NEWS Monday July 15th - Monday 22nd July 2002

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Friday 19th July 2002

Thursday 18th July 2002

Wednesday 17th July 2002

Tuesday 16th July 2002

UK to axe satellite tax?

The UK government has changed its plans to charge all satellite operators a tax for the use of the airwaves, following opposition from Rupert Murdoch's BSkyB corporation.

The government's independent adviser had suggested that satellite operators should pay for the use of the spectrum. But it now seems that the government consultation document will propose a voluntary scheme of 'recognised spectrum access'.

If an operator decides not to contribute, it would not be a criminal offence. However, without recognised spectrum access, satellite broadcasters would not have their signals protected from interference to the same degree as companies that have paid up.

At present, satellite operators only have to pay for any signal-generated in the UK and transmitted up to a satellite while terrestrial operators have to pay for a licence to broadcast.

The government is believed to be considering a voluntary satellite tax which, if BSkyB were to pay it, would cost the company between 50p and £1 per customer, according to the UK's Guardian newspaper.

Other countries such as Ireland and Australia already charge for satellite spectrum. In 1996 the US government auctioned licences for its direct broadcasting satellite services.

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ITV Digital: boxes repossessed?
Up to one million former ITV Digital subscribers could be forced to give up their set-top boxes under plans being drawn up by the company's administrator, Deloitte&Touche.

Though it's not clear what a buyer would do with the boxes - which still allow subscribers to receive all free-to-air digital channels ¯ their removal is sure to be a blow to the BBC which recently won the TV licences formerly held by ITV Digital.

It will also anger former subscribers, many of whom are creditors of the company, and the UK Government which is still hoping to convert the whole of Britain to digital TV by 2010.

Most subscribers received the boxes free from ITV Digital but they remain the property of ITV Digital, despite the company's extremely public failure.

After a meeting with the administrator last week, creditors estimate they will only get back 1.5p from every £1 owed by ITV.
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Mac PVR unveiled

Californian software company El Gato has announced the first consumer personal video recorder for the Apple Mac operating platform.

Available for E199 direct from the company's website (www.elgato.com) the EyeTV connects to a Mac via a USB port and receives a signal from a cable or an antenna through a standard connector.

Titan TV will provide the online program guide for EyeTV. This comes as part of the purchase price and does not require any additional service fees. Like personal video recorders for TVs, EyeTV is able to record shows ahead of time or stop live programming for an instant replay.

Mac enthusiasts can do searches up to 14 days ahead, using keywords, actors' names, show titles or other criteria to find the programs they want to record or watch.

El Gato has chosen MPEG-1 over MPEG-2 or other digital formats for recording to cut down the size of the recorded programs and make them easier to copy to CDs or DVDs. One hour of recorded MPEG-1 video consumes about 650MB of space ¯ small enough to fit on a single CD.

El Gato executives felt the time was right for a Mac product. "We looked around and saw that people were doing this on PCs, but no one was doing it on the Macintosh," Victor Nemechek, El Gato's product marketing manager, told CNET News.com.

Hauppauge and Pinnacle Systems are among a handful of companies making either internal or external personal video recorders (PVRs) for PCs. But so far there have been very few such products for the Mac.

Traditional recorders, such as TiVo or Sonicblue's ReplayTV, attach to a televison but manufacturers have also started producing PVRs for personal computers. Sony, for example, ships several Vaio consumer PCs with a built-in personal video recorder.
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ITV Digital deal better than Sky

According to UK-based website, www.mad.co.uk, the Football League was offered a better deal forTV rights than it secured with BSkyB earlier this month.

ITV Digital's administrators sent an offer to the Football League for a single up-front payment of E115 million for the next three seasons compared to a four-year E148 million deal offered by Sky.

Last week, the Football League denied that any such offer of settlement had been made, but The Times has received documents that show an offer was sent by the administrator's solicitor on 11 April.

