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NEWS Monday 19th August - Tuesday 27th August 2002
Scroll down page or click below for news - latest first
| Tuesday | |||||
Friday 23rd August 2002
Swedish Teracom's DTT merger
RTLII breaks free
E60 m profit at Canal Satellite
Macedonia launches multiethnic channel
Liberty bids again in Germany
Berlusconi Circus halted
Time Warner Cable seeks acquisitions
What now for iTV retail?
Real media player goes multiformat
Swedish
Teracom's DTT merger
By Goran Sellgren
Teracom, the state-controlled owner-operator of all Swedish terrestrial
television and radio transmitters, has taken the radical decision to merge
its two main operations, Boxer, the programme packager, and Senda, the
DTT platform of Sweden, and the administrator of DTT access cards.
The move comes in response to sustained official criticism of its handling
of DTT matters, and of its general financial procedures. The government
and the Swedish parliament ordered Teracom to "focus on core businesses"
some months ago.
The brand name Senda is to be phased out, and the focus will be put on
Boxer, in which Swedish insurance giant Skandia has a 30 per cent share.
Teracom has hinted that it is willing to sell off another 19 per cent
of its shares, thus keeping only 51 per cent of Boxer's shares.
"Its simply that we want just one external face; that's why we are now
merging the two companies", Teracom's Head of Information, Christer Lundin,
comments. In May Teracom was instructed by the Swedish government and
Parliament, to make dramatic staff reductions and to sell off all non-core
affiliates and to concentrate on its tasks as a network distributor.
Active TV, a digital television consultancy, had been sold back to its
founders. Next in line to be sold-off are TV component manufacturer Faktum
Elektronik and Teracom Component (a manufacturer of transmission equipment).
"We will probably wait a little with the sale of Teracom Component until
the present shaky telecom market stabilises," Lundin added. Also TravelVision,
a company specialising in selling advertising airtime on the express trains
to and from Stockholm's leading airport, Arlanda, and on the leading ferry
line between Stockholm and Helsinki/Turku, is also about to be put on
the open market. It has even been suggested that Teracom might have to
divest of one of its prestige assets, the mighty Kaknaes teletower, one
of Stockholm's tallest buidings, just off the Stockholm city centre. However
no such decisions have yet been taken.
DTT in Sweden was launched in April of 1999, but even if over 90 per cent
national coverage has now been achieved, only some 100,000 households
have subscribed to Teracom's services over its five present multiplexes.
RTLII breaks free
By Dieter Brockmeyer
From 2004 onward the German commercial TV channel RTL II intends to sell its advertising slots without the support of the RTL channels' family's sales house IP-Deutschland.
As the network's Managing Director, Josef Andorfer, confirmed at newswire, he believes that the company will create more revenue by going out on its own. Previously IP-Deutschland CEO Walter Neuhauser had said in an interview with the Financial Times Germany that he would not grant any specific sum to the channel for 2003.
However, that's what some of the RTL II shareholders demanded, with TMG's Herbert Kloiber calling for a sum of E250 million. TMG, in a joint venture with Disney, is joining with Heinrich Bauer Verlag the main defender of the independent channels, while RTL Group, which owns some 30 per cent would like to tie the venture in its Germany family more tightly. It's previous approaches to acquire additional shares has successfully been blocked in the past.
The signs that RTL II was seeking more independence became more obvious recently when Andorfer announced a plan, backed by TMG and Bauer, to launch its own animation channel early next year. These plans are under discussion again, since the demand for 'Manga' animations, was declining following September 11. However, this does not affect expansion plans. Other possible genres for spin off channels are under investigation says Andorfer.
E60 m profit at Canal Satellite
By Sotires Eleftheriou
"I made the right choice in coming to Canal Satellite a year ago," said Isabelle Parize, President and CEO of the French Canal Satellite platform, at its annual press lunch on Wednesday (21/8/02). Canal Satellite, 66 per cent owned by CanalPlus Groupe and 34 per cent by Lagardere Groupe, expects to make an operating profit of E60 million this year on sales of E760 million. It has been making a profit since 2000.
Last year it made a profit of E48.5 million on sales of nearly E700 million; in 2000 it made a profit of E20 million on sales of E600 million. It is the first digital satellite platform in Europe, having started in April 1996, and the first to turn a profit. The company also has the lowest churn rate (9.5 per cent), and high customer satisfaction, added Parize, which she attributed to the strong programming in films, sport, children's and documentaries.
Subscriber numbers are expected to top two million before the end of this year. Vivendi Universal's new boss, Jean-Rene Fourtou, has previously confirmed that Canal Satellite will remain within the group and that he ultimately intends to merge it with Canal Plus, the Lagardere stake to be converted to shares in Canal Plus.
There are 17 new channels to be added to the bouquet between now and the end of the year, although five are replacing existing channels, giving a net gain of 12 channels. Ten of them are satellite exclusive to Canal Satellite. The film channels from Multithematiques are being reorganised into six theme channels: Premier, Emotion, Frisson (suspense/horror), Auteur (art house), Success (blockbusters), Classic replacing the existing Cine Cinema 1, 2 and 3.
AB Groupe is bringing four film channels, also organised in themes: Polar (crime), FX (horror, fantassy, S-F), Comic, and a replay channel. CanalPlus Sports will be a new sports channel, drawing on the resources of CanalPlus and Pathe, replacing the existing Pathe Sport. Disney is adding three new channels to the bouquet: DisneyPlus1 (time shifted version), Toon Disney, and Playhouse Disney (2-5 year olds).
The Teva women's channel, currently on rival satellite platform TPS, will also be on Canal Satellite. A new documentary channel, Planete Thalassa (sea and travel), and music channel VH1, complete the list. In all the platform broadcasts 3,500 different films a year and covers over 100 different sports, with football in prime place.
Parize said that the (long awaited) new second generation decoder with a hard disc drive will be released towards the end of this year. The battle against piracy is continuing. Canal Plus is carrying out a full card swap out in all of its territories. This has already taken place in Spain, as well as Italy, where piracy was extensive, resulting in a 60 per cent increase in subscriptions. While no figures are available, the problem is not felt to be so significant in France, where the swap-out will take place towards the end of the year.
Macedonia launches multiethnic channel
Macedonian National Television launched a multiethnic channel on 20/8/02, featuring programmes in the following languages: Albanian, Turkish, Serbian, Romany, Vlach, and the Bosnian Muslim minorities' 'Dnevnik'.
Some 85 per cent of Macedonia can receive the programmes. Macedonian National Television's second channel previously broadcast five hours per day of minority language programmes. Now there will be 12 hours of minority-language programs, nine hours of which are in Albanian. The Albanians and some other minorities also have their own private television stations.
