NEWS Monday 15th April-Monday 22nd April2002

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Danish TV2 for privatisation?

To privatise or not to privatise? - that is question for Denmark's Prince of broadcasters, TV2. Currently the channel is a strange hybrid between state-controlled public service and advertising supported commercial television.

Partly financed by licence revenues (even though the lion's share of Danish licence money goes to the traditional, advertising-free pubcaster, Danmarks Radio-TV, DR), TV2 still enjoys the position of an independent organisation, however under government control, and vehemently advocating its 'public service' role.

A new Liberal-Conservative government, installed last autumn, may however change all this. The new government has made several moves to have TV2 privatised, but the management of the station, headed by TV2's MD, Christina Lage, is vigorously opposing such suggestions.

While the Director General of DR, Christian Nissen, has recently made several public statements to support privatisation of his main rival, to ensure all future licence money goes directly to DR alone.

In relation to plans for a future DTT network, where Denmark has been left behind by both Sweden and Finland - and soon Norway too - TV2 took an early leading position, even offering to pay for digitisation of the Danish terrestrial network from its own pockets. So far these efforts have been of no avail.

The new Danish Minister of Culture, Brian Mikkelsen, is due to publish a report with regard to his plans for the Danish media future in a couple of weeks.

Meanwhile there is speculation galore about which players might be included; should TV2 be privatised after all? Today the major candidates are Scandinavian: Swedish Bonnier and its main rival Modern Times Group are mentioned together with Norway's Schibsted and Orkla (with major newspaper investor in Denmark). Also Denmark's own 'super media group', Egmont is among the hottest candidates. Others include Denmark's leading telco, TDC, and its Swedish rival Telia, and Norwegian rival Telenor, through its DTH affiliate CanalDigital. Also pan-European SBS Broadcasting - with a Danish representation through TVDanmark, is expected to look at investing into Danish TV2.
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Lescure support rallies

The staff unions at Canal Plus say that in order to continue live broadcasts attacking Vivendi-Universal chief Jean Marie Messier over his decision to sack popular channel boss Pierre Lescure, they have now ruled out a strike and instead have arranged a 'celebrity-led' protest picnic for the weekend.

Canal Plus staff are reportedly planning to broadcast an evening of special programmes Lescure. The channel's producers have arranged for French film, TV and music celebrities to appear on the programme, which will be broadcast on the channel's free-to-air schedule and can be viewed by the whole French population.

Thousands of Canal Plus staff marched to the headquarters of Vivendi Universal at the Arc de Triumph in Paris to protest at Mr Lescure's removal.

Broadcasting watchdog, CSA, has summoned Vivendi's chairman to a meeting yesterday to warn him that Canal+ could lose its licence if it fails to respect its contractual role as the financier of most French films - 115 last year - a regulation Messier has fought against. Canal Plus' broadcasting licence could certainly be withdrawn if the company fails to honour the terms of its contract with France's CSA audiovisual regulator French President Jacques Chirac confirmed on local radio - despite often having been the target of the channel's political satire. Messier had said that protection for French films is dead.
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Berlosconi consolidates media grip

Earlier this week Italian media mogul and Prime Minister Silvio Berlusconi ignored his critics and appointed politically friendly executives at public broadcaster RAI giving him country-wide dominance with access to about 90 per cent of Italy's TV audience and control of virtually all the television ad market.

Reuters reports that the public broadcast channel RAI1, will be directed by Fabrizio Del Noce, backed by Berlusconi's right-wing Forza Italia party. Forza Italia member and RAI veteran Clemente Mimun is director of the RAI news unit, while former fascist National Alliance party sympathizers Mauro Mazza and Bruno Socillo were given the directorship of RAI2 news and radio news, respectively.

The centre-left opposition got RAI3 (director Paolo Ruffini) and RAI3 news (Antonio Di Bella, in place and confirmed), but all regional news programs were split off into a new service headed by centre-right candidate Angela Buttiglione.
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Gemstar-TV Guide gets Shell

US-based Gemstar-TV Guide has appointed a new Co-President and COO - Jeff Shell, former President and CEO of News Corporation's Fox Cable Networks Group, who will report to Chairman/CEO Henry Yuen.

News Corporation is Gemstar's largest stock holder, with a 42.6 per cent stake.

Gemstar has seen its stock peak at around $90 (E101) in 2000, dipping to around $20 per share to $10 when former co-president Peter Boylan left a month ago. It is believed that News Corp - being the largest stock holder, with a 42.6 per cent stake - wanted one of its own to help manage the struggling organisation.

"Jeff substantially deepens our management team and enhances our ability to maximise the long-term value of our businesses," said Yuen. "His operational leadership will also permit me to intensify my focus on developing innovative technologies and on expanding our business, both domestically and internationally."

At Fox, Shell was responsible for 20 major networks, including entertainment and sports channels.
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Thursday 18th April 2002

Strike looms at Canal Plus

The sacking of Pierre Lescure, for 18-years the popular head of French pay TV company Canal Plus, has not resolved attacks on Jean-Marie Messier, Chief Executive of parent Vivendi Universal, but added to them, with staff now calling a strike on April 24, the date of next week's Vivendi shareholders' meeting.

Lescure's replacement by Xavier Couture, from rival broadcaster TF1, was denounced by Union representatives who announced the strike.

Under Lescure Canal Plus provided substantial finance for the French film industry - a link which Messier has sought to break. France's Prime Minister, Lionel Jospin, immediately asked the French media watchdog to ensure Canal Plus continues to adhere to cinema laws

Programming on Canal Plus was interrupted as a tearful Lescure told viewers live-on-air that he was unfairly dismissed and stabbed in the back by Messier, just a week after second-in-command Denis Olivennes resigned, apparently to make Lescure's sacking more difficult. Lescure declared that the "editorial independence and liberty" of Canal+ is now threatened. French television celebrities, including Antoine de Caunes and Alain Chabat, joined the union representatives in urging Canal Plus viewers to cancel their subscriptions.