The offer was not refused, but no reply was given by 14 April, the deadline for acceptance. David Burns, chief executive of the Football League did not attend an emergency meeting with ITV Digital to discuss the matter.
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Digital recorders threaten free TV

According to Jamie Kellner, chairman of Turner Broadcasting Systems, TV viewers could soon be paying for channels they currently receive for free if digital video recorders proliferate.

"The wider use of systems like TiVo and ReplayTV, which allow viewers to easily skip through ads, would force a change in how broadcast and basic cable TV is supported", Kellner told the Television Critics Association on Friday.

"Don't think for a moment there's a free lunch involved in this," he added. Viewers could end up paying about E250 a year above any cable or satellite fees, he said, based on his own rough calculation.

According to a recent survey, Kellner said, 70 percent of DVR users skip past commercials. Although only about 1 percent of TV homes currently have the devices, their use could proliferate if they are routinely included in set-top cable boxes and satellite systems.

But, in an interview published last week in The Hollywood Reporter, TiVo Inc. president Morgan Guenther offered a different assessment of DVR's relationship to TV.

"The 30-second ad is dead but we don't think the E60 billion ad industry is going away,'' Guenther said, adding he expects new ideas to emerge from those not "threatened by the new models.''

AOL Time Warner, parent company of TBS Inc, holds a 13 percent stake in TiVo.
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Hitachi bolsters LCD production

Hitachi's display group announced that it is to invest 23 billion yen (E193.3 mil) in the TFT LCD production line at its Mobara plant, doubling capacity from the current 20,000 units to 40,000 units by the first half of 2003.

The increase in output capacity will enable the company to enter the market for large-screen TFT LCD TVs beginning in the 2003 fiscal year. The group will be spun off as dedicated flat panel display company Hitachi Displays on October 1, 2002.

Hitachi will concentrate planning, development, design, and production of displays in the new company.
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Pearson and C4 in learning deal

United States media group Pearson and the UK's Channel 4 have made a deal to create an interactive educational programming.

Channel 4's education division, 4Learning and Pearson Broadband will create an interactive version of the maths television programme, The Number Crew.

Pearson, which also owns the Financial Times, is one of the largest educational software and content operators in the US. This deal is expected to be the first of many to come in the next few months.
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Monday 15th July 2002

EU OK's Telia-Sonera merger
By Goran Sellgren

On Tuesday the EU commission gave its approval to merger plans by Swedish Telia and its Finnish counterpart, Sonera. The move occurred sooner than expected, with EU representatives pointing out that this is the first European merger between two monopoly operations, and also geographical neighbours.

Mario Monti, the EU commissioner in charge of competition issues, expressed his satisfaction that, "The new company will be more competitive on the European market, and we have ensured that business and private customers in Sweden and Finland will not lose from this deal."

But, as expected, there are some snags and built-in conditions from the EU officials. Telia will have to divest itself of its Finnish mobile telephony operations, the wireless W-LAN operations and also its chain of tele shops. Both companies are also required to ensure that future terrestrial and mobile operations in both countries will be legally separated from end user operations.

Most important of all, as already rumoured (and recently reported in Advanced Television) Telia will also have to divest itself of its national cable television operation, Com.hem, a market leader with some 1.3 million Swedish households connected - 65 per cent of the total cable market.

It is not the first time Telia has been ordered to sell-off Com.hem. When the company planned to merge with its Norwegian rival Telenor in the late Nineties (both still in 100 per cent state owned monopolies at that time) a binding condition from the EU was that Telia sell off Com.hem. The merger, however, was called off, but Telia stuck to the sell-off plans, then planned for a floatation of Com.hem, and finally, last year, decided to keep Com.hem within the family and integrate the company with its other broadband operations in its Telia Internet business area.