Liberty bids again in Germany
US cable investor Liberty Media is reported to have teamed up with private equity investors Blackstone Partners of Blackstone Group, and Apollo to bid once again for the cable TV business of Deutsch Telekom.
A bid by Liberty for six franchises at the cable company was blocked earlier this year by the German Cartel Office, both on competition grounds, and because it was insisting on a higher specification system than that planned by Liberty. Final bids are expected in by September 30. There are currently six bidders in the current auction, which is being run by NM Rothschild. Other confirmed bidders come from the finance world, including Goldman Sachs in conjunction with Primera, Providence Equity and Apax Partners, CVC Capital Partners and Warburg Pincus, Hicks Muse Tate & Furst and BC Partners, with Liberty the only media group in any of the consortia.
Since Liberty's original E5.5 billion bid there has been a slump in cable system valuations, and the new bids are believed to be nearer E3 billion. The lack of funds available for media, communications and technology acquisitions is reported to have led to more complex funding deals to raise the capital.
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Berlusconi Circus halted
The decision by the Italian football league to delay the start of the football season by two weeks following the 20/8/02 halt in negotiations with state broadcaster RAI has thrown Italian Prime Minister Silvio Berlusconi into the heart of a new row over conflict of interests.
The Italian football league has called on the government for financial aid. But Berlusconi is embroiled at every level on both sides of the dispute - as owner of the Serie A club AC Milan seeking more money; as leader of the parliamentary majority which controls the state broadcaster RAI that does not want to pay more than half the E87m sought for hightlights, and as owner of the largest commercial broadcaster, Mediaset, which would be expected to pick up any television rights dropped by RAI.
Prime Minister Berlusconi is now expected to mediate the dispute. His Culture Minister Giuliano Urbani is scheduled to meet Adriano Galliani, the Chairman of the Italian football league who broke off negotiations, on August 30 to agree a three-year deal between the league and RAI. Adriano Galliani has his own conflict of interests as he is also the Chairman of AC Milan.
There is concern that Berlosconi could potentially engineer a collapse of the Rai deal, including ignoring the league's appeals for state subsidies or tax breaks, then deliver a solution via his own Mediaset.
The merging of Berlusconi's private business interests, television and positions of power have been heavily criticised across the political spectrum of opponents. A 'conflict of interests' law - itself described as inadequate - has yet to receive final approval from parliament.
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Time Warner Cable seeks acquisitions
A well financed US cable company, Time Warner Cable, plans to hit the acquisition trail following floatation using shares as currency.
TWC was created following AT&T and Comcast Corporation's agreement with AOL Time Warner to restructure the Time Warner Entertainment (TWE) partnership. This complicated venture includes the HBO pay television operation and the Warner Brothers film studio, enabling an orderly and timely sale of AT&T's stake.
Under the deal, AOL Time Warner is to give AT&T E2.1 billion in cash, E1.5 billion in AOL Time Warner stock and 21 per cent of a new company, Time Warner Cable, valued at some E25 billion.
Time Warner Cable Inc will include all of AOL Time Warner's 10.8 million cable television subscribers and additional cable properties to be contributed by AOL Time Warner. AOL Time Warner will assume complete ownership of TWE's major content assets, which include Home Box Office (HBO), Warner Bros. and stakes in Comedy Central, Court TV and The WB Network.
By seeking a separate listing for its cable network, Time Warner Cable, the shares will provide currency to build the company's cable interests and TWC is already reported to be on the look out for cable purchases. "We will be well-positioned to pursue strategic opportunities in a sector that is likely to continue to consolidate," commented AOL Time Warner, chief executive, Richard D Parsons.
AOL Time Warner is paying the equivalent of about E9 billion to buy out AT&T's stake in Time Warner Entertainment - which goes to Comcast if it completes its pending purchase of AT&T's cable operation around the end of the year.
AOL Time Warner investors get increased transparency and reduced complexity at AOL Time Warner, Parsons, explained. But in the short term, the deal will add E2.1 billion to AOL Time Warner's E26 billion plus debt. Standard & Poor's is reviewing AOL/TW's credit rating downward, having left its investment-grade rating untouched.
AOL Time Warner had wanted to avoid paying cash and preferred AT&T Comcast to agree to swap its 27 percent stake in Time Warner Entertainment for perhaps a third of a new Time Warner Cable entity. But AT&T and Comcast were unwilling to pursue that route, though they did agree that more than half of AT&T Comcast's potential stake of E9 billion could be taken in Time Warner Cable shares.
AOL/TW now has to increase its debt to borrow the E2.1 billion down payment to AT&T Comcast for its stake in the partnership, with a plan to repay the debt when it sells shares in Time Warner Cable to the public. Despite the debt issue, AOL's share price rose by seven per cent.
The main beneficiary, Comcast, saw its stock jump 14 per cent on confirmation of the deal, up E3.08, to close at E24.25.
The deal facilitates Comcast Corporation's plan to acquire AT&T's cable unit, by removing a potential conflict of interest between AOL Time Warner - owner of the second-largest US cable operation - and AT&T Comcast, which would be the country's largest cable player.
Comcast's Time Warner Entertainment stake will provide cash - which would contribute to reducing the debt to be incurred in the E47 billion takeover of AT&T's cable division. "This agreement will turn a non-strategic investment into cash that we can use to pay down debt," said C Michael Armstrong, Chairman and CEO of AT&T. AT&T's share price rose by about nine per cent on news of the deal.
AOL Time Warner will also pay for access to AT&T Comcast's cable systems to provide high-speed cable access to subscribers of the America Online Internet service. However, instead of ubiquitous access, AT&T and Comcast agreed only that within two years after closing the Time Warner Entertainment deal - expected next spring - they would make America Online cable modem service available to about a third of their roughly 22 million combined subscribers in a three year deal. But this could be expanded to all of AT&T Comcast's cable systems, if both sides later agree. AOL Time Warner also agreed to pay AT&T Comcast E35 to E40 a month for each AT&T Comcast subscriber who uses the America Online cable modem service - with subscribers expected to pay E55 a month retail.
Parsons believes that the company could execute a public offering of stock in Time Warner Cable despite the difficult market, because it would have a relatively low debt level compared with other cable companies. As a back up, he noted that the company had, "various assets that one could view as nonstrategic or noncore that you could look to monetize,"
The boards of all three companies have approved the restructuring agreement, which will require regulatory approval and is expected to close in the first half of 2003. AT&T and Comcast continue to expect the AT&T Comcast merger to close by the end of 2002.
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What now for iTV retail?
A report by Datamonitor
iTV based retail or tCommerce was at one stage seen as the 'killer app.' of interactive TV, however disappointing early results led to widespread scepticism.