Messier told a Paris press conference, "Canal+ has lost its soul, its results, its subscribers. ‹ It was time for a change of team at Canal+." He said, "The current situation at Canal Plus is worrying. That's why I wish to bring in a new team under the leadership of Xavier Couture." As a result there is now a public battle between the parent company and executives at its pay-TV business.

Messier had previously faced severe criticism of the company's drop of almost 40 per cent in the share price this year, its record losses and, his failure to reduce massive debts or offer a strategy that would do so. While Messier says he is confident he will remain in charge of the business - and some analysts have described Lescure's departure as positive and stabilising, the general tide of opinion suggests that Messier's position is now less secure than it was on Monday.

At Tuesday night's unscheduled board meeting of Vivendi Universal Messier's leadership was discussed with some investors believed to have suggested he take a non-executive role. However, speaking on French radio Lescure said Messier's position at Vivendi Universal "was not really under threat," despite branding his leadership as 'A one-man show."

An example of the kind of reaction Messier can increasingly expect was given by the writer of the satirical puppet show Les Guignols, Bruno Gaccio, who via his puppets, joked on air, "Messier gave the management 24 months to turn round the station's finances and fired them one month later. How can we trust a guy who canªt even count up to 24?" Moments later, station managers pulled the plug and switched to the weather forecast.
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RTL2 animation launch

German general entertainment channel RTL 2 intends to launch an animation channel that focuses on the popular Japanese 'Mangas', the channels general manager Josef Andorfer announced in Cannes during the international program market MIP-TV. The channel is part of the so called RTL network family.

"We are in negotiations, but it's nothing decided yet," a spokesperson for the RTL Group said. However, RTL has not achieved the controlling stake it sought in the RTL 2 channel as the partners Herbert Kloiber/Disney and Heinrich Bauer Verlag declined to sell their stakes. "The channel will launch as scheduled in the coming year," Andorfer said, "as long as the other shareholders are backing the project." He did not appear to doubt that this consent would be given. Kloiber however owns the rights to these program hours and could also benefit from the effects created by its own merchandising company CTM. Bauer has invested strongly in childrens and teen comic books and magazines. These additional revenue streams make Andorfer believe that the advertising-funded free to air satellite channel can break even by 2004, even if it doesn't seem likely to get additional cable distribution.

For Kloiber's TeleMunchen Group, TMG, this means a change in strategy. The group originally intended to launch two digital thematic offers within this year. Because of the delayed cable situation these projects were put on ice. "It's the obvious way. You can't make business in the field right now," Kloiber said.

Instead, the second RTL channel will be the second new free to air venture after Tele 5, to have been launched this month - a relatively short time for multiple TV launches. The group is obviously is trying to win some ground in the German TV industry made possible by the Kirch insolvency.
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Additional report from MIP in Cannes

The press conference actually was scheduled to promote one of Canal Plus' new program highlights during this year's MIP-TV. But the prepared "Dossiers des Press" remained unread. You could feel the disbelief and shock from both the French press and the Canal Plus managers that had come to Cannes about the sacking of the highly popular CEO of the Canal Plus Group Pierre Lescure, by the Chairman of its mother company Vivendi Universal Jean-Marie Messier. This followed the unexpected announcement at 16:00 hours on Tuesday that Lescure would move to the supervisory board by April 24, the day of the Vivendi Universal shareholder meeting, where a successor was already presented by Messier, the current number three of French commercial network TF1, Xavier Couture.

"There were different opinions about the direction we should take. We had to react since we had a management problem we had to solve. We could not accept risking the soul of our company," Messier later said in an TV interview on France 2. However, in his own press release, Lescure doubts that his sacking is in line with provisos that French regulator the CSA had attached to the consent of the merger between Vivendi, the US major Universal, and Canal Plus Group two years ago.

Meanwhile, at Canal Plus' headquarter in Paris, all the employees held a general meeting in one of the group's large studios, where Lescure gave his well-received statement and was supported by some of the group's most famous TV hosts such as Phillipe Gildas. The regular programming of Canal Plus and of the digital channel i.television was interrupted for half an hour to televise live from the assembly.

Canal Plus had been blamed for the conglomerate's losses, however the French ventures are in the black but deeply in the red in other markets such as Italy. The highly unpopular sacking of Lescure was meant to appease shareholders but caused public revolt. Messier had previously been blamed for giving up French national assets for his career, while Lescure was seen as representing the French way of doing business. He granted significant financial support which French TV networks are required by law to give to the domestic theatrical film industry. Messier questioned the French national consent on this issue and the appointment of Couture, a commercial TV manager - not from the public networks France 2 or France 3 - which increased suspicion that he would try to get out of the commitment. "By this unpopular decision to sack Lescure there has been a major increase in the likelihood that Messier will also not survive the year," one French observer said.
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No Australian consensus on rule change

Australia's commercial TV stations are divided about government plans to allow a degree of multichanneling in return for a relaxation of the anti-siphoning laws that keep the bulk of televised sport in the free-to-airs' control despite the pay sector's objections.

Communications Minister Richard Alston has suggested that the trio, Networks Seven, Nine and Ten, be allowed to run extra channels over the digital spectrum they have been allocated to upgrade their analogue services.

In return, the events on the anti-siphoning list would be re-examined and reforms would be put in place into the digital broadcasting legislation to allow would-be datacasters to run video and text services through the Internet or TV.

The pay-TV lobby has launched an intense attack on the anti-siphoning list, and their cause has been helped by Nine's decision not to broadcast Australian Rules football matches live in many parts of the country, despite being a key part of a record $250 million bidding consortium that took the rights to the game from the season that started in March.

A spectrum auction for would-be datacasters was cancelled in May 2000 because there was only one bidder after Australian media companies said restrictions reduced what they could offer down to only a text service.

Seven has embraced the proposals, saying that they will allow it to carry high-profile events on a temporary basis. The network's C7 sports channel is carried on two of Australia's pay platforms, Optus and Austar.

