NEWS Monday 1st April- Friday 8th April2002

(There has been a change in the structure of advanced-television.com's archive. Instead of weekend news, we label the last news update on Friday as Monday news, ad provide an update on Monday morning)

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Following Tuesday's (2/4/02) failure to agree E150 in bridge financing, Commerzbank and DZ Bank said no further meetings with the shareholders were planned. Had the credit been granted, a E800 million capital increase would have given shareholders, including Rupert Murdoch's News Corp and Italian prime minister Silvio Berlusconi's Mediaset, control of KirchMedia.

The shareholders offered to provide just 10 per cent of the bridge loan instead of the 40 per cent (E60 million) requested by the banks - who also want a larger share of the company. "The investors have shown that they are really not interested in participating in the bridge financing, and if there is no bridge financing there is no capital increase," one of the departing bank executives was quoted as saying.

KirchMedia failed to honour a E150 million payment to the US studio Columbia two weeks ago and a E460 million loan from Dresdner Bank to Taurus Holding, the holding company for Kirch Gruppe's businesses, is due next week. There is no money to pay, hence an insolvency filing appears imminent - which would be followed by the appointment of an interim administrator. The administrators role would be, with management, to look at whether the business should be rescued or liquidated. The company would be allowed to continue trading for another 30 days while it sought rescue financing. In more than 95 per cent of German bankruptcies, creditors opt to sell the company as a whole or auction off its assets - but this would only apply to assets not already pledged as collateral for loans. KirchMedia, which includes Europe's largest library of film and sports rights and a majority stake in Germany's leading broadcaster, ProsiebenSat.1, is considered to be more attractive in one piece - especially to Murdoch or Berlusconi as a route into Germany.

Bayerische Landesbank and HypoVereinsbank, the other two lenders to KirchMedia, and sole lenders to Premiere, are reported to have sent representatives to Los Angeles to hold talks with News Corporation on the future of Kirch's loss-making pay-TV business Premiere, which Murdoch is believed to be interested in.
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Redundancies at ish

German cable operator ish has fired 570 of its 2,470 employees in its North Rhine Westfalia cable region. In addition 150 limited jobs are being cut so there is a total of 720 jobs going. The reason, ish says, is the poor development of subscribers. They add that the failed take-over of the remaining cable assets of Deutsche Telekom AG by Liberty Media, caused a severe delay in the entire cable industry since hardware manufacturers, service - and program providers lacked Germany-wide sales structures.

The regulators' decision also stopped the consolidation process of the so called Netzebene (net level) 3 and 4 of the cable systems. Net Level 4 is the last mile into the homes that in the majority of cases are owned not by the big cable operator but by small regional operators or the owners of large apartment compounds. The country's antitrust authority criticised the attempt by Liberty to also to acquire the net level 4 operators.

The final reason ish gives for its latest move is an eight months delay in the delivering of components for voice over IP services. ish is owned by Callahan Associates which holds 55 per cent of the company, and Deutsche Telekom AG the remainder. For the other ish asset in Baden Wurtemberg the situation is unlikely to be much different and a similar state of affairs is expected to be found in the NTL/Telekom cable system iesy in the German state of Hesse.
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Liberty as UK's cable consolidator

Liberty Media Corp in the US is reported by Dow Jones to have had discussions with indebted lead UK cableco NTL Inc over its financial restructure of its E27.6 billion debt.

Liberty already owns a 25 per cent stake in number two UK cable operator, Telewest Communications PLC, and could be the catalyst for a merger of the two UK cablecos.

Liberty Chief Executive Robert Bennett said Wednesday,"... there is a substantial amount of industrial logic if you can find a way to combine NTL and Telewest. To this point, we have not been able to do that, among other things, because we have been unwilling to just swap equities because of what the resulting capital structure would look like. We have had some conversations with them (NTL) about (restructuring of their balance sheet). I can't comment on what the outcome might be, because I don't know what it will be."

Commenting on Telewest, Bennett said it has adequate liquidity for at least the next 12 to 16 months, adding, "Üthe market seems to be expecting some sort of restructuring. That determination has not been made."

NTL has been downgraded to the lowest possible long-term corporate credit rating, from triple C minus to D, by rating agency Standard & Poor's following failure to pay interest on bonds issued by NTL Communications Corp. Standard & Poor's said that although NTL had until May 1 to make missed payments, it did not believe this would happen. Moody's Investors Service has left its NTL ratings unchanged.

