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NEWS Monday 24th June - Monday 1st July 2002
Scroll down page or click below for news - latest first
| Tuesday | |||||
French DTT hearings get heated
By Sotires Eleftheriou
Tension has been growing daily at the CSA's hearings of the 65 candidate channels for DTT in France.
The hearings started on June 17 with the 25 free channels presenting their case throughout the first week (see news archive). The heads of the analogue terrestrial channels, which are each allocated two DTT channels hence did not need to make a convincing argument for their particular channel, used their presentation to argue against the DTT project as a whole.
TPS, while also against DTT, argued for restructuring the free/pay balance. Jacques Espinasse suggested that not more than 10 channels should be free and that the pay channels be organised as a basic pay package and two competing premium packages, one from Canal Plus and one from TPS.
The heads of other channels fought back. Arnaud Lagardere, Jerome Seydoux and Vincent Bollore, all eminent industrialists with interests in broadcasting, argued in favour of DTT.
The most passionate plea was on Thursday (June 27) from Claude Berda, head of the AB Group which has applied for a total of ten DTT channels. Before presenting the case for his group's general entertainment channel for 15 to 35 year olds, he gave his view of the anti-DTT pleas by the commercial channels which had been given on the previous days. "I have heard some of my colleagues issue alarms to save the supposedly fragile broadcasting landscape," he said, "I have heard some of my competitors complain of the outcome of the 1789 revolution that abolished privileges. Today I hear the same complaining about the vast sums necessary to set up DTT, promising the ruin and the desolation of the French broadcasting landscape. What have we today? Two private channels faced with an army of beggars, the producers. These two private channels have made total profits of E1.2 billion over the last two years. Now they complain about the E120 million they claim is needed to set up DTT. Two months of profit versus setting up the plurality and freedom of communication and the economic explosion of the broadcasting industry."
Later on, replying to questions by the CSA on distribution policy, Berda denounced what he described as the racket of rented decoders. Canal Satellite and TPS make substantial returns from decoder rental, they also fix them to make reception of certain free to air channels impossible or at least cumbersome. "It's as if Philips sold radio sets that cannot pick up certain radio stations," said Berda.
Patrick Le Lay, who had already argued very strongly against DTT, brought a lighter note to the proceedings when he presented the Breton channel TV Breizh. He delivered what was in effect a history lesson on the Breton peoples, finally requesting not a DTT frequency but a regional analogue frequency.
The hearings, which have turned into a full-time entertainment, are continuing until July 1. The CSA provides free coffee and biscuits and one journalist brought croissants for everybody present.
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RTL2 reconsiders new channel
By Dieter Brockmeyer
German general interest channel RTL2 is reconsidering its plans to launch an additional channel early by next year.
During the Spring MIP-TV the channel's Managing Director Josef Andorfer had announced the launch of a digital animation channel based on Japanese Manga animation series. However RTL2 has confirmed that this spring's slaughter of 19 people in a German school has resulted in a dramatic decline in interest in the genre. Other projects are currently under consideration, including a channel for Latin American Telenovelas.
The new channel is meant to turn a profit one year after it is launched. However, the channel»s plans are being eyed sceptically by RTL2 largest shareholder, Luxembourg based RTL Group. Other shareholders, including Herbert Kloiber and the German publisher Heinrich Bauer Verlag who also is one of the bidders for the insolvent Kirch Media Group, are said to support the project.
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Bredbandsbolaget takeover
By Goran Sellgren
Bredbandsbolaget ('the broadband company'), one of Sweden's leading broadband operators faces a top executive reshuffle following years of turmoil and major losses.
The MD for the last two years, Jan Morten Ruud, is throwing in the towel and has just decided to move back to his family in his native Norway. He will be replaced media veteran, Peder Ramel, who worked for Modern Times Group for ten years, most of the time as MD of the group's DTH platform Viasat, which he left in 2000 to 'pursue his own businesses.'
Bredbandsbolaget was formed in 1998 by IT whiz kid Jonas Birgerssson, nicknamed 'Broadband Jesus.' When the IT bubble burst in 2000, Birgersson, at the height of his career as a multi krona billionaire, saw his IT and broadband empire erode to next to nothing. Among Bredbandsbolaget's investors are NTL, Sweden's industrial Wallenberg family, and British Carlyle group.
"It has been two really strenuous years," Ruud commented on his departure.
Soon after he was recruited the planned floatation of the company was called off, in October of 2000. Instead Ruud had to focus on restructuring, downsizing and staff reductions. During Ruud's reign Bredbandsbolaget has seen its operating costs cut by 80 per cent, the former staff of 450 on a permanent basis and 300 consultants now consists of 176 employees and 24 consultants. But the company is still bleeding red ink.
"It is now up to my successor to get Bredbandsbolaget in the black," Ruud comments.
Turning red figures into black is something Peder Ramel is used to: during his years at MTG - where he started his career as head of marketing at the group's premium pay service TV1000 in 1991 from an earlier background at Electrolux - he managed to make Viasat the first profit-maker among the many media ventures of Jan Stenbeck, father and main shareholder of MTG, Tele2, Metro and other offspring of Kinnevik, the investment group he inherited from his father Hugo Stenbeck in the late Sixties.
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Thomson launches enhanced PVR
By Sotires Eleftheriou
Thomson Multimedia is to introduce a combined DVD player and PVR in the autumn, which it is calling a Digital Media Recorder.
The unit features a 40 GB hard disc and a wide range of connectors including USB on the front panel. The combination of PVR and DVD player and extensive connectivity enables new features, such as creating a personal video, photo or audio juke box, using material from memory cards, CD-R, MP3 CD etc, as well as the more usual PVR features like pausing live TV.
Thomson is aiming at the home cinema market (it includes a Dolby Digital 5.1 decoder) and sees the product as an approach to the problem of local recording that will find more favour with the public than recordable DVD, which is expensive and confusing in its range of formats. The box does not feature modem downloads of programme guides, a key feature of some PVR products but which leads to public resistance to a subscription charge and use of the phone, feeling that they are no longer in control.
Thomson also showed the new range of TAK TVs. TAK is a joint venture between Thomson Multimedia (70 per cent) and Microsoft (30 per cent) which provides analogue TV sets with interactive features. The new models can provide interactive applications in purely local mode using information in the vertical blanking interval of the TV signal. TAK has reached agreements with broadcasters including France 5 and M6, the latter for voting the Loft Story (French equivalent of 'Big Brother' programme) contestants.