But Nine and Ten said that the multichannel plan will push up programming costs. They also warn that the new datacasting plan will allow broadcasters through the "back door" before a moratorium on new free-to-airs is lifted in 2006.
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Norwegian DTT plans criticised

Plans for a Norwegian digital 'super giant' DTT project combining the country's two major television players - pubcaster NRK and its main commercial rival TV2 - under one roof in Norges Televisjon (Norway's Television), have met critical resistance from Norway's official competition authority, Konkurransetillsynet (KT).

KT now warns that the plans for Norges Televisjon might, "lock other operators out of the planned national digital terrestrial network," with NRK and TV2 as the sole owners and controllers.

"With this model of ownership it might well lead to Norges Televisjon having incentives to give other operators less attractive conditions, or even lock them out totally from the projected network," Elin Kleven, Director of Information at KT comments.

KT also reacted against demands from the Ministry of Culture that licences for the projected national DTT network should only be given to public service broadcasters. "If this was the case it would give NRK and TV2 a lead which would be unacceptable in our eyes. For us the important thing is that as many operators as possible get access to the new technology, which would also, in our eyes, be the best benefit for the viewers," Kleven concludes.

Originally Norway's leading telco, Telenor, which has growing ambitions to expand into the world of television, was supposed to become a partner in Norges Televisjon, but had to step down after the company's growing television empire was frequently exposed and questioned.

In Norway, as in Sweden, plans have recently been exposed to launch a programme distributing simple DTT set top boxes, free of charge, to all licence payers in order to enable a more rapid transition from analogue to digital television distribution. Tor Fuglevik, MD of Norges Televisjon, admits that these free STBs will have a "limited capacity"; those wanting boxes with more advanced functions, like interactivity etc will obviously have to pay extra for those services."
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PVR on SeaChange VOD

SeaChange International Inc has introduced Personal Video Recording (PVR) capabilities to its Video-on-demand over cable offering. Described as a seamless extension of the SeaChange VOD system, PVR allows operators to deploy customised and free tiers of on-demand programming supported by targeted advertising.

Adelphia Communications in the US is the first to use SeaChange's PVR capabilities, deployed on its sports-on-demand service. Tests of PVR were successfully completed earlier this month, with Buffalo Sabres games on-demand. Adelphia's original SeaChange VOD system will see its capabilities increased, extending its multi-tiered VOD service with on-demand programming options that appeal to specific audiences.

The system comprises software and video encoders, and SeaChange's PVR application records live events onto the VOD system, providing subscribers with immediate access via existing digital set top applications with fast-forward, pause and rewind. Subscribers can also exit a recorded program stream to re-join the live broadcast.

"Personal television is a top cable priority. Operators are already revealing plans for free-on-demand tiers, which we believe is partly inspired by SeaChange's ability to seamlessly bind PVR programming with existing local and national advertising models," said Bill Styslinger, President and CEO, SeaChange International. He adds, "End-to-end automation and the extensibility of MediaCluster allow SeaChange VOD systems to support the inevitable growth of VOD into everything on-demand. SeaChange completely redefines any notions of cable-delivered PVR with built-in advertising capabilities that offset costs associated with building on-demand tiers and open the door to new ad revenues."

SeaChange will demonstrate PVR and other applications of the SeaChange VOD system at the National Cable Telecommunications Association conference in New Orleans, May 5-8 in Booth 2533.
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EuroNews goes polyglot


From this month (April) countries throughout Europe can receive EuroNews in their own languages. EuroNews is available in English, French, German, Italian, Portuguese, Spanish and Russian via UPC Sweden's digital television platform in what it describes as the operator's 'Favourite' package.

EuroNews is an all-news channel that covers world news from a European perspective. Subscribers can now switch to the language of their choice with their remote control.
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Wednesday 17th April 2002

Losses in 2nd 1/2 for Pace

European set top box leader Pace Micro Technology plc expects to make a £5 million loss in the second half of this year, compared to a £3 million forecast and profit of European set top box leader Pace Micro Technology plc expects to make a £5 million loss in the second half of this year, compared to a £3 million forecast and profit of £38 million in the last financial year according to company and FT reports. This was seen as 'the most likely financial outcome' in the company's latest update on trading for the year ending 1 June 2002, announced just before the end of trading on Monday 15/4/02; as a result the company saw its shares fall 21 per cent to 79p.

Pace also reports that it is now working with UK cableco ntl to achive a mutually satisfactory conclusion to its 'stated difficulties' concerning its inability to get payment insurance on orders, and ntl's subsequent switch to Samsung to supply a major order. In the US, Pace says it is making steady headway and has received what it says is positive reassurance from its customers, although this does not ensure that the product will be shipped in line with current expectations (of some 250,000 boxes) in this financial year.

As a supplier with unsold stocks of DTT boxes - a sector which Pace emphasises accounts for just two per cent of its global business - Pace is also understandably watching closely whether ITV Digital will emerge from administration but notes that the public battle is unsettling the market.

New low-cost digital TV adapters to access free-to-view product, launched this month, had been forecast to achieve sales of 100,000 units by the end of May, but production has now been 'prudently constrained' to around half this level.

Some £20 million impairment charge may also be made on previous acquisitions. There will also be redundancies as the company reduces its overall cost base.

Pace notes that results for the financial year ending 31 May 2003 will depend on the ability of operators to continue to fund their plans for digital roll out; upon the level of demand from consumers subscribing to services or purchasing set top boxes outright and upon Pace's ability to meet their requirements.
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NTL E12 billion rescue comes through

Barclay Knapp, head of the UK's biggest cableco NTL, has pulled off a rescue deal that keeps the current management in place, swaps E11.94 billion debt for equity, giving bondholders control of the company while eliminating shareholder investment.

The biggest looser is France Telecom which has lost E6 billion investment in three years. The deal still requires approval of NTL's banks, and will put some NTL businesses into Chapter 11 US bancruptcy protection.

Knapp was reported in the FT as saying that if the company's expansion had been financed by equity, the company would be where it will be after the restructure.

Under the restructure NTL will be split into NTL UK/Ireland, and continental Europe, with the UK arm becoming 100 per cent owned by the bondholders, who would hold 87 per cent of the European entity. Ordinary shareholders would get 10 per cent of the Euroco plus warrents on nine per cent of NTL UK if it ever saw its value rise above E11.83 billion.