NTL said it had the E156.2 million cash to make the bond payments, but had been asked not to do so by some of its bondholders (see news archive wednesday).
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ZDF viewers oldest

In the first quarter of this year, the leading German commercial channel RTL was scoring on the same market share level as both the public networks ARD and ZDF.

All three of them had a average market share of 14.4 per cent with all viewers starting at the age of three. In February the public broadcaster still were in the lead since they jointly were airing the winter Olympic games in Salt Lake City. However, the audience of the public broadcasters are much older than those of it's commercial competitors as a recently published survey of the German research company MediaControl found out.

The average viewer of ZDF is 58 years of age (a meagre six years more than the newly appointed General Director Markus Schaechter who is 52), that of ARD is 57. When Schaechter climbed into his chair last week he announced that he would try everything to make his channel attractive to a younger audience. The average viewer of Kirch's small movie channel is 49 years of age, and of the RTL channels RTL is 46 and VOX is 43 years. The other Kirch channels' audiences have a average audience age of 48 (Sat.1) and 36 years (ProSieben). The youngest audience - with an average 35 years of age - is scored by an other RTL channel: RTL II.
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BSkyB deadline extended

Satellite broadcaster BSkyB has been given an extension to its March 29 deadline to respond to a provisional ruling by the OFT that it acted anti-competitively and abused its dominant position as a provider of premium sport and film channels to rivals ITV Digital and Telewest.

A final decision is not expected until the end of the summer, but if found guilty under the 1998 Competition Act, Sky faces a fine of up to E374.2 million. Sky could then appeal to the Competition Commission appeals tribunal which could take another six months.

Sky is making changes to invalidate the OFT's claims, negotiating with ITV Digital administrator Deloitte & Touche to cut the price it charges for content, and may re-evaluate the amount it charges Telewest - with NTL then expected to receive a similar deal and BSkyB escape any fine.
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Senior VP at SES Astra

Alexander Oudendijk has been appointed Senior Vice President Sales & Marketing of SES Astra, the SES Global company that operates Europe's Astra satellite system. The appointment takes effect on May 6th, 2002.

Alexander Oudendijk will report to Ferdinand Kayser, President and CEO of SES Astra, and will be a member of the Management Committee of SES Astra.

Alexander Oudendijk joins SES Astra from Hughes, where he held a number of positions since 1995, including European Sales and Marketing Director for Hughes Olivetti Telecom Ltd, Managing Director of HOT Telecommunications (Deutschland) GmbH, formally Hughes Olivetti Telekom Deutschland GmbH (Darmstadt, Germany), and Vice President, Satellite Services Sales for Hughes Network Systems Europe (HNSE).

Ferdinand Kayser, President and CEO of SES Astra commented, "Alex brings extensive sales and marketing experience in the field of pan-European satellite network services to SES Astra, including interactive data, video and data broadcast, as well as broadband services. His know-how will be beneficial to SES Astra's ongoing strive to diversify its service offering. Our focus will be on enabling and actively marketing the bundling of traditional satellite broadcast with innovative space-based broadband and Internet services."

Alexander Oudendijk, a Dutch citizen aged 48, holds a BSc and an MSc in Telecommunications from the University of Delft (Netherlands). He is married and father of five children.
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Gemstar sued by shareholders

US interactive television services company Gemstar is being sued by its shareholders - two days after its 37 per cent share crash (see News Archive, Thursday 4/4/02).

The company is the subject of class action law suit relating to its Securities and Exchange Commission (SEC) filings and public announcements which expanded upon its revenue sources.
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Powerboat racing sold for £1

The rights to professional powerboat racing were on Wednesday sold by Television Corporation for £1 (E1.6) on Wednesday (3/4/02).

Television Corporation chief executive Jeff Foulser said it was unable to get a sponsor to replace the Turkish Tourist Board, and the company had found it difficult to attract broadcasters.

Foulser was reported as describing the sale of Offshore Sport Promotion, owner of the powerboat circuit's rights for the next 55 years, as a relief, despite taking a E7.32 million charge to quit the business.

OSP was valued at E24.4 million last January but the sale to Turkish enterpreneur and former powerboat driver Ugur Isik, valued the rights at a little under E0.03 a year.

Foulser told the FT, "There was no short term or even long term future in it. It was not a strong enough property. Broadcasters were not prepared to pay for it. It was a give-away show like a lot of this minority stuff and the operational costs were too high."