A new report by independent market analysts Datamonitor (DTM.L) argues that iTV retail and iTV branding will become important elements of digital operator and broadcaster strategies, as these groups exploit links across an increasingly broad range of programming and interactive services. The report, iTV branding and retail - Business model and service development to 2006, recommends that for most product and service types, branding-focused strategies will be more appropriate than iTV based retail, with the result that the TV will remain primarily a brand-building environment.
tCommerce was the wrong focus for early iTV investment
The high initial focus of digital TV operators, such as Sky Digital and NTL, on iTV-based retail owed a great deal to the hype surrounding eCommerce with the early development of iTV in Europe coinciding with the height of the dot.com boom. Walled garden-based iTV services were seen as providing a familiar alternative to the Internet, giving consumers more convenient access to interactive services and allowing companies to target those without Internet access.
The early walled garden iTV experience, however, turned out to be very disappointing for both consumers and companies, with a lack of awareness and low level of functionality restricting usage and revenues, while the associated costs made it virtually impossible for companies to achieve a return on their investment. Subsequently many companies discontinued this investment and the iTV development focus of operators necessarily shifted to entertainment and the channel environment, particularly enhancement of popular programming such as sports events, reality TV, and quiz-shows.
Next stage of development hindered by economic situation
The more advanced European digital TV markets are now reaching the point where there is sufficient awareness and usage of interactive TV to enable the development of the next stage of iTV strategies; the provision of advanced iTV branding and retail services across all available iTV environments. The increasing sophistication of enhanced programming enables the provision of a broad range of branding and retail services within editorial channels and retail channels, either on a stand-alone basis or linked to walled garden services, totally transforming their positioning and the user experience.
However, the financial difficulties facing many digital operators and the advertising recession will hinder development, with groups anxious to avoid the mistakes of the last few years and focusing on achieving a reliable return on any new investments. As a result, Datamonitor expects only gradual development, with certain operators - most notably Sky Digital - leading the way. Over the next few years iTV branding and retail will become core components of operator and broadcaster portfolios of interactive services and their commercial offering to advertisers and partners.
iTV branding and retail need to be part of an integrated iTV offering
Datamonitor believes that operators need to develop integrated interactive TV strategies, positioning iTV branding and retail within a broad portfolio of interactive and programming interests and exploiting the associated synergies and links to drive awareness and usage.
It will be vital for iTV branding and retail services to exploit a strong presence in the channel environment and close association with programming, as well as having a high profile on regularly used iTV services, such as the interactive program guide. Furthermore, the success of services, particularly those within editorial channels, will require that products are relevant to the actual viewing experience, rather than simply the program content.
However, while these factors will determine awareness of iTV branding and retail offerings, in order to motivate use or elicit a response, services will need to be entertaining or provide viewers with an interesting experience. While discounts and competitions may attract users in the short term, as these become commonplace they will lose their appeal and may be counterproductive.
Only select product types should exploit iTV retail
iTV branding and retail will not radically change business models, in the main it will simply enhance advertisers' existing strategies, enabling them to extend or strengthen contact with consumers. Interactivity will considerably increase the brand-building power of the TV, allowing businesses to provide the audience with a personalised or otherwise more involving experience and generate consumer data or leads to be developed through another medium.
However, due to the technological limitations of iTV and the entertainment and leisure focus of its usage, only a small number of product and service types will be appropriate for direct retail through iTV. Beyond retail channels, which are ideally suited to exploiting iTV for sales of general consumer goods, these will be products closely associated with the TV-viewing experience and not requiring complex purchasing decisions.
Due to a high level of association with programming and their emotive nature, Datamonitor expects travel and media items to provide the greatest variety of iTV retail opportunities and to dominate consumer iTV retail spend.
The TV will remain primarily a branding environment
Datamonitor forecasts that consumer spend on iTV retail in Western Europe will exceed E6 billion in 2006, equivalent to almost E100 per digital TV household. However, while iTV may increase overall consumer spend on certain product types by driving impulse purchases, most of this spend will simply be transferred from the Internet or the high street.
In fact, consumer spend on iTV retail will remain dwarfed by that on content: In 2006 total iTV retail spend is forecast to reach only 16 per cent of the spend on digital pay-TV services, excluding iTV games and gambling. Furthermore, of the total iTV retail spend by consumers, only a very small proportion will actually go to the operators and broadcasters; these groups will earn most of their iTV branding and retail-related revenues from sales of airtime and iTV services to businesses.
iTV branding and retail will therefore not radically alter the commercial focus of the TV environment. In particular, the TV is the most powerful branding environment and while iTV will enable direct retail in some areas, the TV will remain primarily a branding environment.
Real media player goes multiformat
RealNetworks has launched a new digital media player designed to support all major file formats.
RealOne allows audio and video streaming, as well as the option to mix music playlists, burn CDs and watch DVDs from the user's desktop. The new RealOne player can handle RealAudio, RealVideo, MP3, Windows Media, QuickTime MPEG-4 and 50 other formats. RealNetworks says that a major advancement for users is that they will no longer have to worry about which format a playback file is recorded in.
RealNetworks vice president of programming Erik Flannigan commented that RealOne has an advantage because of a new client-side feature called TurboPlay, which requests quick playback of streaming files - of any content created in the last five years.
The software can be bought for E20.47or 'hired' by the month using a RealOne SuperPass subscription. A free version also will support DVD playback and CD burning. Currently about 750,000 people subscribe to RealOne SuperPass, all of whom will have access to the new software, as well as audio and video feeds from CNN, FoxSports.com, Major League Baseball and NASCAR. In addition, RealNetworks has agreed a deal to stream audio coverage of US college sports, covered by the College Sports Network, previously broadcast by Yahoo.
RealNetworks recently opened up its sourcing via the development organisation Helix, to give device and application developers greater freedom to support the Real formats. It is assumed that it is no coincidence that the launch precedes the launch of Microsoft Windows Media 9 Series by just a few weeks.
Thursday 22nd August 2002
New Confidence at Premiere
Liberty to control Vivendi assets?
EchoStar VIII rescheduled
ProSieben revising focus
ZDF plans cuts
Motorolla compression for MTV
KPN to sell 3G stake
New Confidence at Premiere
By Dieter Brockmeyer
Insolvency is not an issue anymore, said Premiere CEO Georg Kofler in an newswire interview after inking a long expected new agreement with Universal Studios, including both program distribution and carriage of Universal's two German digital pay TV channels 13th Street and Studio Universal.
That means, from October, Premiere subscribers will be able to see films like Galdiator and Hannibal again. The agreement would have been able to be finalised under economically reasonable conditions. The old pricing scheme was not a scale, Kofler said, describing the old pricing system as lunatic. However, he declined to give any further details.