The UK arm is expected to support some E6.5 billion debt after the restructure, making a merger with UK number two cableco Telewest - which has its own E8.3 billion debt - yet more likely.
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Sky + II in the autumn

Brian Sullivan, Director New Product Development and Sales at BskyB, speaking on day one of the 5th Open TV conference in Paris yesterday (16 April) disclosed that a new version of the Sky Plus PVR will be released in the autumn.

It will have a smaller footprint, be more highly integrated and cost less to manufacture. Like the current model it features a 40 GB hard disc drive (but it is an easy matter to upgrade this), twin tuners, a V90 modem and a high speed data port. Advanced-television.com asked him what the price of the new box would be and whether there was a risk that the announcement would prejudice sales of the current model.

He replied that lower manufacturing costs did not necessarily mean a lower retail price. He also declined to give details of the number of Sky+ sold, other than to say it was ahead of expectations and that the number is disclosed every six months in the half yearly accounts. The next accounts are due in August.

Sullivan also disclosed some details of some forthcoming upgrades to the software of the Sky + box. In about a month a manual timer will be added, complementing the existing event timer linked to the EPG and the Search and Scan banner. He said that this feature had been requested by many people who want to record the radio, although he did not understand why anyone would want to use a Sky + box to record radio.

He admitted that there are no plans for a simuilar facility on Sky Digiboxes and did not understand why anyone with a Digibox would want to record The Archers or I'm Sorry I haven't a clue, two well known programmes on Radio 4.

Another software upgrade coming to Sky + in a few months time will be the possibility of recording two different programmes at the same time.

Full details of Sullivan's view of interactive TV will appear in our Special Report on the Open TV conference.
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Vivendi dissension increases

Following earlier criticism of plans for five per cent of the company's equity to be made available for executive stock options, Vivendi Universal's Chairman Jean-Marie Messier, says he will renounce his options this year unless the French media giant's shares pick up in the coming months, trading above E60 by September.

Vivendi shares are currently trading around E38, thus a 58 per cent price rise would be required. Members of Vivendi's executive committee decided to buy company stock with their 2001 bonuses.

Following Friday's resignation of Denis Olivennes, Chief Operating Officer at the company's pay-TV unit, Canal Plus, its Chief Executive Pierre Lescure told union reps Monday (15/4/02) that he will resign if Messier tries to block his choice of a new deputy.

Olivennes reportedly quit to make it politically impossible for Messier to fire Lescure before the April 24 shareholders meeting in Paris.

Lescure explained that he appoints replacements to the company's five-member board, of which Olivennes was a member, in accordance with the charter Messier signed with France's Conseil Superieur de L'Audiovisuel at the time of the Vivendi Universal-Canal Plus merger a few years ago. However Messier must approve the choice.

Burns has also written to ITV Digital's regulator, the Independent Television Commission, asking it to consider whether Granada and Carlton are "fit and proper persons to hold broadcasting licences."

The League has been insisting that ITV Digital honour its contract which requires payment of another £178 million.

THE administrators of ITV Digital offered £74 million to the Football League: £62 million for the remaining two years of the contract and a further £12 million if it is extended to cover the 2004-05 season - the latter being less than the £25 million a year which Sky previously paid.

Stuart Prebble, the chief executive of ITV, has been circulating soccer club chairmen the Particulars of Claim of the High Court action by Carlton and Granada to deny responsibility for ITV Digital's debts should it collapse as they say they were not party to the original agreement.

LATE NEWS: Messier has sacked Pierre Lesure, Chief Executive of Canal Plus.
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Tuesday 16th April 2002

ITV Digital gets a week reprieve

Administrators Deloitte & Touche have £5 million (E8.1 million) to keep the ITV Digital pay TV platform going another week as it seeks to reach a settlement over the £178.5 million (E291 million) outstanding in its rights deal with the Football League, while simultaneously preparing contingency plans for a sale of the company. The UK High Court was told ITV Digital would be wound up after a week and sold off as a going concern if no settlement could be reached.

The 72 Football League club Chairmen meet in Manchester on Thursday to discuss what is described as ITV's final offer - some £74 million (E121 million). The figure was described by one commentator as ' two to three times the market value' of the rights, and 50 per cent higher than ITV's starting point of £50 million (E81 millon), and also up on its £60 million (E98 million) two-year deal offered on Friday.

Football League Chairman David Burns confirmed on UK radio yesterday (15/4/02) that the league might be willing to accept less than the full £178.5 million if ITV Digital handed back the broadcast rights. But the latest offer remains less than the £100 million (E163 million) which the league is believed willing to accept.

Nick Dargan and Nick Edwards, joint administrators of at Deloitte & Touche who would handle any sale are thought likely to be approaching potential buyers such as British Sky Broadcasting, the BBC and financial investors this week.

Any buyer - simply the highest bidder - would immediately get ITV Digital's 1.2 million subscribers, with approval from the TV regulator. Even at a modest E250 per subscriber (at the low end of European cable franchise costs), that would equal a cost of some E300 million - a substantial saving on the £800 million (E1,306 million) already invested in the platform by parents Carlton and Granada - but still far higher than any likely bidder is expected to pay in such a 'fire sale'.

Any payment received would be returned in the form of a dividend to creditors - the biggest being Carlton and Granada, followed by the League. All the creditors have unsecured status.

The League would then be expected to pursue its £500 million (E816 million) lost earnings case against Carlton and Granada, as well as trying to prevent the ITV companies ever winning Premiership highlights again.

At court the administrators criticised the League's tactics, and complained that restructuring and negotiations had been, "hampered by the unauthorised disclosure of private and confidential discussions and the campaign of negative publicity which has continued this morning and is severely undermining the administration process." Michael Crystal QC, acting for Deloitte & Touche concluded, "If there is no restructuring then the running of the business will have to come to an end," with the Football League warned it could be about to score an own-goal.
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UPC net loss doubled

Amsterdam-based broadband communications company United Pan-Europe Communications, which is filing its audited year-end 2001 financials with the US Security and Exchange Commission (SEC), is reporting a net loss for the full year 2001 of E4.4 billion, compared to E2 billion in 2000. The key difference between 2000 and 2001 was a one-time, non-cash E1.5 billion impairment charge relating to a revaluation of UPC's intangible fixed assets, following the previously announced strategic review of the company's business plan.