TAK feels this is easier to sell to the public than the previous version, which used the built-in modem to access interactive programme data from the TAK server. It was slow and expensive (in phone connect costs) and widely perceived as being little more than a TV with built-in Internet and e-mail. TAK only managed to sell 14,000 sets in over a year. Tak has abandoned plans to launch TAK in other countries, at least for the time being.
Earlier sets can be upgraded to the new system by downloading a software update.
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Job cuts at SR
By Dieter Brockmeyer
German public broadcaster Saarlaendischer Rundfunk, SR, the smallest of the nine regional German member networks of ARD, plans to cut its current staff of 724 to 550 by 2008.
A communique released this week by the network's General Director Fritz Raff attributed the cuts to the company's difficult financial situation. The company has suffered increased costs and a sharp decline in the ARD internal financial balance system, by which larger networks with higher income support smaller ones with lower income, resulting in a loss of almost one fifth of the SR income by 2006.
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Messier hangs on
Vivendi Universal Chairman Jean-Marie Messier says he intends to remain in charge of the indebted media and utility company despite strong shareholder criticism of his strategy, a falling share price, and resignation of a main board level ally, Bernad Arnault, ahead of this week's board meeting.
Despite being further isolated, Messier survived the board meeting and told analysts during a conference call that he "will be pleased to continue to manage and drive with the support of my team, of the board, and of shareholders for the next 15 years."
Vivendi Universal has E33.4 billion of debt, and its shares have fallen nearly 70 per cent this year. Further concerns arose about Vivendi Universal's liquidity after it was seen as rushing the sale of a E1.7 billion stake in Vivendi Environnement (see News archive).
Messier said that the company was confident it can meet its E4 billion debt reduction target for 2002 even if the agreed sale of its Telepiu Italian pay-TV operation to Rupert Murdoch's News Corp did not go through.
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Carlton eyes SMG
UK terrestrial broadcaster Carlton Communications is reported to be considering a bid to acquire the Scottish ITV franchises of SMG to boost its own position prior to any merger with co-ITV owner Granada. SMG companies account for around six per cent of ITV's ad revenues and would give Carlton an almost equal share in ITV with Granada.
SMG assets include Scottish TV and Grampian TV - valued at around E460 million - which could be sold to reduce the company's debts of some E620 million.
However, SMG Chief Executive Andrew Flanagan, was reported by The Guardian newspaper as saying that the company was "comfortable" with its financial situation, and had extended the terms of its banking agreements until next year.
Scottish TV and Grampian TV are valued at around E460 million and account for around six per cent of ITV's ad revenues. Any acquisition of these channels by Carlton would give it a share in ITV nearly equal to that of Granada.
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Worldcom fallout hits media shares
The fallout from fraud charges against US telco WorldCom Inc, following its announcement that officials misrepresented E3.86 billion in expenses over the last five years, has hit most major US stocks, including the cable and satellite industries.
The SEC said in its lawsuit that WorldCom engaged in a scheme which was "directed and approved by its senior management. "It had wrongly described certain operating costs as capital investments so allowing it to fraudulently report 2001 cash flow of E2.43 billion, rather than its actual loss of E672 million. In the first quarter of 2002, WorldCom incorrectly reported cash flow of E244 million, rather than a loss of about E565 million
WorldCom's recent efforts to secure E5.07 billion in new financing to stave off bankruptcy are now doomed, making bankruptcy likely. WorldCom truly became a giant when it capped an earlier acquisition spree with the acquisition of MCI in 1998, when MCI was the licensee for the 110-degree DBS orbital location a partner with News Corp to develop American Sky Broadcasting. But News Corp gave the orbital location to EchoStar to settle litigation with the satellite TV company.
EchoStar shares fell more than nine per cent during trading on Wednesday (26/6/02), ending at $16.99. Hughes fell a little more than five per cent, to $9.70. Pegasus dropped to 77 cents a share. Cablevision shares fell more than 26 per cent to $9.50.
Asian stocks and the US dollar steadied on Thursday but investors are still wary of the market - as the scandal follows that of Enron, also using Anderson consulting, and the fear is that other major US corporations may have used similarly dubious accounting practices.
*US cableco Adelphia, also under investigation for accounting irregularities, has now filed for chapter 11 bankruptcy protection, having lined up an E1.52 billion emergency loan last week from a banking syndicate to help it keep afloat pending reorganisation.
Questionable multi-billion-dollar deals by the company's founding Rigas family had led to two grand-jury probes and an investigation by the Securities and Exchange Commission and all Rigas family members resigned from management positions and the Adelphia board of directors in May. Adelphia has already defaulted on some E7.1 billion of debt. The company's shares were dropped from the Nasdaq index at the beginning of June, and failure to find additional funding is expected to result in the company's bankruptcy.
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BSkyB Streams soccer
UK satellite company BSkyB is to leverage its exclusive rights to soccer highlights for England's Premier League clubs with streaming media on line. The service will be a combination of customer loyalty tool, as well as developing other subscription and gaming based services.
Deployment of the service has been facilitated by the use of Agility automated streaming media software from Anystream. Agility is being used to convert BSkyB's extensive archives of game footage from high resolution broadcast formats into multiple lower resolution formats and bit rates for website usage allowing rapid posting of highlights online for subscription based archive services.
Agility automatically ingests the MPEG 4:2:2 media, reprocesses it by applying all necessary editing, colour correction, bumpers and trailers, and encodes into multiple formats and data rates, then posts it to the BSkyB home page and team home pages. "Agility is exceptionally fat at encoding and archiving material from tape to multiple compressed digital video formats," said Duncan Thompson, multimedia specialist at BSkyB, We are also very impressed with its ease of use, reliability and streamlined workflow," he said.
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Liberty renews DT bid
Since the failure of Liberty media's E5.5 billion bid for the cable TV assets of Deutsche Telekom earlier this year, the German regulators, who blocked the deal, appear to have softened their approach, and Liberty is reported to be considering a new bid.
The FT newspaper reports that the 12 investors prequalified to bid - which includes Liberty Media - have been invited to bid again, been given 'more than a thousand pages of documents,' with first bids expected by the end of July.