Television Corporation announced a further write-down of E3.57million for the full investment, so despite turnover rising 76 per cent to E125.7 million (E71.6 million), the company recorded a pre-tax loss of E4.7 million in the year to December 31, compared with a profit of E7.56 million the previous year.
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Pegasus plans Ka-band birds

US Securities and Exchange Commission filings from Pegasus Communications show that the company plans to launch two Ka-Band satellites this summer, to be placed in the 107 degree orbital slot awarded by the US Federal Communications Commission.

Pegasus was among 11 second round Ka-Band applicants granted authorisations by the International Bureau at the FCC last August.

The satellites are expected to deliver digital video, audio, Internet access and local TV stations.

The cost for the first satellite, including design, construction, launch and insurance costs associated could exceed E283.3 million according to Sky Report, with the second satellite costing less. Additional costs would cover the ground segment.

Pegasus' full-CONUS Ka-Band slots are located at the 117-degree and 107-degree orbital positions.
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EchoStar Adds CNN Espanol

US satellite TV group EchoStar's Spanish-language packages - Dish Latino, Dish Latino Dos and Dish Latino Max - plan to provide CNN's 24-hour Spanish-language news network.

Dish Latino features 23 Spanish-language channels, a line-up that includes Discovery en Espanol, Univision, Galavision, TV Azteca, Telemundo, TV Chile, Sur, HTV, MTV Espanol, Gran Canal Latino, Fox Sports World Espanol, Dish CD Latin (six channels) and Playboy TV en Espanol (optional).

In addition, Dish Network offers Dish Latino Dos, a bilingual package which provides Spanish-language channels from Dish Latino as well as more than 20 channels from the regular Dish Network slate. Dish Latino costs E23.7 per month and Dish Latino Dos costs E36.2 per month while Dish Latino Max sells for E45.3 per month.
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Nepal relaxes media restrictions

Restrictions imposed on the Nepalese media at the end of last year by Nepal's King Gyanendra have been relaxed as from yesterday (Thursday 04/04/02).

The King decreed a state of emergency on November 26 2001 following communist rebels attacks on police and the army. All constitutional rights, including freedom of speech and the press, and the right to hold public meetings were suspended.

The rebels have been fighting to replace Nepal's constitutional monarchy since 1996 during which time more than 2,600 have died in the fighting.

The relaxation ends some, but not all, of the restrictions. Reuters reports that the Royal Palace has allowed journalists to publish or broadcast news on any subject except those that highlight acts of terror.
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Thursday 4th April 2002

French cablecos for sale

France's two largest cablecos, Noos and Numericable, are for sale according to Les Echos newspaper. The consortium of investors which owns Noos is reported to have been weakened by the default of UK stakeholder NTL and several are now seeking to sell, while television group Canal Plus has received three offers for rival network NC Numericable.

Liberty Media and AOL Time Warner, both of the US, have each declared an interest in acquiring cable assets in continental Europe putting them top of the list of potential buyers.

NTL acquired a 27 per cent stake in Noos from France Telecom in May last year on deferred payment terms, but still owes some E553 million ($489 million), which is scheduled for payment next month. NTL has just E342 million of cash available to fund the company to the end of the year thus is effectively unable to complete the transaction.

It is understood that an American banker working for Lazard is seeking buyers not just for the

Buyers are reportedly sought by Lazard for the NTL stake and other shareholdings. Morgan Stanley Capital Partners IV, LLC, which holds 22.9 per cent, has also deferred final payments for its stake until mid-May, and has 'syndicated' its shares with other funds.

In addition an FT report suggests that Suez, the diversified French utility company, is open to offers for its controlling 50.1 per cent stake in Noos. Suez Chairman Gerard Mestrallet insisted last month that his communication businesses "were not for sale", but Suez has suggested that it does not see its communication interests as strategic.

Buyers are also being sought for NC Numericable, owned by Canal Plus, part of French-American media group Vivendi Universal. Discussions with France Telecom over the acquisition of the network, operated by Numericable but owned by the French operator, were re-launched at the beginning of the year reports the FT.

Three offers are believed to have been received, but rejected as 'financially inadequate.'

A Canal Plus joint venture with Liberty Media is seen as the favoured option.
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NTL lenders segregated

Despite the E109 million bond interest payment that has been withheld (see Wednesday news 3/4/02), some NTL bondholders will receive their normal bond interest this week. Dozens of funds comprise NTL's E12.5 billion of high yield bonds, each with different claims to payment, thus some E21.5 million interest is being paid to holders of bonds issued by Diamond Holdings, a UK cable subsidiary of NTL.

US and non-US NTL divisions are also expected to be treated differently during the high-yield bonds for new NTL equity swap.