The net loss includes E1.1 billion in non-cash depreciation and amortisation charges, E0.9 billion interest expenses - of which E0.3 billion is non-cash - and a E0.5 billion non-cash loss on the merger of the company's Polish DTH assets which occurred in the fourth quarter.

The company also took an E0.2 billion restructuring charge as part of a programme to both lower operating expenses and strengthen its competitive and financial position.

UPC's total consolidated revenue for the year 2001 increased 38 per cent from E1,000 million for 2000, to E1,380 million, in-line with financial guidance for the year. UPC Consolidated Adjusted EBITDA improved 55 per cent from E363 million in 2000 to E162 million at year-end 2001.

UPC said that it continues to be on track and in constructive discussions with UPC stakeholders regarding the recapitalisation of its balance sheet.

However, UPC's auditor, Andersen, was reported in the FT as warning that there was "substantial doubt" about the chances of the cable group surviving financial meltdown. In Amsterdam its shares, which traded at E80 two years ago are worth just E0.17. And while the company recently noted that it has more than E800 million in the bank, the FT report emphasises that available cash had halved in a year and interest payments alone were running at E900 million a year and the filing did not mention earlier statements that the company was fully funded to April or May 2003.

Under planned restructuring of the company, the great cable svengali John Malone in the US is expected to eventually move to take control of UPC and 'do something' to protect his vast investement in the company. Malone's Liberty Media conglomerate now has more than 72-per-cent control of UPC US parent United GlobalCom, which is expected to get control of the company via the exchange of E6.5bn of debt and convertible preference shares for fresh equity to bondholders - primarily UGC - thereby drastically diluting existing equity. In addition to earlier staff layoffs, more are expected, with other cost cutting excercises including UPC's internet service Chello putting up prices and pulling out of Australia, Chile and New Zealand while programming ventures are under review for possible divestment.
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German Tele launches 5 on Astra

Test transmissions began yesterday (15/4/02) on SES Astra's 19.2 degree East satellite ahead of the April 28th, 2002 launch of Tele Munchen Gruppe's new German entertainment channel Tele 5.

Tele 5 will reach 14.4 million homes in the German speaking countries of Germany, Austria and Switzerland equipped for analogue Astra reception, that's 92 per cent of all satellite households in the German speaking markets of Europe.

Jochen Krohne, Managing Director of Tele 5, commented, "The best programming is worthless if you can't reach your audiences. To succeed in the German TV market, you need access to the direct-to-home satellite system with the broadest reach as well as cable access. During my professional career with several broadcasters Astra's orbital position at 19.2 deg East has become like a second home to me and I look forward to the renewed partnership with Astra for Tele 5."

Ferdinand Kayser, President and CEO of SES ASTRA, an SES Global company agreed, saying, "The decision of Tele Munchen Gruppe to opt for Astra distribution ensures Tele 5 the largest available satellite penetration in the German speaking markets of Europe. Including Tele 5, analogue Astra viewers will now be able to choose between 47 free-to-air TV channels, 40 of them in German language."

Tele 5 will use Astra transponder 23 (11552,75 Mhz; H-polarisation).
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Loft Story Two sets record

French television channel M6 has seen record viewing figures for the launch of Loft Story II, a French 'Big Brother' style reality TV show in which 12 contestants are filmed almost continuously while living together in a 'loft'.

The launch evening audience was 8.2 million, or 37.5 per cent audience share, reaching a peak of 10.4 million viewers at 22.45 when the prime time programs on the other channels finish. The audience share among 15 to 34 year olds was 62 per cent.

The special events channel transmits directly from the loft - with a three minute delay. This time the programme is being carried by all the major cable operators and both the satellite platforms.

There were 70,000 subscriptions before transmissions even started - at a cost of E12 for the 12 week duration of the event.

Loft Story I, which was broadcast exclusively on the TPS platform, attracted a total of 125,000 new subscriptions.

Following the insistence by the broadcasting regulator CSA to allow the candidates two hours a day of 'private time' only 22 hours in 24 are going to be aired.
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Conflicting Kirch reports

Plans by a consortium of banks to rescue Leo Kirch's media empire were abandoned by investors when they found a series of hidden liabilities and funding arrangements, including a E150 million plus deal to support his son, Thomas. But while the more successful part of the business appears ready to collapse, Rupert Murdoch is reported to be putting up money to increase his stake in the Group's loss-making pay TV unit.

KirchMedia, the group's core film rights and broadcasting arm is reported to have provided more than E150 million ($132 million) to fund the growth of one of Thomas Kirch's main investments. This discovery undermined efforts by banks and minority shareholders to restructure the group as they questioned whether the proposed E800 million capital increase would be enough to cover other hidden liabilities. Such fears had already been raised when Thomas Haffa, former Chairman of EMTV, revealed over Easter that he had an E90 million put option allowing him to sell his remaining shares in EMTV to KirchMedia as of this summer.

In addition to controlling the largest media rights libraries in Europe, Kirch also owns a majority of TV broadcaster ProSiebenSat.1 Media AG, as well as KirchPayTV, Germany's only national pay TV operator.

KirchMedia went into administration last week, and Premiere, the loss making pay-TV business, was expected to follow into insolvency as early as this week. However, such a move is now considered unlikely according to German newspaper Welt am Sonntag which reported on Sunday (14/4/02) that Rupert Murdoch - despite earlier claims that he did not want to put more money into Kirch - has has made E600 million ($529.8 million) available to KirchPayTV GmbH, a unit of Kirch Group,

Murdoch has a 22 per cent stake in KirchPayTV through British Sky Broadcasting Group PLC (BSY) but it is not clear what percentage the new money gains. Other shareholders of KirchPayTV are Saudi Arabia 's Kingdom Holdings, with 3.1 per cent; Capital Research Management Co, 2.7 per cent; and Lehman Brothers Holdings Inc's (LEH) merchant-banking arm, 2.4 per cent. Kirch Group holds 69.8 per cent.

