as UPC, despite its financial difficulties, UPC
is the continent's largest cableco with seven million subscribers. UPC
is shutting a further two in-house TV channels as part of its expenditure
cuts.
A possible future backdoor is that UPC may eventually be forced to break up and sell operations to cover debt - and Microsoft may well have an investment relationship with the ultimate buyers - with Liberty Media the favourite. Microsoft paid $300 million for a share in UPC, diluted to 6.3 per cent and now worth €14 million.
Concerted
anti-piracy attacks
Last week both French satellite platforms Canal Plus (for Canal Satellite)
and TPS carried out anti-piracy measures, claiming to block out all the
pirate cards in circulation, just after the start of two major football
matches.
Pirate cards are now available quite widely in France for a few hundred
francs at flea markets and are used by people subscribing to the entry
level package to gain access to all of the programmes. The counter measures
work in two phases, first by downloading a software patch to the decoders
via the satellite and then transmitting codes that render the pirate cards
inactive.
There have been some complaints by legitimate subscribers of official
cards also being affected, but the operators minimise this. Patches for
the pirate software are available over the Internet within a few days,
but pirate users are inconvenienced by having to take their cards back
to the supplier (if they can find it) for reprogramming. Canal has said
that it will carry out a complete card swap out in the first months of
next year, which will keep the pirates at bay for a much longer time.
It pointed out that this will be the first card swap out since the launch
of the system in April 1996.
Until recently TPS had been claiming that piracy was only a marginal problem
and had not implemented any electronic counter measures. However, two
weeks ago French police dismantled a pirate card network in the Lens region
resulting in 19 people being questioned. The anti-piracy brigade had been
tracking the network since April 2000 and had tapped several phone lines
as part of the investigation.
It will be interesting to see whether satellite TV subscriptions grow
noticeably in Northern France in the coming weeks. Ten days later Belgian
police carried out raids on specialist satellite shops in Brussels and
found a large number of blank cards and equipment for programming them.
Meanwhile, Canal Plus is doing its utmost to up the numbers of its terrestrial
subscribers by offering the Canal Plus premium channel free for three
months. Customers can pick up a decoder in a supermarket paying only a
100 franc (15 euros) deposit. The decoder works immediately on plugging
it in to the TV but needs to be registered within two days. At the end
of the three months the user can either subscribe at the normal price
or return the decoder and get his deposit back.
Not surprisingly the decoders have been 'selling' at an amazing rate and
the supermarkets are piling them high near the check-out. It expects a
significant number to transform to a full subscription at the end of the
free trial, but in any case it will have gained a valuable prospects file
as well as an artificial boost in its subscriber numbers for the end of
the year.
This move is presumably as part of its strong arm battle with the government
over DTT: Canal wants to be the single commercial operator for DTT in
which case it would migrate its nearly 3.2 million terrestrial subscribers
to DTT, providing the future platform with the kick start it needs. The
move should be easier than transferring the subscribers to satellite,
which Canal has been trying to do for some time with only a slight success.
On the other hand, the government is in favour of multiple operators of
DTT to encourage diversity.
ARD €767m surplus?
By Dieter Brockmeyer
The General Director of the German public broadcaster ZDF, Dieter Stolte, attributes the huge surplus of about €767m expected this year by fellow public network ARD, as largely due to its vast public radio network.
Simply adding fees and advertising revenues minus the spending shows an annual figure of almost a billion DM in the black since the 1990s. KEF, the organisation that controls the finances of Germany's public broadcasters, declined to comment this figure, ".since we do not know how Stolte comes to this figure." Indeed, it would appear to outsiders that KEF is not using simple mathematics.
After German reunification, the body agreed that ARD - formed by 12 independent regional networks - is to complex to be understood by just adding figures. ARD contests that such an perspective could be put on its finances. "It is simply wrong, that ARD profits from its radio activities in such a way," said the head of the ARD finance commission and WDR director of administration, Norbert Seidel, attending an ARD board meeting in Potsdam last week. KEF would not accept such a surplus, he said.
AT&T customers loose broadband
More than 850,000 AT&T customers in the US had their broadband service cut off this weekend. The high-speed Internet access was provided by Excite@Home, which during the weekend turned off its high-speed cable network after a bankruptcy (chapter 11) judge approved the move.
Judge Thomas Carlson said US-based ExciteAtHome could reject its existing contracts with cable companies from midnight Friday.
The discontinuity of the service happened after Exite’s cable partners - AT&T, Comcast, and Cox - failed to negotiate service contracts which were more favourable to Excite. The company reportedly wants cable partners to pay higher fees. By forcing the higher rates, @Home and its bondholders hope they could prove the network is worth more than the $307 million AT&T has bid for it. Exite Creditors said a shutdown of the network would force the cable companies to give a fairer valuation of the company service.
The bondholders have accused AT&T of using its controlling position on ExciteAtHome's board to steer the company into bankruptcy as part of a scheme to buy one of the US's biggest high-speed Internet networks at a bargain price. AT&T has denied the allegations.
AT&T tried to migrate its customers to an alternative network over the weekend, and said it managed to move about 10 per cent of those affected and it will take 10 more days to migrate the remainder of its customers. Customers who experienced an interruption in service would receive two days of free service for every day of interruption, the company said.
Also other satellite broadband products from StarBand and DirectWay surfaced as alternatives to the missing wired Internet service.
On Saturday Excite said it had terminated service to AT&T after, "determining that it would not be able to reach agreement," and said it was still negotiating with Cox and Comcast reported the FT.
AT&T is likely to rescind its original offer entirely now that their customers have been shut off, said one person involved in the negotiations.
NTL tower valuation questioned
Valuation of UK cableco NTL's transmission tower business - put by the company at £1.5 billion - is seen as slowing the sale with main bidder (and NTL shareholder) France Telecom seeking a £1 billion price tag.
NTL is seeking to use proceeds to cut its vast £12 billion debt, seeking maximum return for the profitable tower business which had £32 million earnings on £60.7 million revenues in the third quarter this year.
The company saw its Moody's debt rating lowered to Caa1, its shares subsequently reaching an all time low of $1.60 - up to $1.80 by Friday (30/11/01) - compared to a peak valuation of $109. Moody's cited greater capital expenditure than expected, minimal growth in revenue, and $500 million of preferred notes related to NTL's acquisition of Noos due in five months, expected to increase costs by $32 million a year in interest payments.