NTL said that a request not to pay came from some of its bondholders hence Monday's (1/4/02) decision not pay the E109 million in interest due on bonds mainly issued by one of its other divisions - NTL Communications Corp (NTL CC).

If NTL does not make the unmet payments by the end of April then unpaid bondholders could force it to file bankruptcy proceedings.

NTL expects to have agreed to bond restructuring terms before then after which it aims to complete an orderly Chapter 11 filing in the US, leaving UK operations unaffected.

A deal is expected in the next fortnight with a small number of funds holding 50 per cent by value of all NTL high yield issues. But there is disagreement among bondholders, with some wanting to see a formal proposal first.

NTL's banks, which lent it E6.8 billion and hold its core UK assets as collateral, could force a bankruptcy filing by calling in their loans - and now so can unpaid bondholders who are being favoured over other lenders.

Diamond and Triangle bondholders have senior claims to the assets of those divisions as they are not held by lending banks as collateral.
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Gemstar share plunge

News Corp's 42.6 per cent owned interactive television services company Gemstar saw its shares crash 37 per cent on Tuesday (2/4/02) reducing Murdoch's stake by E1.13 billion.

Combined with a planned write-down of around E2.27 billion following Gemstar's write off of E5.7 billion goodwill assumed on last year's purchase of Murdoch's TV Guide, the shares are now 80 per cent below last year's high point.

In a conference call Henry Yuen, Gemstar Chairman and Chief Executive, described the accounting as "justified and appropriate."

However, the company also revealed that revenues were boosted by non-cash swaps, with E23.8 million of the E114 million of revenues attributed to interactive services coming from a barter deal with Fantasy Sports.

Gemstar also disclosed that E67 million of the E371 million of licensing revenue reported for 2001 is dependent on a successful US civil lawsuit claiming copyright infringement in S-A imported set-top boxes.
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UPC Q4 results issued

Holland-based cableco United Pan-Europe Communications, currently restructuring its E9 billion debt, released fourth-quarter operating figures on Tuesday (2/4/02) but delayed issuing full results by a further two weeks.

Accounting treatment of "certain interest rate cross currency hedging agreements in the wake of UPC's default on its public debt on March 3," is cited as the reason for the delay which UPC says will only affect results below the operating level of its balance sheet.

Adjusted losses before interest, tax, depreciation, amortisation, stock-based compensation, restructuring and impairment charges are reported to have narrowed from E363 million ($318.9 million) in 2000 to E162 million in 2001.

Revenues increased 38 per cent to E1.38 billion. Capital expenditure was E897 million, down from E1.8 billion in 2000. Average revenue per user increased 16 per cent to E12.70, as 481,000 new users were signed up, giving a total of E8.38 million.

The company says that at an operational level it is continuing to perform ahead of budget in 2002.

Some E6.5 billion of debt and convertible preference shares is being swapped for new equity, primarily by United GlobalCom, its US owner and largest single creditor.

In February UPC forecast full-year revenues of E1.2 billionn in its core business, consolidated capital expenditure within E950 million and a loss before interest tax, amortisation and depreciation of E185 million to E195 million.

(See Wednesday PR for full press release)
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Bertelsmann cuts internet ad spend

A five year E1.13 billion advertising budget on Spain's Terra Lycos Internet portal has been slashed by German media group Bertelsmann.

Bertelsmann is responsible for about one-third of Terra's core media revenues.

Expenditure will "definitely be much less than the [expected] E767 million," said a Bertlesman spokesperson. The other E369.3 million to be spent by October 2002 has largely already happened.
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FCC rules criticised

The US National Association of Broadcasters and various network affiliates are urging the Federal Communications Commission to maintain an ownership cap on media conglomerates from buying up more TV stations and reaching more than 35 percent of the US national audience.

Heading in the opposite direction, on Tuesday (2/4/02) a US Circuit Court of Appeals for the District of Columbia, ordered FCC regulators to ease restrictions on companies wanting to own two television stations in the same market.

Last year the FCC relaxed the rule so that a company could own two TV stations in one market as long as one of them is not among the top four and if at least eight broadcast competitors remained after the deal.

Sinclair Broadcast Group Inc sued over those changes and the appeals court agreed that the eight-competitor requirement, and the FCC's decision not to count cable, direct broadcast satellite, radio or newspapers as one of those independent voices, is "arbitrary and capricious."