But, the invoices for the next films would have beeen affordable. Previously Premiere succeeded with two Hollywood studios and it is currently in negotiations with two additional majors with whom Kofler hopes to finalise the agreements before Christmas.
Premiere would be expected to gross about 2,000 new subscribers on a daily basis, which would significantly boost the current 2.4 million subscriber base by the end of the year. Premiere is part of the crashed German KirchGroup. Its parent company Kirch Pay TV has already filed insolvency - a step that is also expected of Premiere by many outside observers. Kofler added that it would be a satisfying feeling to return to regular business after last month's turmoil.
To date some 20 groups including media groups and investment banks, and possibly also US movie studios have indicated an interest in the auction of KirchMedia's Premiere pay-TV unit.
Germany's Bertelsmann has ruled out making a bid, and Rupert Murdoch's News Corp said it was not interested following its loss of E1.56 billion in the Kirch collapse - though some commentators believe that it would be, at the right price.
Liberty to control Vivendi assets?
US media investor Liberty Media Corp is reported to be investigating the creation of a media giant through the merger of some of its cable-programming interests with Vivendi Universal SA's entertainment businesses, in which Liberty is a four per cent shareholder. Vivendi's entertainment operations could then potentially be spun off, with Liberty retaining a major stake in the combined entity.
Vivendi's Universal Studios, Universal Music Group, USA Network, Liberty's Starz and Encore cable networks and Liberty's interest in the Discovery Channel's parent, Discovery Communications.
Barry Diller, Chairman of Vivendi's film and television businesses, would be likely to manage the new company while John Malone, chairman of Liberty, would be a major shareholder.
Liberty executives are reported to have held exploratory talks with Diller about possible restructuring scenarios for Vivendi's entertainment businesses, and have told Vivendi of their interest.
It has been pointed out that if Malone were to succeed in finalising the deal, Liberty would own significant shares in three rival media companies -- Vivendi Universal Entertainment, News Corp and AOL Time Warner Inc.
Scenarios suggested in the press include Liberty becoming a strategic partner with Vivendi, contributing some of its cable-programming assets - such as Liberty's Starz Encore unit and its 50 per cent stake in Discovery - in exchange for stock. Such an enlarged entertainment company could then sell a minority stake to the public to raise cash.
However, Vivendi may well decide to persue other strategic partners for the entertainment businesses, or Jean Rene Fourtou has suggested that the company could change direction completely given that it has a variety of assets in unrelated areas. Vivendi has just decided to sell E10 billion of assets within the next two years (See news Archive), to cut its debt.
A Liberty deal would put the entertainment businesses under US management and facilitate Vivendi's exit from the market if it later chose to focus on Europe.
Vivendi is also confirmed to be in talks with partner Vodafone Group PLC of Britain to sell its equal stake in their Vizzavi Internet-portal joint venture, expected to fetch around E150 million.
*This week 69 per cent of shareholders at Wink Communications approved the merger between Wink and a subsidiary of Liberty Broadband Interactive Television (LBIT).
*Vivendi may sell its flagship 16 magazines including French news magazine L'Express, contradicting earlier statements that these would not be sold.
EchoStar
VIII rescheduled
The launch of EchoStar VIII has been rescheduled for 6:15 am GMT this
morning (Thursday 22/8/02) from the Baikonur Cosmodrome in Kazakhstan
following a second failed attempt on Tuesday (20/8/02).
The high-powered direct broadcast satellite will be carried by a Proton
K/Block DM launch vehicle and positioned at EchoStar's 110-degree orbital
location.
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ProSieben revising focus
By Dieter Brockmeyer
The German commercial TV network ProSieben is attempting to return to its old role of being a showcase for big cinema production, said the venture's Managing Director Nicolas Paalzow during TeleMesse in Cologne this week.
In addition he is trying to foster two additional pillars to the company: comedy and a new prime time series. The network was aware of its weaknesses, especially during the day time where court room series in other channels like RTL and the ProSieben sister channel Sat.1 had been taking market share away from ProSieben.
A new medical reality format is intended to provide greater competition. In the first half of 2001, in it's core target group of 14 to 49 year olds, ProSieben used to have a market share of about 14 per cent. Lately it has only had about 12 per cent and was almost on the same level as its sister network Sat.1.
ProSieben should be able to return to its previous levels of market share if the task is taken seriously, said Paalzow. ProSieben is the largest channel within ProSiebenSat.1 AG, which is dominated by the insolvent KirchGroup.
The major shareholder of the ProSieben group will be changed, dependent upon who buys the Kirch Media asset.
ZDF plans cuts
German public broadcaster ZDF intends to cut costs and jobs over the coming years, ZDF General Director Markus Schaechter said in an interview with the Financial Times Germany.
He aims to compensate for the annual E25 million loss he expects this year and next as a result of shrinking advertising revenues. He hopes to save about E50 million annually from 2004 onwards. From the current budget of E1.8 billion only some E125million is coming from advertising, with the majority attributed to fees.
Schaechter says that because many of the fixed contracts with regular employees means they can't be fired, he would especially be looking at the contracts of freelance staff. Also because ZDF is suffering from the current decline in advertising revenues it may be necessary to look at the network's outdated structures which go back 40 years.
Motorolla compression for MTV
MTV Networks in the US is to install 12 channels of Motorola's PurePixel and DigiCipher II video compression encoders at its uplink facilities in Happauge, New York.
The broadband communications division of Motorola Inc has an existing relationship with the network, which is a unit of Viacom.
MTV plans to use the DigiCipher II encoding system to improve its distribution of digital programming services. The compression technology is built to handle full-bandwidth video and audio inputs and comes with compression and multiplexing features that form a broadcast multiplex. The PurePixel technology is being used to improve video compression efficiency and so squeeze more programming over existing satellite transponders for the network.
Motorola says the PurePixel processing option will help MTV add dual-pass compression analysis, temporal and spatial filtering, and new scene detection techniques to the Motorola DigiCipher II MPEG-2 compression process.
KPN to sell 3G stake
A further blow for the prospects of commercial 3G services has been dealt by Dutch teleco company KPN which is cutting its losses and quitting its 3G venture with the Hutchison Group. As part of an E9 billion impairment charge announced by KPN, the group has taken an E1.2 billion charge against its 15 per cent stake in UK mobile phone group Hutchison 3G and put the shares up for sale.
In contrast, Hong Kong's Hutchison Whampoa, which owns 65 per cent of Hutchison 3G, has said it had no intention of writing down its holding in the UK mobile phone business.
Concern about customer demand and ability to pay for 3G services -on a level commensurate with the high licence fees paid - has resulted in the industry reassessing it's future strategy and timetables.