But Telia will certainly not be able to get as good a price for Com.hem as when the earlier 1999 sale was planned. Then UPC acquired the Stockholm-based Stjaern-TV (Star-TV) network, with just 250,000 subscribers in the greater Stockholm area, for five billion Swedish krona (E545 million). At this valuation, Com.hem would now have a price-tag of more than E2 billion.

But conditions are different now, and according to Swedish market analysts, valuing each subscriber at some E165, Telia would be happy to get some E200 million, one tenth of the 1999 market value. Com.hem is still fighting losses, with the Q1 figures showing an E29 million loss. But Com.hem has been and still is one of Telia's main weapons in its fight for a market dominance of the Swedish broadband market.

Telia has also ploughed fortunes into upgrading its cable operations to digital standard. Telia was the first in Europe to introduce digital cable services - as early as in November 1997. But despite heavy marketing, not even 10 per cent of Com.hem's subscribers have been convinced by the digital gospel. The present figure is 128,000 digital households.

What will happen now?

"The first move will be to discuss the future with the trustee that EU is expected to appoint within the next 10 days," says Ola Kallemur, Head of Information at Telia Internet. He will not comment on whether the EU decision is good or bad from Telia's and Com.hem's point of view. "It is far too early for us to have an opinion about that," and similarly he ducked the question about which potential clients Com.hem might have.

But in the speculation about a potential buyer of Com.hem, one thing is certain: UPC, the hottest candidate when Com.hem was last for sale, is now in deep financial difficulties and thus totally out of the game. For the same reasons Sweden's aggressive media group Modern Times Group, MTG, is not considered a realistic bidder, even if Com.he, and MTG have forged a number of unexpected alliances in the last year. Instead industry speculation now focus on Telenor, Telia's former partner-to-be which has very good cash-flow. Other potential Scandinavian suitors mentioned are Sweden's powerful media group, Bonnier (the main owner of TV4, and also a giant in publishing, printing, film production and distribution etc) and Telia's and Sonera's Danish counterpart, TDC. A certain Mr Murdoch is also counted in among potential suitors.
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HDTV spectrum withdrawn
By Owen Hughes

Australia looks ready to reverse its policy of using its digital spectrum capacity for high-definition TV and instead pushing its terrestrial channels into multi-channelling.

Communications Minister Richard Alston wants to tie in the push to multicasting with a change in the anti-siphoning legislation that keeps major sports events on the terrestrials to create a source of content for any extra channels.

Two terrestrials, the government funded Australian Broadcasting Corporation, and SBS, have already been permitted to run extra channels using digital spectrum. But the Nine and Ten commercial channels have fiercely opposed multichannelling. They fear that they will be forced to find extra programming to fill airtime and that they will dilute the mass audience that draws advertisers.

Seven Network is an advocate of multichannelling. It has already run a sports channel that was carried on the Optus pay TV platform until earlier this year.

In 1999 the Australian government voted to use the spectrum for datacasting, while putting stringent curbs on the genres of programming and how much video could be carried. These measures were to mollify the terrestrials who were worried that datacasters would become de facto new channel operators ahead of the end of the moratorium on newcomers that ends in 2007.

The conditions meant that Alston had to cancel the datacasting auction because of a lack of bidders in May 2000. Alston's department conducted a review of datacasting policy earlier this year and concluded it was not viable because of a lack of commercial interest.
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ProSieben fights on
By Dieter Brockmeyer

The German commercial TV group ProSiebenSat.1 Media AG is fighting the negative effects of a declining advertising market and the insolvency of its main shareholder Kirch Media.

"Things are not getting any easier for us," said ProSieben CEO Urs Rohner during a shareholders meeting last Tuesday in Munich. However, the supply of programmes would be secured on long-term bases.

Despite benefiting from the world soccer championship last month, revenues were down by about four per cent in the first half of this year.

Rohner was optimistic that the group's performance would be better than the industry average over the entire year. Revenues would be slightly down and profits slightly up, he predicted.