A key stumbling
block last time was Liberty's refusal to upgrade the network to 862 MHz,
and Liberty's preference for a lower specified service and less advanced
set top than called for by the German cartel office.
Since then cable valuations have collapsed, with restructures at UPC (itself
controlled by Liberty) and NTL (which Liberty is seeking to control, and
expected at Telewest (where Liberty has a 25 per cent share). Consequently
the price to be paid would now be lower.
Liberty could choose to only bid for some of the six regions bid for last
time - but the general thrust of Liberty's expansion is to achieve economies
of scale, thus this is thought unlikely.
During advanced-television's German panel at Mediacast in May, Wolfram
Winter of Universal's channel subsidiary in Germany commented, "The failure
of Liberty Media was more a result of how they went about entering the
market rather than what they did."
Thus an even slightly chastend Liberty, perhaps with a local partner to
ensure compliance with German sensitivities - and a more open regulator,
contemplating the alternative to outside investment, could well see Liberty
succeeding this time.
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Microsoft reconsiders digital TV
Microsoft is planning to re-launch the Xbox as a hybrid games machine and digital TV recorder according to a report in Red Herring, which says the company has been working on the project for nine months and expects to launch next year.
Thiswould involve merging Microsoft's existing Ultimate TV set top box with the games console.
Microsoft has said that part of a recently-announced E2 billion investment would be spent on future generations of the machine, including the Xbox Live online gaming channel
In a separate development reported by zdnet Microsoft is promoting its proprietary Windows Media technologies and its pending successor, Corona, in competition with RealNetworks' digital media formats, which is joining Apple Computer and other companies in backing open-standard MPEG- 4 (see PR and Cuttings for original article, Thursday 27/6/02).
The article notes, 'MPEG-4 is a successor to MPEG-1 and MPEG-2, technologies instrumental for delivering digital broadcast transmissions over cable, satellite and the Web. MPEG-2 also is the video standard adopted by Hollywood for DVDs. In addition, MPEG-4 is seen as a possible successor to MP3. RealNetworks and Microsoft each offer video and audio codecs, or formats for encoding or condensing data. Apple is an important player, too, as the company's QuickTime tools are the most popular for authoring digital content.'
Microsoft and RealNetworks are reported to be running neck and neck in the race for supremacy between their competing, proprietary formats, with Microsoft's success again attributed in part to bundling more functions within its Windows operating system.
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TV4's New Channels division
By Goran Sellgren
TV4, Sweden's biggest private television operation, is forming yet another new business division, this time for New Business/ New Channels.
Mikael Hernstroem, 42, has been appointed to head the new division. Hernstroem was previously head of planning at TV4, a role he will retain.
Hernstroem has worked for TV4 since the channel's launch in the early Nineties - he has been an analyst and also worked in sales at the company.
To assist Hernstroem in his new capacity TV4 has also hired Thomas Bruehl.
"Mikael Hernstroem has a unique knowledge and competence about television which he now brings along to our new operations," Jan Scherman, MD of TV4, states.
"I am really looking forward to our future projects," Hernstroem comments. "TV4 has a very strong position as a TV channel; it is a great challenge to be able to participate when we are now taking the active step of launching a number of new channels."
TV4 has already been awarded licences for two new digital channels. Its news service is already running in partnership with CNN, and a sports and games service has long been on the drawing board. Some months ago TV4 also launched a digital interactive service, Mediteve, and further launches are expected.
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Kirch seeks loophole
Kirch Gruppe founder Leo Kirch could use today's (27/6/02) annual shreholder meeting at publisher Axel Springer to force a sale of his 40 per cent stake in the company by challenging the management's veto.
The stake is valued at between E700 million and E800 million. The FT newspaper, which reported the possible move, questioned who might buy such a stake, but noted that publisher WAZ Gruppe has expressed an interest, though such a move would be considered hostile, and fought legally. Mithias Dopfner, Axel Springer's Chief Executive, excercised a E767 million put option in January, forcing Kirch to buy the publisher's 11.8 per cent stake in ProSiebenSAT.1 - which Kirch is reported to see as the cause of his empire's collapse.
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Streaming wins 5% of viewers
Norway's telecomms operator Telenor ASA reports that 50,000 paying customers have subscribed to the video streaming service of the television show Big Brother.
The 50,000 figure correspond to five per cent of the show's total Internet portal visitors. iCanal, Telenor's portal unit, described the result as demonstrated people's willingness to pay for content. The broadband streaming industry will certainly hope that such figures will be repeated with other genre. But Yahoo's decision to dispense with its Internet broadcast service emphasises that the industry is still very much in its infancy.
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Kazakhstan launch stopped
On Saturday (22/6/02) EchoStar Communications Corp in the US reported that it had aborted the launch of a broadcast satellite as it could not be confirmed that a command receiver was fully working.
Scheduled to launch from the Baikonur Cosmodrome in Kazakhstan, there will now be further satellite testing with a new launch date dependent on the availability of the Baikonur launch base. EchoStar says the delay will not interrupt its DISH Network satellite television service.
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AOL/TW restructures US cable holding
AOL Time Warner Inc in the US has restructured its cable partnership with Advance/Newhouse Communications, with the latter taking a more active role in cable system management.
Later this year Advance/Newhouse will take on management responsibility for systems with 2.1 million subscribers (out of a combined seven million total), after which these results will no longer be included in the consolidated financial statements of AOL Time Warner.
Newhouse's economic interest in the restructured cable partnership will track only those systems that it will manage, rather than one-third of all cable partnership systems.
On completion, Time Warner Cable will continue to fully manage cable systems serving a total of 10.8 million cable subscribers, and will provide management functions such as programming for all of the cable partnership's systems.
Time Warner Cable also gets Advance/Newhouse's interest in its Road Runner cable modem Internet service, which would have boosted AOL Time Warner Cable revenue by E25.2 million in the first quarter of 2002. However, the deal cuts its cable segment's cash flow by E30.3 million.
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Foxtell/Optus
fallout
By Owen Hughes
Speculation is mounting that the Australian bank that bought the local
assets of NTL earlier this year will be an indirect beneficiary of the
regulatory veto of the Foxtel/Optus content merger plans.