Finland's Sonera and Spain's Telefonica wrote off more than E9bn against mobile phone operations in Europe last month and France Telecom has sought to delay its 3G roll out in Sweden.
KPN has nonetheless insisted it will press on with its 3G operations in Germany and the Benelux countries.
Wednesday 21st August 2002
Swedish media mogul Stenbeck dies
Freeview DTT Autumn launch
Egmont - mergers, TV2 bid
ITV Joint sell condemned
AOL/TW buying AT&T stake
European digital TV a E13.7bn market
Swedish
media mogul Stenbeck dies
By Goran
Sellgren
Swedish multibillionaire Jan Stenbeck, the founder/ controller of Modern
Times Group and several other major media and telecom operations, including
Tele2, Millicom, and Metro International, died suddenly from a heart-attack
yesterday (20/8/02).
He was taken to the American Hospital in Paris from his Luxemburg offices,
(his other centres were Stockholm, New York and the Bahamas) but his life
could not be saved.
Jan Stenbeck, 59, inherited the family empire, Kinnevik, after the sudden
deaths of his father and his elder brother in the late Sixties. He soon
started to transform the old traditional Kinnevik (with roots in wood/pulp
and steel industries) into a modern operation focused on media and telecoms.
He discovered the potential of mobile telephony long before most of his
future competitors.
Stenbeck was one of the first investors in satellite television (SES and
its Astra birds), without then knowing how to use it, but the move soon
led to a series of television station operation launches. In 1987 he launched
pan-Scandinavian TV3, the region's first private commercial operator,
today also active in the Baltic countries and Hungary; pay TV service
TV1000; youth channel ZTV; business channel TV8; TV6 etc. Today MTG operates
in almost a dozen European countries, including Russia.
DTH platform Viasat is one of the leaders in the Nordic area with over
a million subscribers. MTG also controls leading production companies
Strix and Sonet, subtitling specialist SDI, claiming a 'world-leading'
position.
The sudden death of 'Mr Stenbeck', as he prefered to be addressed, is
now front-page news all over Scandinavia. The Prime Minister Goeran Persson
and leaders of most Swedish political parties have commented on Stenbeck's
death with respect, many calling him "the greatest Swedish entrepreneur
of modern times."
But along with all admiration his unusual ways of conducting businesses
and the ruthless American methods he learnt from his years as a student
at Harvard and his first career at Morgan Stanley in New York also made
him countless enemies. "A modern Dr Jekyll and Mr Hyde," a "combination
of genius and gangster," "a Swedish Berlusconi" are among the many obituaries
now printed.
25-year old Cristina, the eldest of Stenbeck's four US-based children
has for some years been the heir designated by her father to take over
the empire. Stenbeck's legacy has been severely hit by the on-going international
telecom crisis and over the last few years the value of Stenbeck's empire
is estimated to have fallen from 150 to 60 billion krona (E16 to E6.50
billion).
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Freeview DTT Autumn launch
The UK Digital Terrestrial Television service from the BBC and BSkyB is to be called Freeview and will launch in Autumn - expected to be the second half of October.
Greg Dyke, Director General of the BBC, and Peter Abery, head of consortium member Crown Castle, the transmission tower company, described their 12-year licence award from the independent television commission last month as providing a "fresh start" for DTT in the UK. The old ITV Digital licence has been split into three multiplexes, which will be shared by the BBC and Crown Castle.
It was also revealed that the new platform will add three extra channels - two general entertainment channels and a music channel (possibly Emap's 'The Box')- to the 28 already announced. These will be provided by third parties other than the BBC and Sky and run on the Crown Castle multiplex. Previously announced services include all five existing terrestrial channels, BBC Choice, ITV2, BBC4, News 24, Sky Sports News and two new channels, UK History and Sky Travel.
The BBC is planning what it describes as a 'significant' pan-media marketing campaign to support the launch, and while no figure has been anounced, the suggestion from ATV of £20 million (E31 million) was described by a BBC spokesperson as 'wouldn't be far from that sort of figure.'
The spokesman told ATV, "It has to be a significant spend as not only do we have to re-establish confidence in DTT, we have to end the confusion that exists. Set-top boxes will be retailing for a one-off fee of around £99 (E150), supplied by Nokia, Pace and a variety of other manufacturers. Andy Duncan, the BBC's director of marketing and communications was quoted as saying, "As well as former ITV Digital customers, people who make a one-off equipment cost of around £99 will be able to enjoy this simple, compelling proposition - more high quality channels, entirely free to view."
"We believe we have a compelling range of channels with the broadest possible appeal to those seeking to extend their viewing choice," said Peter Abery, the Crown Castle President and Managing Director. No name has yet been announced to head up the new operation.
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Egmont - mergers, TV2 bid
By Goran Sellgren
Denmark's oldest and largest media group, Egmont, is merging its two major entertainment divisions, Nordisk Film and Egmont Entertainment, creating what the group calls "the biggest Nordic producer and distributor of electronic entertainment."
Simultaneously Egmont is finally coming out as an official bidder for TV2, Denmark's leading ad-supported - but still public service - TV station, which the new non-Socialist government of Denmark has recently decided to privatise.
Egmont, formerly Gutenberghus, was founded in 1878 and for many years operated as a foundation. From its initial focus on traditional trades such as book-printing and publishing, its has gradually transformed itself into a modern media house. Nordisk Film was incorporated. In the early Nineties. Nordisk is one of the world's oldest film studios, formed in 1906 and still active in film production and distribution, as well as being Denmark's biggest cinema operator.
The Egmont board is now taking a step further towards streamlining its operations, by merging its two divisions Egmont Entertainment and Nordisk Film, using the old Nordisk Film as the new joint brand name. The new company has an annual turnover of some E405 million, and a staff of some 1,350 people. Kenneth D Plummer has become the MD of the new company; for the last few years Plummer was MD of Egmont Entertainment and has worked at Disney and Mattel.
Nordisk Film's previous MD, Soeren Jakobsen, who has an extensive background at Denmark's public service broadcaster Danmarks Radio-TV, will now supervise Egmont's television investments.
Egmont group already controls a 33 per cent interest in Norway's biggest private station, TV2. And, as mentioned above, has officially revealed itself as one of the major bidders for Danish TV2. Several leading Danish newspaper groups have announced their interest in investing in the station. These include Norwegian Orkla, which has a controlling interest in leading Copenhagen morning daily Berlingske. The management of Berlingske has indicated that forming a consortium with Egmont might be an acceptable way of getting control of TV2.
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ITV Joint sell condemned
There has been a hostile response from UK advertisers to the announcement that terrestrials Granada and Carlton Communications will make joint advertising pitches and coordinate programming schedules.