The recent shareholder meeting was originally planned to provide the basis of the ProSieben merger with its parent company Kirch Media. Klaus Schneider from SdK, a small shareholders' organisation, said that the Kirch insolvency came just in time. The Kirch debt was towering too high and it would have taken ProSieben down too had the merger happened.

However, the transformation of the preferred stock into general stock has been postponed by the insolvency. Rohner confirmed that this would not be easy to achieve, but suggested that it would still be pursued some time in the future. Kirch Media holds about 88 per cent of the general stock while only the preferred stock is being floated.

Rohner predicts that after Kirch Media gains control of ProSiebenSat.1 Media AG, any new major investor would offer to buy out the smaller shareholders. In the meantime, ProSieben is investigating the possibility of taking full control of Internet subsidiary Kirch Intermedia. Only last year ProSieben merged its own Internet supplier ProSieben Digital with the Kirch arm in which it currently holds 49.8 per cent.
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Slow growth for French Cabsat
By Sotires Eleftheriou

The latest Mediacabsat panel of French cable and satellite channel viewing, published Thursday 11/7/02, shows that growth in viewing cabsat channels in multi-channel homes has slowed significantly.

Two thirds of viewing time is spent viewing the terrestrial channels, by whatever means of reception. Total viewing of terrestrial channels was 67.8 per cent, an insignificant drop on the previous Mediacabsat, when it was 68 per cent, and barely perceptible drop over the first Mediacabsat (February - July 2001) when it was 68.8 per cent.

The panel covered viewing on a per quarter hour basis for a period of just under six months, from December 31 to June 16.

The survey found some differences between cable and satellite homes. Cable homes on the whole spend 29.8 per cent of their viewing time on complementary channels, whereas satellite homes spend slightly more (33.4 per cent in Canal Satellite homes and 36.8 per cent in TPS homes). The reason is that a number of cable homes only have access to a basic service as part of a multi-dwelling subscription.

Another factor is that there is a greater proportion of children (avid consumers of complementary channels) in satellite homes than in cable homes.

The main winner in the new channel stakes turns out to be, as previously, RTL9 with an audience share of 2.7 per cent of the total population, or 2.9 per cent of the population that can receive it. This figure even exceeds that of some terrestrial channels, notably the evening arts channel Arte which achieved only 0.8 per cent audience share, or France 5 daytime educational channel which shares the analogue frequency with Arte and achieved only 0.9 per cent. Second place goes to TF6, which scored 3.4 per cent of audience share among the audience able to receive it but a much lower score than RTL9, of 0.9 per cent out of the total population. The reason is that TF6 is only available on TPS and some cable networks whereas RTL9 is on all the platforms.

The leading scores, in relation to their population of subscribers, are: Cartoon Network (1.3 per cent), Cine-Cinemas 1 (1.2 per cent), Cinefaz (1 per cent), Cinestar 1 (1.8 per cent), Disney Channel (2.5 per cent), Eurosport (1.7 per cent), LCI (1.3 per cent), M6Music (1.1 per cent), Teletoon (2.9 per cent), Tiji (1.4 per cent), TPS Star (2.9 per cent), 13e Rue (1.7 per cent).

Almost all the channels have issued press releases giving their own gloss on the results, as many interpretations are possible, such as in relation to their own target audience or various time slots. Disney Channel, for example is an optional channel so it is only to be expected that it would get a higher score than a basic children's channel when measured in relation to its subscriber population. Teletoon scores high but is only present on TPS and some cable networks so it has much less competition than children's channels on the Canal Satellite platform.
The detailed results are on the mediametrie web site, www.mediametrie.fr
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New HDTV chip

According to Reuters Japan's Matsushita (Panasonic) is to introduce an advanced silicon microchip for high-definition digital televisions (HDTV) that incorporates a processor, graphics, memory and additional functions previously split between separate chips.