Macquarie Bank paid around E419 million for the NTL network of transmission
facilities and contracts to offset the latter's multi-billion debt in
February and set up the Macquarie Communications Infrastructure Group
to run the acquisitions.
Macquarie is now contemplating a E505 million new public offering on the
Australian stock exchange to raise more funds to expand the group, and
the bank has hired Gerry Moriarty as its Deputy Chairman. Moriarty was
lured from domiant telco Telstra, 50 per cent owned by the government.
Telstra has a 50 per cent stake in Foxtel, along with News Corp and PBL
with 25 percent each and the pay TV's hardwire customers; around two-thirds
of the 750,000 total subscribers receive the service over the telco's
network.
In turning down the Foxtel/Optus plans to share channels, the Australian
Competition and Consumer Commission (ACCC) said one of its concerns was
that Telstra could use its control of the network to effectively baulk
competing services from leasing capacity.
One suggestion is that Telstra separates into two parts - a fully privatised
retail services company selling telephony, mobile, Internet and pay TV,
and a network operator maintaining the phone and cable lines, and selling
wholesale access to customers.
It costs Telstra E1 billion a year to maintain and operate its network,
and a 2001 consultancy report said that it could save E200 million a year
outsourcing this function. In addition, splitting its pay TV ownership
from the delivery of the platform could also address some of the ACCC's
concerns about the Foxtel/ Optus accord.
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Horsman discrimination case
Mathew Horsman, a well known media analyst at London stockbrokers Investec Henderson Crosthwaite, whose book on BSkyB is considered the seminal work on the company, is at the centre of a sex discrimination lawsuit, with his employers accused of paying him more than the woman who recruited and trained him.
Louise Barton recruited Horsman in 1997 and claimed that up to March 2001 both had generated revenues of about £11.5 million each for Investec's media team - but Barton told an Employment tribunal that their earnings over the period were £2.1 million for Horsman compared to her income of £1.05 million.
However, Horsman was not a 'rookie' new recruit, having already established his reputation as a financial journalist, able to insist on financial parity as an inducement to become an analyst. Investec said that Horsman generated three times as much revenue as Barton in 2000 and twice as much the following year, from which bonuses were calculated. He has also maintained a high media profile, which has a public relations value for the company.
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CanalDigital
deal at Telenor |
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CanalDigital
deal at Telenor
A year after the original deal was struck, French CanalPlus and Norwegian
CanalDigital - owned by Norway's leading telco Telenor - have agreed on
the details whereby Telenor takes full control of CanalDigital, by acquiring
the 50 per cent of the shares previously owned by CanalPlus in the joint
venture.
Last summer Telenor made an agreement to takeover CanalDigital in its
entirety, since when the parties have been at odds over the conditions
of the deal. CanalPlus has urged Telenor to pay cash for the CanalPlus
shares - an urge sharpened by the financial crisis in later months at
CanalPlus and its owner Vivendi/Universal. Telenor has insisted that no
deal would be made until the EU competition authorities have given their
approval.
In a press statement, issued by CanalPlus, it now appears that Telenor
will pay E290 million, "as soon as the deal is finalised." In the original
deal from July last year Telenor was supposed to pay E257 million in advance,
and E66 million later, in a separate payment.
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Liberty
in $100 m Wink acquisition
Liberty Broadband Interactive Television Inc (LBIT) - set up after Liberty
Media bought OpenTV - has expanded its iTV software portfolio, effectively
buying iTV company Wink Communications Inc.
LBIT is to acquire all of the outstanding stock of Wink, with Wink stockholders
receiving $3.00 in cash for each share of Wink common stock giving a valuation
of some E103 million in cash.
Wink's interactive software enables Pay-TV subscribers to order coupons,
request or buy product samples by clicking a button on their remote control
when a symbol appears during enhanced TV shows.
The deal, approved by Wink's board of directors, is subject to approval
by Wink's shareholders and regulatory approval. Wink Communications will
be filing a proxy statement and other relevant documents concerning the
merger with the SEC and the deal is expected to be completed during the
third quarter of this year.
Maggie Wilderotter, Wink's CEO, commented, "We are thrilled to be working
with LBIT and the Liberty Media family and expect to realise synergies
from the leverage of our response network, relationships with partners,
technology assets and management expertise across their television businesses.
The combination of experience, partners and proven technology will expand
and accelerate the ITV business."
Peter C Boylan III, President and Chief Executive Officer of LBIT adds,
"LBIT is pleased to add Wink to our emerging iTV company. They have been
the leading provider of complete, end-to-end technology solutions for
delivering interactivity as well as processing the related responses.
With more than five million interactive-enabled homes served by its network,
it is the clear leader in domestic interactive deployments across multiple
cable and satellite platforms,"
Wink Communications will continue to operate as a wholly-owned subsidiary
of LBIT, headed by Maggie Wilderotter and her management team.
In the US, both satellite operators EchoStar and DirecTV have existing
deals with Wink, and EchoStar also works closely with OpenTV.
Wink saw its shares jump 60 per cent, reaching $2.80 in Monday afternoon
trading from $1.70 on Friday's close.
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NTL
chief contender
Philip Jansen, a former Telewest executive, was being touted by the Guardian
newspaper this week as the lead candidate to take over from Barclay Knapp
as Chief Executive of NTL.
Bondholders at the UK cableco are reported to be seeking new management
when NTL emerges from Chapter 11 bankruptcy protection.
Jansen, who supports an NTL/Telewest merger, was praised by the paper
which noted he had been linked to the top job at BT earlier this year.
It is suggested that the former Managing Director of Telewest's consumer
division has the operational experience to help NTL integrate its various
cable franchises.
Adam Smith, the head of Telewest's business division, left last week with
the now merged consumer and business divisions being run by Mark Luiz,
former head of Telewest's Flextech arm.
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Ball
warns off Ofcom
As submissions are being considered for the UK's new Communications Bill,
including the remit of the new combined communications regulator, BSkyB
- a potential beneficiary of relaxed ownership rules - is getting its
retaliation in first.
BSkyB Chief Executive Tony Ball, speaking at the Institute of Economic
Affairs conference on the future of broadcasting in London this week warned,
too much power given to UK's TV and radio watchdog Ofcom, could interfere
with the growth of the UK media.