"There are concerns that closer working ties between Carlton and Granada could represent an attempt to 'merge by stealth' and that the pooling of operations could lead to information sharing between Carlton and Granada on their advertiser-customers," The Incorporated Society of British Advertisers has announced, in a highly critical condemnation of the two companies' planned joint marketing and programming initiative. They suggest that the move could lead to illegal sharing of information about advertisers allowing the companies to manipulate advertising rates.
If Carlton and Granada actually engage in joint advertising sales the ISBA has threatened to refer the two companies to the regulators.
It did however welcome ITV's apparent acceptance that it would face regulatory hurdles to a full merger.
Even if legislative barriers to a single ITV are removed in the forthcoming communications bill, a merger would be opposed by ISBA whilst ITV controls some 50 per cent of the UK airtime sales market.
Full merger talks between Carlton and Granada collapsed earlier this year due to regulatory concerns that such a virtual monopoly would be anti-competitive (Also see News Archive) and the company views such a move as now unlikely before 2003.
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AOL/TW buying AT&T stake
AOL Time Warner is reported to be buying out AT&T's stake in Time Warner Entertainment this week for E9.22 billion in cash, AOL stock and shares in a new publicly traded cable business.
The deal gives AOL Time Warner full ownership of Warner Bros studios and cable networks HBO, Court TV and Comedy Central.
AOL access to AT&T's cable networks proved a haggling point in negotiations and agreement could follow the main deal. AT&T is selling its cable business to Comcast, and access to Comcast's networks may be included in the deal.
The deal will reduce AOL Time Warner's 2003 earnings and could even hit its credit rating, but would simplify and clarify the company's capital structure and signal the company's intention to pursue a clear forward strategy.
Reuters reports that AT&T would get about E2 billion in cash and about E1.5 billion in AOL common stock in exchange for its 27.6 percent stake in Time Warner, which includes the Warner Bros. film studio, most of Time Warner Cable, as well as the three cable TV networks.
AT&T also would get a more than 20 per cent stake in a new cable TV business that would have about nine million subscribers, which AOL Time Warner would sell to the public, depending on market conditions. The 20 per cent stake would be valued at about E5.5 billion.
AT&T would cut its debt load and gain some E5.8 billion to E6.5 billion in after-tax proceeds to strengthen its balance sheet ahead of the sale of its cable TV business, AT&T Broadband, to Comcast.
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European digital TV a E13.7bn market
A recent report from Strategy Analytics' Broadband Entertainment Strategies service predicts that European consumers will spend E13.7 billion on digital and interactive television services in 2002, a 31 per cent increase over 2001.
Satellite players such as BSkyB and Canal Plus are forecast to be the major beneficiaries of growing demand. Revenue from satellite platforms are predicted to reach E10 billion this year, and E24 billion by 2008.
Cable operators are expected to take an increasing share of the market once the industry consolidates and upgrades to digital. By 2008, Strategy Analytics predicts that cable will be Europe's leading platform, accounting for 45 per cent of revenues.
The report assesses the outlook for digital and interactive television services across 16 European markets. On a country-by-country basis, it describes current levels of usage of digital and interactive television, revenue streams and market segmentation, and forecasts demand to 2008.
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3
yrs for ITV merger
Vivendi
'asset-rich'
E110 bn media write-off
Operators
told 'abandon 3G'
Viewers join ReplayTV court
case
PanAmSat adding Ka-band
3 yrs for ITV merger
Any actual merger of the UK's dominant independent terrestrials Granada and Carlton is now claimed to be at least three years away, with the companies instead planing to combine marketing operations during Autumn.
Carlton chief executive Gerry Murphy is reported by the Financial Times newspaper as saying that the joint approach would result in a "virtual enterprise," designed to save costs and increase revenues.
Granada and Carlton abandoned earlier plans for a full merger this year when it appeared that regulatory approval was unlikely on competition grounds. Murphy suggested that regulatory hurdles in the new draft Communications bill made Carlton unlikely to reopen merger talks for another three years as it considered other priorities.
"Under current competition rules a full merger would be very difficult," a Carlton spokesman told the Reuters news agency.
The two companies will co-ordinate their programme scheduling, and although they are not allowed to combine their sales teams, they intend make joint approaches to advertisers to combat the erosion of their market share by cable and satellite companies. They will also merge their back office operations, however they will still act as separate companies. Murphy commented, "We are marketing together for the first time ever for 2003 and sales, commissioning, marketing and programme scheduling will be presented and pitched to advertisers together," though many in the industry say that is something that the company has already been doing for some time.
Carlton and Granada's cooperative DTT venture ITV Digital collapsed earlier this year. Both firms are currently believed to be in talks with Scottish Media Group over buying the television franchises Grampian and Scottish TV but are seeking to reduce the reported £350m asking price.
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Vivendi 'asset-rich'
Vivendi Universal's new Chairman Jean-Rene Fourtou denied suggestions that the company would sell further stakes in Vivendi Environnement, Cegetel, Canal Plus, Vivendi Publishing, Universal Music Group or Vivendi Universal Entertainment, to cut its E20 billion debt.
Although Fourtou has negotiated a credit facility worth almost E2 billion with seven banks, ensuring that the company did not default on debt repayments, a further E2 billion credit is sought from the banks by the end of September to prevent forced asset sales.
In an open letter to staff, no doubt also intended to assure the market, Fourtou commented, "I want to assure you that although the group's situation remains tense I have myself identified a strategy for getting out of this crisis."
"With a policy of strict management we can significantly increase the value of the assets we retain," said Fourtou, emphasing that the assets were greater than the company's E20 billion debt (E35 billion including the company's environment group), despite the free-fall in its share price.
Vivendi's shares fell 45 per cent last week after it unveiled losses of E12.3 billion for the first half of this year and failed to secure a E3 billion loan to cover short term debt repayments.
A subsequent eight per cent share price rise from a low of E9.3 was partly attributed to suggestions that the group is in talks to sell its half of struggling internet portal Vizzavi.
Fourtou has said it plans to raise E10 billion by selling off non-core bits of Vivendi's business to solve its debt problems.
However, Fourtou has ruled out selling off stakes in Vivendi Environnement, Cegetel, Universal Music Group, Vivendi Universal Entertainment (VUE) or on Vivendi's publishing interests outside the United States, though it is Vivendi is selling its American publishing business, Houghton Mifflin.
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E110 bn media write-off
So far this year a vast E110 billion has been written off the value of media companies as assets are accepted as no longer being worth the price they were bought for.
The two-year advertising recession has seen the UK's media sector underperform the struggling FTSE all-share index by 21 per cent this year.
The collapse in share prices has slashed the value of "goodwill" of acquired businesses.