KirchPayTV also says it expects to reduce sporting and film rights deal costs by 50 per cent.
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Messier E2billion stock plan panned

Criticsm of Vivendi Universal CEO Jean-Marie Messier mounted after his call last week for top management to defend a E2 billion ($1.8 billion) executive stock option proposal, despite suggestions from senior executives that it should be scrapped in the face of poor performance. Shareholders will be asked to approve the plan at the annual meeting on April 24.

The company's E19 billion ($16.7 billion) debt, a share price fall of 40 per cent this year, and a perceived management crisis has resulted in investor unrest, making such approval unlikely.

But at an executive committee meeting last Thursday, Messier argued for a scheme requiring shareholders to make five per cent of the company's equity available for executive share options to retain and reward top talent.

The FT quotes one critic as saying, "Investors bought shares at maybe E75. Now the shares are in the 30s and executives are awarding themselves options. It would be more sensible to cancel it now, but Messier cannot hear that."

On Friday, Denis Olivennes who was once seen as a contender to succeed Messier, resigned from the company in protest at what he is reported to have described as Messier's egotistical management style and lack of consistent strategic vision.
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Viacom chiefs get bonuses

US broadcasting and media company Viacom paid its top executives 20 per cent less in bonuses than during 2000 due to the fall on advertising. But they are ahead on compensation in comparison to top executives in rival groups.

Viacom's Chairman and Chief Executive Sumner Redstone and President and Chief Operating Officer Mel Karmazin each received E17.3 million in 2001, E2.15 million less than a year earlier. Although their bonuses have been reduced from E17 million to E13.6 million, their salaries increased a 63 per cent. They were paid E3.7 million in 2001, from E2.3 million salary a year earlier.

Top executives from Disney and AOL Time Warner did not get bonuses for 2001, especially after the deep advertising recession that hurt results for most media groups, reported the FT.

According to Viacom's compensation committee Redstone and Karmazin achieved record operating results for 2001 whilst in a very difficult environment. For this reason the committee settled on E13.6 million in bonuses for the two executives.

The advertising slow-down was reflected in the share prices of the big media groups. Viacom stock fell about 23 per cent in 2001, compared with 35 per cent for Disney and 40 per cent for AOL Time Warner.
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TV25 'Fast Trackers' Forum

The UK's Guardian Edinburgh International Television Festival 2002 (GEITF) has launched this year's talent initiative, the TV25 Forum for Fast Trackers.

The scheme will be expanded to offer forty young TV industry 'hotshots' a free series of tailor-made masterclasses, executive breakfasts and workshops, as well as access to the main Festival.

TV25 is open to 22 to 29 year olds with between two to four years of television experience. TV25 attracts figures from all sectors of the broadcasting industry, with associate producers, producers, directors, writers, marketers and new media creators enjoying exclusive access and networking opportunities with the most respected policy and programme makers in TV today.

TV25'ers have specially created events that provide career direction, programme making skills and insight from leading TV practitioners. Last year Endemol Creative Director Tim Hincks, RDF Media's Stephen Lambert and the team behind the sitcom 'Spaced' shared their vision and passion with the delegates.

The TV25 scheme was founded by Lucy Richer (Channel 4 Drama) in 1994. Previous high profile TV25 delegates have included Andy Zein (Managing Director, Tiger Aspect Productions), Ben Adler (Day Producer, Big Brother) Oliver Dennis (Writer, Eastenders/Dream Team), Myfanwy Moore (Editor, New Comedy, BBC Entertainment) as well as the Producer of last yearªs TV25, Anne Mensah (BBCªs Fictionlab).

The TV25 initiative is now in its eighth year and is sponsored by the BBC. To apply for a place on TV25, applicants can log on to www.geitf.co.uk/tv25. The closing date for applicants is 31st May 2002.

TV25 is produced by Harriet Jaine (V Graham Norton Show) and Suzy Lambert (Flextech Television). Commenting on the launch of the extended scheme, TV25 Director Simon Harrison said, "I am thrilled that we are able to extend this forum to offer forty young industry delegates the chance to benefit. TV25 is a hugely successful scheme that provides inspiration, vision and passion to some of TV's emerging faces. By integrating them with the Festival, GEITF also benefits from ensuring the young voices are heard throughout the programme sessions. This is a fantastic opportunity to shine the spotlight on the Controllers, Programming Directors and Producers of tomorrow."
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S-A in Dominican Republic win

Dominican Republic cableco Telever, SA has awarded a contract for an undisclosed figure to Scientific-Atlanta for a range of the company's products, applications and services to launch digital programming and interactive TV (iTV) across its service area. The iTV rollout is scheduled for mid-2002 in the city of Santo Domingo.

Using Scientific-Atlanta's digital Explorer platform, Telever will provide its subscribers a diverse programming line-up and new services that will, "make us the first cable operator in the Dominican Republic to offer interactive applications catered to each of our subscribers," said Enrique Bonetti, General Manager of Telever SA.

"We plan to offer games and a variety of local news services, an interactive program guide with an easy-to-use help application, and it is all accessed through a centralised portal that will make the viewing experience exciting and easy."

The iTV applications will be delivered to subscribers using Scientific-Atlanta's Digital headend system and Explorer 2200 digital interactive set-tops. "The diverse new interactive services selected by Telever will appeal to a broad range of viewers and enhance subscribers' loyalty to help reduce churn and expand revenue opportunities," said Fernando Mechetti, Regional Director for South, Caribbean and Andean region in Latin America at Scientific-Atlanta. "By delivering both the systems and the applications needed for iTV, as well as the installation and training assistance, Scientific-Atlanta offers cable operators a complete interactive solution designed to minimise the time to market and speed the enhanced revenue generation process."