Ball also accused the Office Of Fair Trading (OFT) of "thwarting" BSkyB's
efforts to renegotiate distribution deals with cable operators, including
NTL, for its pay TV channels - which has taken 16 months so far without
any results being achieved.
"NTL was happy, we were happy and consumers would have benefited. All
it needed was for the OFT to give it the go-ahead," Ball said.
"We waited and waited. Eventually, both sides gave up waiting and got
on with our lives. Well over a year later - approaching 16 months - the
officials at the competition regulator stepped forward with the courageous
decision not to make a decision."
The enforcement of competition law across the communications industries,
which to date has been the responsibility of OFT, is also being given
to Ofcom next year.
Ball said he hoped Ofcom would implement a "speedier and more equitable
process" for applying regulation in this area. "Ofcom should use its competition
powers to tackle any unfair trading, rather than use industrial policy
to shape the market as it sees fit," he added.
"There is a real danger the regulation previously set down by governments
will be replaced not by the application of competition law but by the
un-elected board of Ofcom with a charter to interfere," said Ball.
"As the government considers who to appoint as Chairman and Chief Executive
of Ofcom, it should recognise that the industry needs a policeman, not
a dictator."
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CNBC
buys Tokyo TV stake
CNBC Asia Pacific and another unit of General Electric Co, GE Equity,
has bought a three per cent (E15.5 million) stake in Television Tokyo
Channel 12 Ltd from Nihon Keizai Shimbun - the first US-owned TV network
to own a stake in a Japanese TV network.
CNBC Asia is a Singapore-based joint venture between NBC and Dow Jones
& Co and GE Equity.
TV Tokyo bought a 14 per cent stake in Nikkei-CNBC, a joint cable and
satellite TV venture, in which CNBC Asia previously had a 49 per cent
stake
"We want to enhance our news programming by cooperating with CNBC in providing
news materials," an official at the company was quoted as saying.
Bill Bolster, chairman of CNBC's international operations, commented,
"Our investment in TV Tokyo is cementing our position as the No. 1 provider
of television business news on a global basis."
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BBC/CNN
Israel slot threatened
The satellite news services of both the BBC and CNN have been accused
of pro-Palestinian bias by Israeli officials, with Israel's Communications
Minister Reuven Rivlin commenting, "If (local satellite operator) YES
decides to deprive BBC and CNN of their slot, I will not stand against
that decision."
However, the YES satellite company said it declined to play the role of
censor, and had no intention of taking away the slots of CNN and the BBC,
but added that it would instead offer carriage to Fox TV of the United
States, CNN's main competitor. It is also being suggested by Rivlin that
if retained, the BBC and CNN services should only be available on a separate
subscription.
There is general Israeli dissatisfaction with the balance of coverage
given to Palestinian and Israeli viewpoints and victims of violence during
the current spate of bombings and military responses. But the latest spat
was sparked by comments from Ted Turner, Vice Chairman of CNN's parent
company AOL Time Warner, who described both Israel and the Palestinians
as being involved in terrorism.
This provoked a strong reaction, with Tommy Lapid, the former director
of Israeli radio and television services commenting, "It is clear that
the CNN journalists are spokespersons for (Palestinian leader) Yasser
Arafat." Turner subsequently expressed regret over his remarks while CNN
issued a statement distancing itself from its founder.
Earlier this year Israeli forces blew up Palestinian owned TV broadcasting
facilities in the West Bank (see News Archive).
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Snorkel
for Messier!
Troubled French media group Vivendi Universal saw its shares sink 23 per
cent on Monday (24/06/02) despite reassurance from the company that their
situation was under control.
Vivendi started selling some of its holding in a desperate effort to raise
cash. It also asked for a loan from the Deutsche Bank, but its stock closed
at E18.75 - its lowest in the six-year tenure of its Chief Executive,
Jean-Marie Messier.
Vivendi Universal said the sale of 15.6 per cent of Vivendi Environment,
to professional investors would generate E1.7 billion of cash for debt
reduction. Furthermore, an 11.5 per cent drop in shares in Vivendi Environment
left investors concluding there was little appetite for the Vivendi-owned
business.
Vivendi Universal has agreed not to sell any more shares in Vivendi Environment
for 18 months. However, Vivendi Environment plans to sell new shares worth
E1.5 billion to French investors once Vivendi Universal's placement is
completed.
Messier's increasing unpopularity, having failed to demonstrate a convincing
strategy for the business, is facing calls to quit. He has been hoping
to get investors back on side by selling assets and using the proceeds
to cut debt, but so far the outcome has not been beneficial.
Another route for Vivendi to try and sail its sinking company was to increase
its stake in the French telecoms firm Cegetel, in which it currently owns
a 44 per cent stake. But the plan has been put on hold since UK telecoms
firm BT, owner of 26 per cent of Cegetel, said that it is in no hurry
to sell its part of the business.
"We still want to sell the stake, but we can wait. For the time being,
the conditions for a sale are not right, so we won't move," said Pierre
Danon, Chief Executive of BT's consumer arm, BT Retail.
Rupert Murdoch's News Corp has been buzzing around Vivendi's Italian pay-television
unit Telepiu but might pull out of an agreement to buy it because of difficulty
of finding partners to fund the deal.
All these factors contributed to the slump in share values, putting the
future of the Paris-based multimedia giant into severe difficulties.
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Murdoch seeks Italian partner
Rupert Murdoch could drop plans that would deliver dominance of the Italian pay TV market if he is unable to find investors to own half his planned new venture.
News Corp was to merge its Italian pay TV venture, Stream with Vivendi Universal's Telepiu pay TV business under an E1.5 billion deal as both were loosing money.
But News Corp wants another investor to take 50 per cent by value of the combined business - while it manages the enterprise. Stream is a joint venture between News Corp and Telecom Italia, with the telco reported to want to keep its exposure in a merged group at not more than 20 per cent.
Last year the two platforms were estimated to have lost E750 million, hence the belief that the market can only support one player - with hundreds of millions of losses expected to be incurred over the next three years before a single operator would reach profitability.
It is unlikely that both Stream and Telepiu would maintain operations if the talks collapsed, hence Murdoch could seek to renegotiate the deal with Vivendi, or one - or both - of the pair could close in order to stem losses.