Consequently the FCC must reconsider the definition of competitors as well as the number.
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Wednesday 3rd April

SVT seeks free DTT boxes
Pace DTV adapter released
UK soccer solution expected
TVST closes shop
Liberty Media posts $6.2 billion loss
Intelsat launches bird
Interactive cable TV pact
Redstone unstoppable
Murdoch in Kirch meeting
Astra 3A launched
NTL to agree with creditors

SVT seeks free DTT boxes

Free basic DTT boxes for all licence payers, plus several new digital channels are proposed by Christina Jutterstroem, the new MD of Sveriges Television, SVT, Sweden's public service broadcaster. Jutterstroem has also revealed that a new channel, focused on children and youth may be SVT's next contribution to attracting new audience groups for the digital future.

Jutterstroem, who was installed late last summer, has taken an aggressive attitude for an early rapid transformation of the Swedish TV landscape from analogue to digital, mainly citing cost savings for her company from an early switch to digital transmission. While official authorities have been aiming at 2007 or later as the official closing-down date of the analogue network, Jutterstroem and her allies have for months called for 2004 as the optimal transition date.

Jutterstroem has also officially criticised Teracom, the state-owned owner-operator of all Swedish terrestrial TV and radio transmitter systems, for slow and ineffective methods of introducing DTT in Sweden on a wide scale. So far only 100,000 households have chosen to subscribe to Teracom's DTT services out of a population of almost nine million people. Teracom, which was recently very close to bankruptcy, has been forced by the government to make considerable reductions in its various operations, leaving the set top box market instead of using Teracom's own distribution arm Boxer.

Last week Jutterstroem made an official speech where she further challenged the Swedish media establishment by advocating the launch of simple, basic set top boxes to all Swedish licence payers. This should be free of charge, financed by a 'distribution account', intended for several future years of analogue broadcasting of SVT (with two national channels) and its commercial rival, TV4, the only private Swedish channel with a national licence.

The manufacturing industry has responded with surprising speed: some days ago both Nokia and Humax announced their plans to introduce new set-top boxes, specially adapted for the Swedish DTT network. The new boxes will be available from May onwards, starting with boxes with simple, basic functions, "pure 'zap-boxes' for watching television only," as Christer Franzon, MD of Boxer, puts it. Then, the plan is for boxes with more advanced functions to be marketed.

According to a Boxer press release Nokia will launch a set-top box, specially adapted to the Swedish DTT system, in the second quarter of 2002. "Our box will give an easy access to DTT; it has a compact and stylish design, and, as with all Nokia products it will be completely user friendly," Mikael Faernjsjoe, head of marketing at Nokia, comments.

Christina Jutterstroem and Leif Jakobsson, Director of Programming at SVT since January 1, made a public promise that during 2002 SVT will launch "at least one, maybe several" new digital channels during 2002. It now appears that a children and youth channel has got the highest priority.
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Pace DTV adapter released

Despite the possible collapse of the UK's digital terrestrial platform, a digital TV adapter from Pace Micro Technology has been previewing in selected retail outlets since last Saturday (30/03/02).

With this set top box, UK viewers will be able to make the switch to digital TV for £99.99 (E161). The set top box will initially be available to order in Comet, Currys and Dixons outlets and widely available within two to three weeks.

Pace's adapter allows consumers to access 14 free-to-view digital TV channels featuring entertainment, news and information, including nine channels previously unavailable to analogue viewers.

The adapter provides access to free-to-view digital channels such as BBC Four, CBeebies and ITV2 as well as digital versions of the five standard channels.

The introduction of the Pace digital TV adapter is seen as a significant step towards the realisation of Government's plans to convert the UK to digital TV by 2006 to 2010.

Malcolm Miller, Chief Executive, Pace Micro Technology said, "The Pace DTVA brings digital TV access to millions of consumers who might previously have been put off by the cost of switching to digital, and in doing so ensures the UK's continued lead in digital TV take-up. The adapter will also open up digital TV to multiple TV environments such as hospitals and schools and provide a cost-effective digital switch for each television in households with more than one TV.

"Digital TV is all about giving viewers a greater variety of programming and more choice over what they watch. With the launch of the new digital channels from the BBC, and rights to screen certain matches from this summer's World Cup, free-to-view digital TV is fast becoming a compelling service."
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UK soccer solution expected

The willingness - some would say eagerness - of ITV Digital joint owners Granada and Carlton to put the company into administration, and ultimately wind it up, has strengthened its negotiating position with the UK Football League which had threatened a E816.5 million lawsuit if it did not get the E291.4 million it is owed under its three-year E514.4 million contract.