The Scientific-Atlanta iTV applications that will be offered by Telever are:
Classic Games - favourite games played on the subscriber's TV;
InView Information-on-Demand Application to deliver updated local news, weather, sports, and financial (stock market) highlights on demand;
Services Portal will present application and channel options via an on-screen interface;
Help will deliver 'how to' help for subscribers as they use the interactive program guide.

In addition to purchasing network systems and equipment and applications, Telever will also rely on Scientific-Atlanta's SciCare Broadband Services for a variety of network set-up and evaluation services along with training of its technical and customer service representatives for rollout of the iTV applications.
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Monday 15th April 2002

NDS faces piracy 'evidence'

News Corp software subsidiary NDS faces what - if proven to be true - appears to be damning evidence of industrial espionage against French rival Canal Plus Technologies, undermining the security of its smartcards by making the codes available to hackers who produce pirate cards.

As part of a E1.1 billion ($1 billion) lawsuit, Oliver Kommerling, a software security consultant whose company ADSR is 60 per cent-owned by NDS, said in a written deposition to a California court on Thursday (11/2/04) that Chris Tarnovsky, an NDS employee on the West Coast, arranged for Canal Plus Technologies' codes - enabling smart cards in pay-TV boxes - to be published on the Internet at the direction of his employer. The code was said to have been cracked by NDS technicians in an Israeli laboratory.

In addition to Canal Plus' E1.1 billion claim for damages against NDS, which is 80 per cent owned by Rupert Murdoch's News Corporation, UK smart card customer ITV Digital is claiming to have lost at least £100 million (E161 million) from piracy.

Canal Plus Technologies is calling for the April 18 hearing to bring the case to court early as it plans to release a new and more secure type of smartcard in the near future.

NDS has dismissed the Canal Plus claim as "baseless", rejected moves to hasten a trial but does not object to an order requiring all parties to preserve documents.

The entire case is described by NDS as "An attempt by an inept competitor to shift the blame for its incompetence, to damage its skilled competitor behind the shield of the litigation privilege and to extract an unfair price in the merger negotiations."

Canal Plus Technologies has demanded twelve individuals provide witness statements including NDS Chief Executive Abe Peled and Ray Adams, a former Scotland Yard commander now employed as NDS UK's head of security and BSkyB's representative on a Europeanwide body that fights pay-television piracy.

A report by the Guardian newspaper suggests Adams and NDS have a financial link to a UK-based website which distributed hacked codes about ITV Digital smart cards.

NDS describes the link as part of a legitimate exercise to gather intelligence on hackers.

From NDS' side, there is believed to be documentary evidence that Canal Plus Technologies Chief Executive Francois Carayol talked about a merger with NDS with former News Corp co-chief operating office Chase Carey on January 14 this year. And on March 8 Canal Plus Technologies met with News Corp's most senior legal adviser Arthur Siskind to discuss the possible lawsuit but a resolution could not be reached. Carey quit his role at News Corp on January 25.

The case is expected to exacerbate tensions between Murdoch and Jean-Marie Messier, Vivendi's Chief Executive: NDS directors include James and Lachlan Murdoch, while Vivendi also uses the Canal Plus smart cards.
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ITV Digital financial investigation

Insolvent UK digital terrestrial platform ITV Digital, whose funding runs out just in time for today's (Monday 15/4/02) High Court review of its future, could now also see its owners, Carlton Communications and Granada, investigated by the Financial Services Authority (FSA) for allegedly misleading investors. The company was put into administration with Deloitte & Touche in March owing the Football League E191 million for football broadcast rights.

Now the Football League, which is threatening a E861.5 million lawsuit, made a submission to the FSA on Friday (12/4/02) which says Carlton was saying one thing to UK investors and another to the US Securities and Exchange Commission (SEC).

Despite UK-listed companies being legally obliged to disclose any information which could affect their share price, on February 12 this year Carlton and Granada issued a statement to the London Stock Exchange headlined "ITV Digital on track."

It claimed that its latest subscriber figures showed growth to the end of December continuing in line with the objectives announced in April 2001. In contrast, a 28 March SEC filing, required from Carlton in the US, is reported by the FT as saying, "Since December 2001, the operating performance of ITV Digital deteriorated as significant competition in the retail market persisted, alongside general lower levels of new digital TV subscriber sales," the FT quotes the filing as saying.

When both parties report back to the High Court today, it may still not be the end for ITV Digital - which could offer to meet the Football Leagues lowered demand for the first instalment of the monies owed. It is likely that the decision will not so much relate to wanting to keep the platform going or the dozen or so soccer clubs threatened with closure, but to avoid both expensive further litigation and the possible future loss of Premiership soccer on terrestrial ITV.

* Plans by the Scottish Premier League to launch its own dedicated channel collapsed on Friday (12/4/02) when Rangers and Celtic failed to agree the deal which had required an 11-1 majority of the clubs to go-ahead.

The SPL had earlier rejected an offer by BSkyB to broadcast its games live.
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Two-way's tech for Telewest cup coverage

Interactive TV pioneer Two Way TV has signed a deal with UK cableco Telewest to deliver its newly branded Ark enhanced TV technologies to the company's broadband television platform next month (May) - in time for the World Cup soccer tournament.

Two Way TV appears to have made its final metamorphosis, from its early days as an analogue interactive TV hardware and software provider and stand-alone interactive channel/programme maker, to being primarily an interactive digital technology provider and enabler for the content owners.

Explaining the change in direction, Two Way TV Chief Executive Matthew Tims told advanced-television's Tony Morbin, "We found that the content owners wanted to develop their own interactive programmes rather than licence us their content. But they didn't want to re-invent the wheel in terms of creating the technology. We already had a system which was proven to work. Our Ark technologies are now driving programming from the BBC, Channel4 and Sky Sports on the Sky Digital netowork. The channels are looking for a standardised way to deliver synchronised messages."