*In an Australian documentary ' Inside the Murdoch Dynasty' shown on the BBC, 70-year-old media magnate Rupert Murdoch vowed to stay at the helm of his media empire until he is 100 years old, reiterating his distaste at the idea of retirement.
New York-based Lachlan, the 30- year-old eldest son, is expected to succeed Rupert at News Corporation - but doesn't see it happening for some 20 years.
Murdoch also suggested that Lachlan's succession was not definite, and the company could be more equally shared between him and his younger brother James, currently running Asian satellite network Star TV.
News Corporation has controlling stakes in a E46 billion portfolio of media assets including SkyDigital, News International, Fox Television and 20th Century Fox. Collectively, Murdoch's children are the largest shareholders in the company.
One critic - Emily Bell of the Guardian Unlimited - condemned the 'kid gloves' treatment of the programme, anglicised by the BBC, asking, "Could it be pure coincidence that the BBC has just entered a partnership with BSkyB?"
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AOLTW
beats Viacom to Viva
AOL Time Warner has taken over a 15.1 per cent stake in the German media
group Viva Media AG from the music company EMI, adding to its existing
15 per cent stake to give it a 30.6 per cent share.
Viva runs music channels in Germany and other European markets.
AOL's main competitor in the bid - Viacom Inc - virtually held a monopoly
over German music television with MTV until Viva entered the market. Viacom
has effectively been put out of the market, as, under the German takeover
code, AOL now has sufficient shares to make a full takeover bid.
AOL is also said to be interested in taking Vivendi Universal's shares
in Viva. If it does so, its stake will rise to 49.5 per cent. Vivendi
needs to reduce its debt burden, so industry insiders believe it's likely
to be willing to sell.
Viva founder and CEO Dieter Gorny said that a strong international partner
is necessary to survive global competition. It has been said that Viva
had feared that under the Viacom umbrella, it would simply have been closed
down. He now wants to expand the business into other European markets.
For the future, Gorny is looking at options to expand into Asia or the
USA. In the meantime, Germany's Bertelsmann AG, which was said to be also
interested in the EMI stake earlier this year, is considering launching
its own music channels. The group would investigate the opportunity of
co-operating with its Internet subsidiary Napster in this project, Bertelsmann
CEO Thomas Middlehoff said in a German newspaper interview.
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Vivendi
seeks cash
Debt-laden French media group, Vivendi Universal, arranged a surprise
short-term financing deal on Saturday (22/06/02) with the Deutsche Bank,
a move which has frightened investors and resulted in its shares falling
to a six-year low.
Vivendi Universal had effectively loaned a 12.6 per cent stake in its
subsidiary Vivendi Environment to Deutsche Bank in return for a cash sum.
The company claimed that the Deutsche Bank transaction, completed on May
30, gave it a cheap E3.3 billion funding cushion while it completes other
disposals. The loan is expected to be for six months and Vivendi eventually
hopes to buy back the stake.
A recent report in French newspaper Le Monde said that Vivendi, E33 billion
in debt, was running out of cash. Vivendi responded that its cash position
was 'comfortable' even if market and trading conditions deteriorated.
Shares in the owner of Universal Music and television firm Canal Plus
closed down more than down per cent on the day (21/6/02), reported the
Guardian.
Investors were not happy that the group was mortgaging one of its most
robust assets to keep together its disparate collection of media, telecoms
and Internet assets.
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Malone's
Telewest route
US media investor John Malone may be planning to bid for all of Telewest's
bonds, and eventually take control of the UK cable company in which he
faces dilution of his 25 per cent shareholding in any debt-for-equity
swap according to reports in The Independent.
By buying out Telewest's bondholders, Malone would become the main beneficiary,
rather than the main looser from any such financial restructure, winning
a significant European bridgehead.
Malone's Liberty Media, has already made a E358 million offer for a fifth
of the bonds. The debt-holders have until Wednesday (26/6/02) to accept
the offer at this price. If the bondholders accept, it is reported that
Malone will win the rights to bid for the rest of Tele-west's bonds.
Telewest's Chief Executive Adam Singer refused to deny suggestions that
he could be forced to restructure the company's debts this year.
Malone is being opposed by a group of Telewest's bondholders intending
to reject his offer. Malone's key role in the debt restructuring of Telewest's
rival cableco NTL heightens the belief that restructuring would herald
a merger of the two.
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Ch4's
ITV tie 'a mistake'
Michael Grade, the former chief executive of Channel 4, predicts failure
for Channel 4's bid to take the collapsed ITV Digital's digital terrestrial
licences, saying he was surprised they teamed up with ITV, and should
have gone with the BBC/BSkyB consortium.
As ITV has already lost E1.5 billion on ITV Digital, and lost both public
and government support for the way it dealt with the Football League,
it is seen as a poor partner to team up with - already dubbed 'ITV Digital
2.'
"I think (Channel 4) would have had more chance throwing its resources
behind the BBC-Sky bid. It may well have backed a loser," commented Grade.
A financial bid from private equity house Apax Partners, and a consortium
that includes United Business Media and NTL were summarily dismissed for
lack of programming and financial debts - in contrast to the BBC's content
expertise and Sky's business acumen.
Potential break up the BBC-Sky alliance by regulators was compared to
repeating the ejection of Sky from the original ITV Digital consortium
in 1997 - which was seen as contributing heavily to its eventual demise.
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Competition
concerns at Foxtel
Australian regulators have told Foxtel and Optus that they will have to
dramatically rethink their plans to share channels because of concerns
that the deal will lessen competition in the country's TV sector.
The Australian Competition and Consumer Commission (ACCC) Chairman Prof
Allan Fels said last week (Friday June 21) that in its current form the
deal would breach the Trade Practices Act.
However, the government's decision allows Foxtel and Optus to redraft
the terms of the agreement. In a statement Foxtel said it would, "Work
constructively with the ACCC about the concerns on the Optus agreement
that have been raised by the ACCC."
The ACCC focused on four areas of concern about the proposals - the dominance
of the new entity in the programme acquisition market, the gatekeeper
status Foxtel would have to its network, the monopoly of pay TV provision
in areas served by the Foxtel and Optus network, and the provision of
pay TV channels to third parties in areas not served by the two companies.
Fels was also concerned that a 'first and last bid' right Foxtel enjoyed
to acquire certain Optus assets would hamper the ability of other interests
hoping to buy company property including programming contracts, the pay
TV operation and Optus' cable network that currently serves 250,000 households.