AOL Time Warner has led the rout with its E150 billion merger between AOL Online and Time Warner now seen as overvalued by E60 billion; Vivendi Universal has had a E30 billion write off in value and BSkyB wrote off more than E1.5 billion on its KirchMedia share.
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Operators told 'abandon 3G'
Third generation telephone services should be abandoned now or face a long drawn-out death say analysts in a recent report from Datamonitor.
Some operators such as Spanish telecoms firm Telefonica have already abandoned their 3G plans while others assess the burden of debt they carry for 3G licenses.
Long delays before the roll out of new services - allowing users to download video clips and colour photos, as well as browsing the internet on their handsets - has compounded the crisis.
Datamonitor analyst Nick Greenway suggests that it may be cheaper for license holders to abort 3G plans rather than attempt to pay huge subsidies necessary to get the market going.
While research by UK regulator Oftel suggests that consumers will not be prepared to pay more than £300 (E470) for any sort of advanced mobile phones, and many no more than E230, the new E1,170 smartphones would require huge subsidies to assist take-up.
Datamonitor says that more operators will have to abandon services, while others may lease capacity to brands such as Manchester United, AOL Time Warner or Disney to create revenue.
In the UK operators paid £34 billion during the spectrum auction, with similarly large amounts paid in Germany and other markets choosing the auction route.
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Viewers join ReplayTV court case
Viewers wanting to influence any decision over what constitutes 'fair use' of video content have joined ReplayTV to counter a US law suit by the Hollywood studios.
SonicBlue, the maker of the ReplayTV 4000 digital video recorder, is defending claims that use of the device contravenes copyright law.
Last week US District Judge Florence-Marie Cooper in Los Angeles allowed Craig Newmark, creator of San Francisco-based community Web site craigslist.org, and four other consumers to become a party to the suit - reversing an earlier decision that "many, if not all'' of the issues consumers raise would be resolved without their direct output, and rejecting moves by the studios to exclude consumer groups from the case.
SonicBlue is expected to defend features of the device that allow users to skip commercials or send shows to friends, which forms the basis of a copyright infringement case brought in October by 28 Hollywood studios and television networks. However, Cooper claimed that without consumer input the case wouldn't necessarily resolve questions about whether specific uses - such as transferring a TV show to a laptop to watch while travelling or using the commercial skip features to avoid exposing children to commercials - constitutes a legally permissible "fair use."
Robin Gross, an attorney for the Electronic Frontier Foundation, a San Francisco-based technology advocacy group representing Newmark commented, "We are pleased that the court recognised the importance of having the consumer voice be a part of the debate in which the legal issues will ultimately be decided."
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PanAmSat adding Ka-band
Satellite manufacturer Orbital Sciences has been contracted by PanAmSat to build a Ka-Band satellite system for the company, for delivery sometime in 2005.
PanAmSat said the Orbital contract helps it meet milestones associated with the Ka-Band authorisation it received from the Federal Communications Commission.
"We are exploring the business case for the use of Ka-Band frequencies and may conclude that we will not pursue the construction of the satellite to completion," PanAmSat said in a recent filing at the Securities and Exchange Commission.
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Telefonica/Sogecable
avoid EU review
Liberty's E5.2bn write-down
Bertlesmann chief quells fears
Fairytale bonus at Disney
AOL Time Warner shares jump
Echostar
practices investigated
Telefonica/Sogecable
avoid EU review
On Friday (16/8/02) the European Union Commission announced that it views
plans by Spain's Sogecable SA (controlled by Vivendi Universal and Prisa)
and Telefonica SA to merge their digital-TV broadcasting businesses as
a purely national issue, and so although the deal would leave Spain with
just one digital- TV operator, it will only be subject to review by the
Spanish authorities - and not the EU. Spain has four months to conduct
its investigation. EU Competition Commissioner Mario Monti had previously
suggested that Telefonica's control over pay TV could limit competition,
and it also considered whether Vivendi's involvement added a pan-European
dimension.
The EU did conclude that the deal "risks strengthening Telefonica's dominant
position in a number of telecommunications markets," but on balance, saw
it as primarily a national concern. The two companies have a combined
80 per cent of Spanish pay-TV subscribers, giving the new company - in
which each constituent company would have an equal share - some 2.5 million
subscribers and more than E1.3 billion in revenue. It would also effectively
have a monopoly on buying Pay-TV rights to movies and Spanish soccer.
Pay TV in Spain is forecast to grow from 29 per cent penetration to 35.6
per cent, according to a report in the FT, hence it is not seen as an
excessive threat to free to air competitors TVE1 or Antena3.
Spanish Economy Minister Rodrigo Rato wanted the Spanish government to
oversee the regulatory work and the Spanish government, which supported
the deal, is now expected to formally approve it in order to prevent Telefonica's
TV platform, Via Digital, going bankrupt. Via Digital had Ebitda losses
of E122 million in the first half of this year.
Following operator collapses in the UK and Germany, Europe's pay-TV operators
are seen by many commentators as needing to consolidate to survive, with
countries potentially having no pay-TV broadcaster at all where such consolidation
is blocked.
This announcement could pave the way for a decision favourable to Rupert
Murdoch in Italy where his News Corp organisation intends to buy Italy's
Telepiu from France's Vivendi Universal and merge it with its own Stream
joint venture with Telecom Italia SpA. Murdoch was reported by Dow Jones
Newswires in June as saying that he would accept conditions already imposed
by Italy - but not necessarily conditions that the EU could impose in
the future. The companies reportedly plan to close the deal by mid-September
and gain EU clearance by the end of November.
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Liberty's E5.2bn write-down
The vast media stocks holding company of US cable guru John Malone, Liberty Media, has sustained losses of E4.67 billion after taking huge writedowns of E5.2 billion in the first half of 2002. These included a fall in book value of $2.33 billion on its investment in AOL Time Warner, E1.42 billion for its stake in News Corp and more than E1 billion from its holding in US mobile phone network Sprint PCS.
Europe's largest cable company, UPC, controlled by Liberty's UnitedGlobalCom, ran up debts of more than E10 billion on acquisition and capital expenditure and last week warned that it could file for bankruptcy if it is unable to go ahead with a planned restructure(see news archive). This E4.67 billion first half loss compares to a deficit of E2.34 billion in the same period last year.
Poor Online advertising and investigations into the company's accounting methods by both the SEC and the US justice department have hit AOL Time Warner's share value, with AOL last week admitting E50 million of dubious accounting (see news archive).
Liberty owns 171 million AOL/TW stock, one of the largest shareholders, thus severely hit by the 70 per cent fall in share prices this year.