The chip will also be compatible with terrestrial-based digital broadcasting. Advanced processes such as narrow 0.13-micron circuitry, developed in cooperation with Mitsubishi, with be used by Matsushita to manufacture the chip which is due to start distribution in August at a cost of E170 per chip.


Matsushita controls almost half the global microchip market, but has lost its dominant position to Sony, a situation this chip is intended to rectify. "This chip will support the products that lead Matsushita's recovery," said Susumu Koike, head of the company's semiconductor operations.
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Viva and MTV stalemate
By Dieter Brockmeyer

Both German popular music channels MTV and Viva gained viewers over the last couple of months but neither of them was able to win top spot over the other.

This conclusion was noted by the annual AWA research study which investigates the development of advertising media in Germany. According to interviews conducted in three sessions between June 2000 and June 2001 5.46 million viewers (with a starting age of 14) per day were looking at the MTV program while Viva reached 5.38 million viewers.

Focusing on the core target group in the age range from 14 to 29, 3.82 million turned on the Viva channel while 3.9 million preferred the MTV offer. For years, both channels have been competing for leadership of this core target group. However, both channels were also very close last year according to the AWA figures. Some 4.79 million viewers preferred Viva while MTV was slightly behind with 4.55 million daily contacts. The AWA figures are of special interest to both channels since in the past they did not participate in the official people meter operated by GfK Fernsehforsung, where they score a daily viewing market share of 0.2 and 0.3 per cent. This simple figure for such small niche channels is not considered detailed enough for advertising promotion.
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FCC calls for faster digital transition

Michael Powell, Chairman of the US Federal Communications Commission, last week called on US consumer electronics manufacturers to help speed the transition to digital television.

Powell said he has not received a final response from the industry to his April proposals for phasing in the necessary tuners into new sets.

"I hope they (the consumer electronics industry) will join their industry colleagues and come forward with real and tangible commitments to advance the transition," said Powell.

The US is officially seeking to complete the digital transition by 2006, but reasons cited for the slow speed of transition, and expected failure to meet this date, include limited available content, potential piracy of content, and high-priced equipment needed to receive the higher-quality signals.

Major television networks should air at least half of their Autumn prime-time line-up in digital, says Powell. Among television networks praised for their actions were Walt Disney Co's ABC network and Viacom Inc's Showtime movie channel, while General Electric Co's NBC and News Corp's Fox were described as making progress.

Powell also welcomed the agreement by US satellite broadcasters and ten leading cable operators, including AT&T Broadband and AOL Time Warner Inc, to carry several high-definition digital channels or other value-added programming by 2003. Cable operators also agreed to start deploying integrated set-top boxes that can display high-definition programming.
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Carefree Monkey business

Carefree.tv is a new TV shopping venture in the UK whose launch is being funded by auctioning several of ITV Digital's infamous Monkeys on eBay - already a collector's item according to the BBC's Antique Roadshow.

The three founders of Carefree.tv previously worked for the ex-digital terrestrial broadcaster, ITV Digital, and Director of Operations and Finance Aleri Karen Kraws, commented, "On the last day at ITV Digital everyone was throwing Monkeys around the office and whoever caught the most could just walk out with them. I caught three and sold them for E78.3 each on eBay, although the week before they were going for E392. The money definitely went towards funding Carefree.tv."

There are reported to be 32,000 Monkeys - worth E2.5 million at Kraws' valuation - relaxing in a warehouse in a top secret UK location. The administrators for ITV Digital, Deloitte & Touche, said Monkey cannot be used for commercial purposes until the dead business' finances are sorted out. Carefree.tv is searching for seed capital of around E470,000 right now on website Angel Bourse to launch its venture which will sell electronic goods to low income households.

The business plan for Carefree.tv is to sell affordable products to UK households with a yearly income of less than E30,000, using personalised payment methods. Its founders had the idea whilst at ITV Digital and put it forward to the executives of the company. Having been ignored, they decided to start their own venture resulting in Carefree.tv.
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