Officially the League says it would accept E145.7 million in August when the next payment is due, and then negotiate payment of the remainder. ITV Digital however has refused to revise the offer of E81.6 million.

The indications are that the League would be willing to accept E161 million - saving ITV Digital E128 million of the E484 million still needed to be invested in the platform before break-even is expected.

While the league says it is looking at alternative bidders, and excluding ITV companies and notwithstanding a separate Scottish proposal, the only credible alternatives are BSkyB and Channel 5, neither of whom are likely to pay more than the E81.6 million offered.

However, much as there are those willing to countenance closure of ITV Digital, there are substantial costs entailed (see ATV archive) - plus brand damage to ITV to be considered - and the even less quantifiable effect of governmental embarrassment at the failure of its digital plans. Consequently, a compromise - probably in the range of E106.1 million to E142 million - is seen by advanced-television.com as the most likely outcome. And the closer the August deadline before a conclusion is reached, the lower the figure is likely to be as the clubs' cash needs and overdraft limits loom large.
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TVST closes shop

French company TV Pilote, which operates TVST, the country's digital channel for the hard of hearing, has filed for liquidation.

It had stopped all payments from March 1 and all staff employed were terminated on March 31. The company has stated that it will continue broadcasting automatically while awaiting a possible buyer, but when advanced-television.com checked (Tuesday afternoon 2/4/02) there was only an announcement stating that the channel was not currently in a position to continue transmitting its programmes.

The channel was available via Canal Satellite as one option, or as a stand-alone channel, with programming consisting of films and series, all of which are subtitled for the hard of hearing, as well as magazine programmes. It had managed to attract only about 1,000 subscribers in the few months it has been operating. No doubt a significant part of its problem came from not being able to reach a carriage agreement with cable operators.

The hard of hearing are not very well catered for by French TV. While a sizeable proportion of the prime time programmes on mainstream television include teletext subtitles, these are stripped from the digital versions since the cable and satellite operators are trying to push their interactive applications and do not want to encourage the use of teletext.

TVST had also applied for a DTT licence in the recent call for candidatures (see last week's ATV), but this is now unlikely to come to anything.
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Liberty Media posts $6.2 billion loss

US cableco Liberty Media Corp, run by cable pioneer John Malone, posted a major loss for 2001 after recording a book value decline of E4.65 billion ($4.1 billion) in the value of some of its investments in other media-related companies, it reported in a securities filing.

Last summer, Liberty, split off from AT&T Corp, reported a full-year loss of E7.4 billion, compared with a profit of E1.69 billion, in 2000. The downturn in the advertising market has affected almost all the big media companies.

Liberty's revenue rose 35 per cent to E2.33 billion.

Liberty's 2000 financial statements were restated to reflect AT&T's contribution to assets to Liberty before last year's split-off.

The filing with the Securities and Exchange Commission reveals that Liberty may have to pay an additional E121.5 million in taxes as a result of an Internal Revenue Service audit of AT&T, covering the 1993 to 95 tax years.

The IRS has told both AT&T and Liberty it is considering proposing income adjustments and assessing certain penalties in connection with the 1994 return of Tele-Communications Inc, the cable company affiliated with Liberty that AT&T acquired in 1999.

The largest single drop in Liberty's portfolio was a E2.32 billion decline in the value of its four per cent stake in AOL Time Warner, whose stock has tumbled during the past year. A E1,039 million decline in the value of Liberty's stake in News Corp also contributed, according to the filing.

Liberty, Englewood, said it expects to take a charge of E1.7 billion to E2.27 billion in accord with a new accounting rule on goodwill, reported Reuters.

Liberty is the latest media company to disclose plans for such a charge, dictated by a new rule that requires companies to write down their goodwill assets to reflect any permanent declines in value.

A spokesman for Liberty said the new rules had to be adopted during the first quarter of the year.

AOL Time Warner has said it will take a E61.3 billion goodwill charge, while French media conglomerate Vivendi Universal SA announced a smaller charge.

Although companies emphasise that the rule-driven goodwill write-downs are one-time, noncash charges, analysts have argued that they are significant, as the companies are effectively admitting to investors that their assets won't generate nearly as much cash as they had thought.

Liberty is primarily an investment company. Aside from AOL and News Corp, it has stakes in companies such as USA Networks Inc., Discovery Communications Inc and QVC Inc. One of its few operating units is Starz Encore, the pay-cable network concern.

Liberty's 2001 results also reflect its share of losses sustained by partly owned companies, including Discovery and several overseas cable companies. Liberty owns nearly 50 per cent of Discovery. The filing said Liberty's share of Discovery's 2001 loss was E332.8 million, the same as it was in 2000.