Malone recently withdrew an offer to bondholders to increase his stake in debt-laden UK cable group Telewest. The book value of Liberty's Telewest investment was cut from E98million to just E30 million. NTL, the other British cable company, hopes to emerge from bankruptcy later this year.
Last week News Corp - in which Liberty is the second largest shareholder after Murdoch - reported losses of more than E6.01 billion for last year after taking its own writeoffs (see News Archive).
Liberty Media reported revenues of E1.03 billion for the first half, in line with last year's revenue. Operating profit was E66 million, against losses of E408 million a year ago. Liberty's total equity and debt value fell from E23.07 billion to E19.5 billion during the period. Its total cash and equivalents rose from E1.8 billion to E2.0 billion.
Liberty's SES filing for the quarter ended June 30, 2002 covered the company's broad range of video programming, broadband distribution, interactive technology services and communications businesses including:
Starz Encore Group LLC (100 per cent owned); Discovery Communications Inc (50 per cent owned); QVC, Inc (42 per cent); Liberty Media International Inc (100), the latter owning and operating programming services and communications networks outside the continental United States.
Denominated in US dollars, Liberty's Total Corporate Cash and Liquid Investments increased by $56 million and Total Corporate Debt decreased by $124 million compared to March 31, 2002. The increase in corporate cash was primarily due to proceeds from the sale of Liberty's investment in Telemundo and the sale of shares of Motorola common stock. This was partially offset by purchases of Liberty common stock, the exercise of Motorola warrants and Liberty's funding of Jupiter Telecommunications Co. Ltd.
Liberty's Public Assets:
Shares Held 8/14/02
Ticker Symbol Market Value (in $millions)
NWS.A $4,176.0
USAI 1,994.0
AOL 1,891.6
MOT 1,012.7
PCS 814.3
VIA.B 591.4
UCOMA 552.6
V 436.1
CD 356.9
IDT 162.2
CJR 89.1
LWIRA 75.0
CRWN 60.3
LSTTA / LSTTB 36.6
TWSTY 23.8
Other 169.2
Total $12,441.8
Impact of Underlying Collars (hedging) 4,768.0
Grand Total $17,209.8
OTHER EVENTS:
Agreement With France Telecom to Acquire NV Casema
On August 1, 2002, Liberty announced that it has signed a definitive agreement with France Telecom for the acquisition of Dutch cable operator N. Casema. Liberty will acquire 100 per cent of Casema for E750 million in cash. Closing of the transaction, which is expected in the fourth quarter of 2002, is subject to regulatory approval from The Netherlands Competition Authority (NMa), and other customary closing conditions.
Acquisition of Chofu Cable Television KK (Japan) with Microsoft Corporation
On July 26, 2002, Liberty acquired 46 per cent of Chofu Cable Television from Microsoft for approximately $16 million in cash. Upon completion of the transaction, Liberty and Microsoft each own 46 per cent with local partners owning the remainder. Chofu has 151,000 homes in its franchise area, passes 97,000 homes and currently serves 22,000 cable subscribers and 4,000 internet customers. Chofu is contiguous with J-COM's footprint and will be managed by J-COM.
Sale of Cablevision S.A. (Argentina) Interest to VLG Acquisition Group
On June 25, 2002, Liberty sold 21.8 per cent of the equity interest and 100 per cent of the voting interest of Liberty Argentina Inc for $14 million. Liberty Argentina owns 50 per cent of Cablevision S.A. Following this transaction, Liberty owns 78.2 per cent of the equity and none of the vote of Liberty Argentina Inc which translates to a 39.1 per cent equity interest and no voting interest in Cablevision SA.
Liberty Broadband Interactive Television to Acquire Wink Communications
On June 24, 2002, Liberty Broadband Interactive Television, Inc and Wink Communications Inc announced the execution of a definitive merger agreement whereby LBIT will acquire all of the outstanding stock of Wink. Under the terms of the agreement, Wink stockholders will receive $3.00 in cash for each share of Wink common stock. The transaction, which has been approved by Wink's board of directors, is subject to approval by Wink's shareholders and the satisfaction of certain other conditions to closing.
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Bertlesmann chief quells fears
Bertlesmann's new Chief Executive Gunther Thielen has moved to quash rumours of staff cuts at the company's TV and magazine units.
Senior managers, including those at the RTL Group, owners of the UK's Channel 5, were told that their businesses would not be cut as a way of reducing debts. Thielen also confirmed plans to reverse predecessor Middelhoff's centralisation and give the units greater autonomy. Middlehoff's expansionist ambitions to turn the company into an integrated entertainment conglomerate prior to a 2005 IPO, appear to have been abandoned.
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Fairytale bonus at Disney
Walt Disney Chairman and CEO Michael Eisner gained $800,000 (E813,000) in one day as an unexpected bonus for his demonstration of belief that the company's shares were undervalued.
Eisner personally bought $10 million worth of the company shares to boost sentiment toward the stock which had recently hit an eight-year low in intraday trading. The 725,700 shares, bought in a series of open-market transactions Wednesday 14/8/2002 at an average price of less than $14, jumped $800,000 by Thursday, 15/8/2002 thanks to a 4.5 per cent gain as the market coincidentally rallied back to the media sector.
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AOL Time Warner shares jump
AOL Time Warner stock rose more than 11 per cent last Thursday (15/8/02) after the company's top executives certified its financial results, meeting a deadline set by the Securities and Exchange Commission. The shares closed at $11.86, up 7.3 per cent .
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Echostar
practices investigated
Investigations are being made into alleged contravention of consumer protection
law by practices employed at US satellite operator Echostar, which is
already subject to antitrust investigations surrounding its planned acquisition
of Direct TV.
Attorneys general in 10 US states are reported to be looking into "EchoStar's
failure to comply with consumer protection laws based on the company's
call response times and policies, advertising and customer agreement disclosures,"
the company said in its second-quarter earnings report (See News Archive,
Vivendi).
The State attorneys general are also examining whether to sue to try to
stop the acquisition of DirecTV, because of their concerns about Echostar,
and the fact that a combined company would have a virtual monopoly on
US satellite TV.
EchoStar CEO Charlie Ergen said EchoStar may gain "some constructive advice
on how we can improve, and that could be good for our business and our
customers." He added that EchoStar "takes very seriously the comments"
from the state AG offices.
Ergen also said he still expects EchoStar's pending merger with DirecTV
and Hughes to win regulatory approval before the end of the year.
Meanwhile Ergen himself has been criticising executives and companies
that were less than honest about reporting their financial status. Commenting
on corporate accounting scandals elsewhere, Ergen described the fraudulent
reporting as "business practices that always made me wince." He added
that EchoStar doesn't anticipate any changes to its accounting methodology,
and there are no plans to restate past financial reports.
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