Two Way TV does still have its games channel, whose revenues include 'pay per play', but the focus is now on providing systems and tools to develop interactive TV applications in-house by its clients or through third party developers. In addition the company offers design, development and integration services as well as earning licencing and consultancy revenues. When asked by advanced-television, considering the tens of millions of dollars invested over the years in the venture, how do these revenues compare to earlier forecasts, and when is the expected break-even date of the company? Tims responded, "The earlier forecasts were a business plan, so while these revenues are lower, they are real revenues, and we expect to break even early next year."

The deal with Telewest will be provided using integration with Liberate Technologies (set top box software) version 1.2 - which is said to improve bandwidth efficiency - with Two Way TV technology being integrated into future versions of the Liberate middleware.

In a separate deal, automated broadcast systems provider Chyron is also now offering Two Way TV enhanced functionality to its customers by integrating Ark Broadcaster with its Digital Content Controller. This will enable Pro-Bel Compass and Sextant automation systems to dynamically link interactive content to any event in the broadcaster's schedule.
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Canal number two resigns
By Sotires Eleftheriou

Denis Olivennes, Director General of Canal Plus, part of the Vivendi Universal Group, resigned on Friday. Olivennes joined the Canal Plus group in 1997 to head its cable operations, NC Numericable, and had been in his present position since December 2000.

While no official reason was given for his departure, tension has been growing between Canal Plus and its parent company Vivendi Universal in recent weeks. This follows the criticism of the management of Canal Plus by V-U chief Jean Marie Messier in a newspaper interview last month in which he gave Canal Plus two years to redress the financial balance. Canal Plus head Pierre Lescure and Olivennes then sent an e-mail to all the staff explaining that Messier's criticisms were unjustified.

According to one source quoted by the AFP, Messier telephoned Pierre Lescure, in the USA on Thursday, telling him to get rid of Olivennes. Lescure told Olivennes of the conversation on Friday and Olivennes threw in the towel. Apparently Messier had already requested Olivenne's departure at the time of the Vivendu-Universal merger.

Meanwhile, one of the unions at Vivendi has issued a statement calling for Messier to resign in view of the catastrophic performance, with losses reaching E 13.6 billion for Vivendi Universal and E 2.2 billion for Vivendi Environment. The statement talks of a sorcerer's apprentice on a suicide track and that thousands of jobs are the hostage of financial folly.

The general assembly of shareholders on April 24 promises to be heated. Our reporter will of course be there.
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TVB scraps Galaxy project

Only days after telling the market that it would launch its Galaxy Satellite Broadcasting project in a reduced format to meet a June deadline, Hong Kong terrestrial Television Broadcasts (TVB) has apparently decided to scrap the project.

Analysts in Hong Kong have said that following discussions with TVB, the company will pull out of plans to operate the E739 million digital, direct to home satellite platform.

TVB is maintaining in public that Galaxy is still on track, but analysts' briefings and a series of well-aimed leaks make it clear that the project will be axed.

The news comes as TVB nears a June deadline to sell half of its stake in Galaxy. The condition was imposed by the Hong Kong government because TVB's dominance of the local free to air market. Galaxy was also forced to wait 18 months before beginning operations after the last of its rivals had gone on air as part of another official condition designed to create a level playing field.

Galaxy was one of five new pay TV licences issued in July 2000, and it is now apparently the third would-be platform to withdraw before it even went operational. Star's pay TV plans and those of a Hong Kong property company had been withdrawn within seven months of the licences being issued.

Yes TV and Pacific Digital launched limited services earlier this year, but they are struggling to make an impact against i-Cable that had been operating a de-facto monopoly up to 2002 since its start up in November 1993.
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Americas World Cup viewing

US Spanish-language media company Univision Communications plans to broadcast the entire 64 soccer games of the FIFA 2002 World Cup in Korea/Japan live through its three networks, Univision, TeleFutura and Galavision. The tournament takes place May 31 through June 30.

This is the seventh consecutive FIFA World Cup tournament that Univision has exclusively broadcast for the US' 35 million Hispanics, and represents the Network's most extensive coverage of the games to date.

The Univision Network will air 56 of the tournament's 64 matches live, the largest number of live coverage hours that the Network has ever dedicated to this event. TeleFutura will broadcast the remaining eight games live, along with 56 match replays. In addition, Univision's cable network, Galavision, will air 25 'Match of the Day' telecasts, featuring a selection of the best games of the tournament - which will probably be the most watched given that the live games will be broadcast at dawn, because of the time difference with Japan.

"We're thrilled to be able to offer the US Hispanic community unprecedented television coverage of the world's most exciting, prestigious and popular sporting event, the FIFA World Cup," said David Downs, President, Univision Sports. "Univision will provide live coverage of all 64 games throughout 31 days on our three networks, Univision, TeleFutura and Galavision. With more live coverage of the games than ever before, advertisers will have a unique opportunity to reach the millions of Hispanics who tune in to the World Cup above all other programming."

Meanwhile Directv Latin America LLC has granted Mexican programming and network feed operator PCTV the rights to broadcast a total of 40 games of the FIFA World Cup Korea/Japan 2002. The agreement includes the inaugural game, all Mexican National Team games, semi-finals and the final. The amount of the transaction was not disclosed.

Directv Latin America is a multinational company owned by Hughes Electronics Corporation, Darlene Investments, LLC, an affiliate of the Cisneros Group of Companies, and Grupo Clarin. It currently has more than 1.6 million customers in Latin America and the Caribbean, reaching a total of 28 markets.

"We are very pleased with this agreement, which will allow a larger sector of the Mexican population to enjoy the FIFA World Cup games," said Raul Reyes, vice president of World Cup, DIRECTV Latin America. "This agreement will also include the games that will be offered by open television companies."

The contract is limited to 40 games of the FIFA World Cup Korea/Japan 2002 to be selected among games already included in previous agreements with TV Azteca, CNI Canal 40 and Multimedios/Milenio. In addition to live broadcasting rights, it also includes the right to re-broadcast the games, as well as the right to broadcast footage of all 64 games for summaries and highlights shows.

Directv Latin America owns the broadcast rights for the 2002 and 2006 FIFA World Cup games for Argentina, Chile, Colombia, Mexico, Uruguay and Venezuela.
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