Also in the filing, Liberty said it had asked a federal court to cancel a 1999 order that required Liberty to sell its stake in Sprint PCS Group by 2004.

As of December 31 , Liberty owned about 19 per cent of Sprint PCS.

The original order was a condition of regulatory approval for AT&T's acquisition of Tele-Communications and predated Liberty's split-off from AT&T.
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Intelsat launches bird

US satellite services provider Intelsat 903 satellite was launched this weekend aboard an ILS Proton K/Block DM launch vehicle from the Baikonur Cosmodrome in Kazakhstan. Once in its assigned orbit at 325.5 degrees East, Intelsat 903 will offer capacity for Internet, video, telephony and corporate network solutions to customers on 72 C-Band and 22 Ku-Band transponders.
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Interactive cable TV pact

The US will have a new interactive cable television video-on-demand system this summer. WorldGate Communications Inc and TV Guide Interactive Inc, a unit of Gemstar-TV Guide International Inc (see results, tomorrow's advanced-television) have completed their integration and on Monday (01/04/02) said that the interactive TV package is expected to be available to cable operators in a couple of months.

Cable network operators will line up digital services, offered by the companies, on Motorola's DCT-2000 class set-top boxes.

Through WorldGate subscribers can send and receive e-mail, chat online and shop and now also use TV Guide Interactive's new interactive program guide release.

Michael Benevento has been named by Gemstar-TV Guide as Corporate Senior Vice President overseeing corporate investments and investor relations. In the past 12 months, the company lost E6,210 million on revenue of E1.55 billion.

WorldGate Communications Inc is also struggling having lost E35.61 million on revenue of E19.14 million in the past 12 months.
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Redstone unstoppable

US media mogul Sumner Redstone, the 78-year-old Chairman and Chief Executive of Viacom Inc was supposed to be in China over the weekend, meeting with President Jiang Zemin about expanding the reach of his company's MTV and Nickelodeon cable networks, but was unable to go after slipping on the bathroom floor of his Manhattan apartment and ending with two broken ribs and a collapsed lung.

Redstone, who in late February had three litres of blood drained around a punctured lung, said he was now "feeling great," although he had grudgingly taken his doctor's advice not to travel abroad. "They can't kill me! Anyone who wants to get rid of me, forget it," Redstone joked during a chat in the presidential suite at the Hotel Bel-Air, reported the LA Times.

He said he was looking forward to his visit to China. In March 2001, Redstone was in Beijing to sign a three-year deal to launch Nickelodeon in 40 million Chinese homes. "Today that number is 85 million," Redstone said.

In the late '90s MTV was Viacom's first channel to reach China. The country has 300 million TV-watching households -three times the number in the US; for this reason Redstone believes that the Chinese market has huge commercial potential. "MTV is now seen in 85 million Chinese households," Redstone said, "up from 52 million a year ago."

Although Redstone says he was in extreme pain after his fall, the next night he travelled to the White House as planned for a screening of Viacom's new Mel Gibson film, 'We Were Soldiers.' Among the guests were Gibson, Viacom Entertainment Group Chairman Jonathan Dolgen, Viacom President Mel Karmazin and Secretary of State Colin L. Powell.
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Murdoch in Kirch meeting

Next week Bavarian bankers, British Sky Broadcasting executives and investors in Kirch are to meet in Los Angeles. Rupert Murdoch is to host a meeting which will revolve around the restructuring of Premiere, Kirch's loss-making pay-TV platform, which if left in its current form could collapse and bring KirchMedia down with it. Advisers to Kirch Gruppe were considering whether to declare the German media group's core TV and film rights business insolvent on Tuesday night which could result in an insolvency filing with the court today which would give the company about eight weeks to persuade the court it had a working plan.


Last Thursday's (28/03/02) meeting to rescue the media giant only brought disagreements between its lenders. The banks failed to agree to a loan. There is understood to have been a row between the four creditor banks, after which two walked out. Among all this chaos Murdoch has emerged as a central figure in an attempt to save the business from bankruptcy, reported the FT.

BSkyB, which is controlled by Murdoch, holds a E1.7 billion put option against the Kirch holding company, but has said it wants to get the money back rather than use the option to manoeuvre for control of Premiere. Murdoch may be interested in exploring the strategic opportunity in Germany opened up by the Kirch collapse. BSkyB executives are expected to have separate meetings with Murdoch.