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Interactive
portal from NTL
UK cableco NTL is introducing a new interactive TV (iTV) portal in July
for its subscribers, reports on-line news service Netimperative.
Jeremy Davies, NTL's director of content said that the new enhanced digital
TV service will be based on the Liberate 1.2 platform, to be introduced
to subscribers later this year following trials of the service.
NTL's DTV subscriber base is reported to be 1.6 million, with 90 per cent
of subscribers using iTV services each month.
Features of the newly designed portal include changes to the description
and lay-out of sections on the front page, including 'sport and betting',
'news and weather', and 'life and love'. The service also now offers 'mail
and mobile', and 'internet' as service access points.
The move cuts the number of brand partners associated with the platform,
with such streamlining expected to reduce consumer confusion. It will
also 'shake out' the less viable suppliers.
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Gemstar
looses patent case
An International Trade Commission judge rejected as 'without merit' electronic
programme guide pioneer Gemstar's patent infringement claims against Echostar,
Scientific-Atlanta and Pioneer.
Gemstar said that the three companies had violated its patents on the
Electronic Programming Guide (EPG) by deploying its EPG without paying
a licensing fee.
Gemstar was stunned by the 22/6 ruling as it was so confident of winning
that it had included unpaid licensing fees from Scientific-Atlanta in
its overall revenue totals.
It is true that Rupert Murdoch's News Corp, which owns 42 per cent of
Gemstar, is financially loosing in the deal - facing an E1 billion write-off
and undermining its plans to be a central EPG provider. But US trade reports
suggest that Murdoch wants to oust Gemstar CEO Henry Yuen who is contractually
in place until 2005, and this decision makes that move more likely - though
it sounds a hefty price to pay.
In addition to the lost licence fees from defendants in the case itself,
if Gemstar's defeat is upheld, it is expected to encourage other companies
to develop their own versions of the EPG without the expectation of being
sued by Gemstar. Operators with Gemstar EPG agreements may also seek to
renegotiate or find alternative suppliers.
An appeal to the six-member ITC commission which must approve the judge's
ruling, is expected later this year.
News Corp's Gemstar shares had already halved their book value before
the ruling due to uncertainty surrounding the outcome, and now stand at
E1.43 billion on the market compared to E2.61 billion on the company accounts.
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to top
Telewest
investors still angry
UK cableco Telewest's Chairman Cob Stenham again angered investors as
further inaccuracies were found in his report to the company's annual
general meeting.
Stenham had reassured investors at the annual meeting that no director
had sold shares in the previous year - but it appears that Finance Director
Charles Burdick did sell nearly 47,000 shares last November for tax purposes.
Stenham previously said none of the directors had received a pay rise
- though Burdick received a £40,000 (E62,000) bonus to his £400,000 (E619,000)
annual salary.
Investors were already angry at the slump in share value from more than
40p (E0.62 at the start of the year to less than 3p (E0.5) today on the
back of fears that a debt for equity swap would render their shareholdings
worthless.
A committee of Telewest bondholders represented by law firm Cadwalader
has appointed investment bank UBS Warburg to pursue just such a debt-for-equity
swap, on its behalf, in response to US media investor John Malone's moves
to take a controlling interest via the same route.
The Cadwalader group of investors rejected the terms of an offer made
by Malone (See Archive news).
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Optus
'bluff' on pay TV?
Optus' threat to abandon its pay TV operation if the Australian government
does not allow its content sharing plans with Foxtel to proceed has been
questioned again with the publication of a 2001 letter to officials promising
to maintain services to allow Singapore Telecom's acquisition to go ahead.
Optus CEO Chris Anderson wrote to the treasurer Peter Costello in March
2001 saying, "The Singtel proposal means that this great Australian company
- one of Australia's top 10 listed companies by market capitalisation
- will remain an integrated operator.
"We will continue to deliver the full breadth of services that we deliver
today. We will continue to operate in all of the markets we operate in
today," added Anderson in the letter that was leaked to the media.
The letter was written as opposition to the E7.2 billion Singtel takeover
was mounting in Australia, although the deal went ahead with government
approval.
Anderson has hinted that he will close down the loss-making cable TV operation
that reaches 250,000 subscribers unless the accord with Foxtel proceeds.
Last week Optus ended a trial of interactive TV on the network, and cited
uncertainty about the deal as one of the reasons for the decision.
Optus said this week that the letter was consistent with its position
since the channel share agreement was announced in February - subject
to regulatory approval; some observers believe a decision from Australia's
competition watchdog is due to be announced by the end of the month, or
even sooner. The content swap proposals have come under attack from almost
every significant media group for a variety of reasons.
Publication of the letter will give more ammunition to the deal's opponents
including Nick Falloon, Chief Executive of the terrestrial Network Ten
who called Optus' threats "straight bluff."
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Hungarian
News channel planned
A Hungarian TV news channel is planned for September by Gabor Borokai,
former spokesman of the previous Fidesz-Hungarian Civic Party-led government,
and Gyorgy Bence, an advisor to former Prime Minister Viktor Orban.
Niether financial backers or exact launch date have been revealed, but
the channel name is to be Hir TV (News TV), and it will broadcast up to
18 hours a day, operating along similar lines to Budapest FM news radio
station Inforadio.
Janos Krasznai, co-owner of satellite-beamed cable stations FilmmĻzeum
and Pax TV, is also involved, but has said the new station will not replace
either of his channels.
Launching a terrestrial television channel will require bidding for a
frequency at media authority the National Radio and Television Board (ORTT),
whereas a satellite-beamed broadcast only requires an agreement with broadcast
transmitter Antenna Hungaria Rt and the cable companies. Private satellite
dish and cable subscriber reach is roughly 40 per cent of the population.
One route other suggested route into the market is investing in a bankrupt
station like Satelit TV, which has the infrastructure but lacks the money.
Available to roughly 45 per cent of households but attracts only two to
three per cent of viewers; the station is owned by TVegy Cultural and
Broadcasting Rt.
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Napster
tech contested
Bertelsmann's E8.3 million acquisition of Napster is under threat from
a US court filing by PlayMedia Systems which contends ownership of key
parts of Napster's file-sharing technology.
PlayMedia designed the MP3-functionality of Napster's file-swapping software.