Italian Prime Minister and owner of Mediaset, Silvio Berlusconi and Murdoch are understood to be ready each to take up to 20 per cent of KirchMedia, the TV broadcasting and film rights business, as part of a E800 million capital injection to put the business on a firm footing. Both sides must work out which management tasks they would take on at KirchMedia, which owns 52 per cent of ProSiebenSAT.1 - Germany's biggest TV broadcaster.

But insolvency specialists and executives at KirchMedia have said they also need a roughly E150 million bridging loan from their banks to pay bills while the capital injection and accompanying restructuring is put in place, said the FT.

The minority investors in KirchMedia, which include Berlusconi's Mediaset and Fininvest, Murdoch's News Corporation, Saudi investor Prince Alwaleed, the US investment bank Lehman Brothers, and specialist media investor Capital Research, are understood to have put together a memorandum of understanding.

This would see the investors take majority control of KirchMedia, although the final decision about who would take how much of Kirch is yet to be taken. They also agreed in principle to take on 10 per cent of the bridging loan.

The investors and bankers have also so far failed to get Leo Kirch, the 75 year-old founder, to sign up to the rescue plan. It is understood there has been disagreement about whether to ask him to put his name to it now or in a couple of months time when the details of the take-over have been agreed.

While in Los Angeles, advisers are also expected to continue talks with the Hollywood studios, which are being asked to renegotiate their contracts with Kirch. Investors say that Kirch cannot be saved if it has to honour inflated contracts with Hollywood in full.
(Also see special Kirch report in Privilege Pages)
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Astra 3A launched

The Astra 3A satellite of SES Astra was launched aboard an Ariane 4 booster from the European Space Port in Kourou (French Guyana) in the evening of March 28, 2002.

Astra 3A, the thirteenth satellite in the Astra fleet, will be the first SES Astra spacecraft to be permanently positioned at Astra's third orbital position over Europe, 23.5 deg East. From this position, Astra 3A will provide follow-on capacity for the Kopernikus satellite of Deutsche Telekom AG, which has contracted 10 transponders on the spacecraft.

The satellite has the apability to operate 20 transponders, each with a bandwidth of 36 MHz, in the Ku-band frequency range of 11.45 to 12.75 GHz and an optimised coverage area for the German speaking countries of Germany, Austria and Switzerland.

Astra 3A, the second 'spinner' satellite in the Astra fleet, was built by Boeing Satellite Systems Inc and has a design life of 10 years.

Ferdinand Kayser, President and CEO of SES Astra said, "Astra 3A will provide SES Astra with highly cost-effective additional transmission capacity for cable feeds and new, innovative broadband applications targeting the thriving German speaking markets."
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NTL to agree with creditors

UK cableco NTL is understood to be close to agreement with creditors on restructuring its debt-laden balance sheet, with a broad deal structure likely to be announced within weeks.

As a sign that they are having a positive progress, on Monday (01/04/02) the company decided to default on a E109 million ($96 million) bond payment reports the FT, although this is not set on stone yet.

NTL said bondholders that represented about half the E12.4 billion of outstanding bonds had requested the pause in interest payments. NTL also has about E 6.8 billion of bank debt not included in the restructuring.

However, talks are continuing and a number of pitfalls remain. For example, there is a disagreement among bondholders over whether to accept all equity in return for bonds or a mixture of new equity and new bonds. Also NTL has yet to resolve the issue of E568 million of debt to France Telecom, a key NTL shareholder, which falls due next month, commented the FT.

One unrestricted bondholder said on Monday, "This is probably the biggest corporate bond default in history. Psychologically, people may have been prepared for the default because of NTL's bond prices but financially it is still a shock. Those who bought bonds in the last few months expecting to receive the accrued interest are mad as hell."

NTL would not comment on Monday beyond a tightly-worded release. But observers suggested the bond default - which gives NTL a 30-day grace for repayment - looked like a prelude to a broader announcement of the terms under which bondholders might swap debt for equity. The move, which would see shareholder equity virtually wiped out, might be accompanied by a pre-arranged Chapter 11 bankruptcy filing to win protection from its creditors.

In addition, negotiations are still continuing with potential strategic investors such as Liberty Media and AOL of the US.

NTL said on Monday the decision to withhold interest payments would not affect the normal course of its business operations in the UK, Ireland and Continental Europe. It said, "NTL has sufficient liquidity to make the current interest payments and trade obligations, given its existing liquidity and the expected net proceeds of approximately E341 million from the anticipated closing on or about April 2 of the sale of NTL's Australian broadcast business."
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