The company's attorney is reported to have said that the move is not an
attempt to hinder the E8 million acquisition, but has been made to declare
the company's due interest in the deal.
"We're just trying to protect PlayMedia's licences. Depending on what
(Napster's) position is on the PlayMedia licence, we may have to object
to the transaction," Richard Riley, PlayMedia's attorney is reported as
saying.
Bertelsmann invested over E88million in Napster which has filed for bankruptcy
protection under Chapter 11 - a move which could enable rival bids to
be made.
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Liberate/Samsung
DSL demo
Set top iTV software company Liberate Technologie is to collaborate with
Samsung Electronics to provide interactive video over digital subscriber
line (DSL) networks.
A digital set-top box running on MPEG video compression technology enables
provision of interactive video content over DSL networks running on copper
teleco networks.
Demonstrated at the BroadcastAsia 2002 trade show in Singapore, the proposed
service has seen its capabilities questioned, with doubts raised about
the ability of existing broadband services to provide interactive video
and gaming content.
Liberate's President Coleman Sisson commented, "Telco operators have long
searched for a platform solution which leverages their Internet infrastructure
and content assets. Our offer is the next step for this industry."
Samsung's SMT-F240 set-top box was used for the demonstration running
on the Linux operating system, based on Liberate's TV Navigator software.
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Objections to Sky/Ch5 takeover
The UK government's communications bill committee has received objections to any take-over of terrestrial Channel 5 by satellite broadcaster BSkyB, with the BBC and ITV saying it would leave them unable to compete for sport, films and top US TV shows.
BSkyB and Channel 5 as a joint entity would be able to bid for both terrestrial and pay TV rights to sport movies and TV shows. Greg Dyke, the Director General of the BBC, pointed out that the vastly higher sums paid by pay operators for TV rights, compared to free to air operators, would enable them to make one combined bid to buy everything.
Mick Desmond, the joint Managing Director of ITV added, "If Sky were to take over Channel 5 it would fundamentally change the ecology of the market for sport and movie rights."
Dyke proposed an amendment to the communications bill, "to say you have to buy rights separately, you can't buy collectively."
Dyke also expressed concerns that a future US-owned ITV would restrict other UK broadcasters access to US TV output. The suggestion was dismissed by ITV joint managing director Clive Jones, who said that any new foreign owner of ITV would stick with its successful formula of broadcasting home-grown shows.
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Satellite
beats UK cable
Satellite is winning the platform wars in the UK with the Digital Terrestrial
platform collapsed and the cable companies seeing their subscription numbers
actually fall.
UK cablecos NTL and Telewest lost 67,000 subscribers over the past year
to give a current total of 3.5 million subscribers. The fall is mainly
attributed to NTL's decision to concentrate on tackling its E18.5 billion
debt, with customer acquisition activity put on hold at the end of last
year, while churn continued to eat into existing figures. NTL has resumed
marketing, targeting former subscribers of the collapsed ITV Digital,
whose demise has pushed cable's share of the pay TV market to 22 per cent.
In contrast, SkyDigital added 704,000 subscribers in the past year, a
growth rate of 1.9 per cent, and now has 5.9 million subscribers, aiming
to reach seven million by the end of next year.
Now Sky is competing head on with the presumed multiple service lock-in
of cable, satellite broadcaster Sky Digital in the UK has just completed
a 200,000 customer six-month trial iDTV billing services for various utility
companies, including telephone, power and retail finance organisations.
Ian Valentine, technical alliances director for Sky Interactive, said
that the company is now looking at a commercial launch of the new service,
based on technology from software provider Macro 4.
"With analogue switch-off due in 2010, iDTV is an ideal mechanism to deliver
efficient, high-quality customer service to UK consumers," he said. "[The
service] is an ideal way for any organisation to offer the benefits of
electronic billing to their customers."
Some analysts have suggested that the benefits are more apparent than
actual as users have shown little inclination to use interactive TV beyond
games and gaming.
Macro 4's Columbus software takes existing computer-generated bills and
automatically converts them into a format (here, Sky's enhanced Wireless
Markup Language microbrowser) to be viewed on iDTV or the Internet.
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Finance
channels seek viewers
Advertisers and business TV providers have clashed over the best way for
financial news channels to build audience numbers and advertising revenue
in Asia.
Speaking at a Bloomberg Television forum in Singapore last week, a veteran
advertising industry executive said that business channels needed to prove
to media buyers who placed Asia's E14.4 billion annual ad spend that they
"owned" the region's affluent and influential business people.
However, music channel MTV's Managing Director for south-east Asia said
business TV providers should follow his company's lead and localise their
offerings to individual markets to build audience share.
Panelist D Sriram, Chief Executive with media buyers Starcom Worldwide,
said, "You need to have a unique audience. You have to define what your
offering is to this audience." He added that business TV needed to define
its proposition to Asian audiences in the same way that the regional business
titles did - catering to affluent, educated business decision makers and
senior management.
Peter Bullard, MTV's south-east Asia managing director commented, "We
learned that the Madonnas and the Britneys did not unite youth across
Asia. Implementing a policy of strong localisation, combined with entertaining
content and packaging that was relevant to viewers, was a turning point
for us and I think that business TV should look to apply that model as
well."
Brian Martinez, Tokyo-based regional Managing Editor with Bloomberg Television
said that among the 24-hour business channel's most successful markets
were Japan and Malaysia. "We have a 24-hour Japanese-language channel,
and in Malaysia we have separate English, Bahasa and scheduled for July,
a Tamil-language dedicated programme on two terrestrial channels.
"What is clear to us is that localisation, combined with the resources
and insights of a worldwide financial news operation, is working for Bloomberg
Television in Asia at the moment," Martinez added.
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Merger
to eliminate cable debt
Israeli cable company Tevel plans to merge three cable companies to solve
its debt problems, without further investments by the shareholders.
The plan has been submitted by the court-appointed interim manager of
Tevel, Zvi Yochman, to the Jerusalem District Court, and calls for an
extension of protection provided to the company against creditors by another
three months.
Under the revised recovery plan, most of Tevel's NIS 3.3 billion debt
will be transferred to the merged cable company following its establishment.
Tevel will also sell off its holdings in Netvision, as well as one-third
of its stake in the merged cable company.
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