NEWS Monday 18th - Monday 25th February 2002

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WEEKEND NEWS Friday 22nd to Monday 25th February

AB Groupe in PR war
Kirch crisis' political outfall
NTL sells off Australia unit
Swedish Breadbandsbolaget deal
Yes' Hong Kong iTV launch

AB Groupe in PR war
By Sotires Eleftheriou

Plans under consideration by AB Groupe - to create a set of dedicated film channels based in Luxembourg, for distribution via Canal Satellite - were leaked last week, causing a furore in the press. To begin with, the French Producers and Directors Association (ARP) expressed its concern, pointing out that AB Groupe's flagship channel RTL9 is already based in Luxembourg, circumventing French legislation on quotas and advertising. ARP was worried about a possible domino effect on French production resulting from such a delocalisation.

In an interview with AFP, AB Groupe confirmed that there is such a project, but denied that it would be based in Luxembourg. Some observers said that the threat of basing future channels in Luxembourg could be a means of applying pressure to obtain a DTT franchise.

Canal Satellite issued a press release confirming that it had concluded a deal with AB Groupe last December for the carriage of five or six film channels but denied accepting that the channels be based in Luxembourg to get round French rules.

Subsequently, the UPF (Union of French Producers) issued a press release in which it asked the broadcasting regulator, the CSA, to make sure that French legislation is respected and that any operator that delocalises in order to escape regulation should be barred from getting a DTT licence. Canal Satellite pointed out that the purpose of the agreement to carry the AB Groupe film channels was to strengthen its line of film channels and there was never any question of evading French rules.

Claude Berda, President of AB Groupe, replying to the growing level of debate, said that "We will be uplinking from Luxembourg because we already have the technical resources there."

On Wednesday, Canal Plus Groupe and AB Groupe issued a joint press release saying that they would respect French regulations to the letter for the AB Groupe channels distributed by Canal Satellite. The French Minister of Culture, Catherine Tasca, said that the French film industry could be sure of government support on this subject.

This was not the end of the matter. The debate continued in a round of press releases yesterday (Thursday). The Minister of Culture asked Canal Plus and AB Groupe to make a specific undertaking to respect French rules. The ARP issued a press release to say that Wednesday's undertakings by Canal and AB were insufficient. Canal Plus issued another press release in the afternoon which insisted that the agreement between Canal and AB Groupe respects French regulations to the letter, pointing out that AB had agreed to have its channels authorised by the CSA. It added that Canal has had exemplary relations with the film industry for 17 years, based on mutual confidence and respect. AB Groupe also issued a brief press release to say that Canal + had requested it to have its channels authorised by the CSA.
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Kirch crisis' political outfall

Bavarian politician Edmund Stoiber, a contender for the German chancellorship, has become embroiled in Kirch Gruppe's demise with his local government potentially making the decision which would bankrupt the company.

Bayerische Landesbank, 50 per cent owned by the Bavarian government, is due repayment this year of an E1billion ($869 million) loan to Kirch. Payment can be delayed, or demand in June, with the risk of triggering Kirch's collapse.

Kirch took the E1bn loan to acquire the majority share in Formula One motor racing, and does not expect to be able to repay the sum in June.

The Bavarian finance minister Kurt Faltlhauser, a political ally of Stoiber, chairs the bank's credit committee.

Kirch, facing E8.7 billion in debt and liabilities, has said it does not have the E1.7 billion in cash it needs to honour a separate obligation with Rupert Murdoch this year.

An extension to the loan could be opposed by opposition Social Democrat and Green politicians in the Bavarian parliament, who have repeatedly questioned the bank's generous lending to Kirch in the past, reports the FT.
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NTL sells off Australia unit

UK cableco NTL has sold its Australian broadcast division for A$850 million (E500 million) in cash - as it seeks to realise assets and reduce its $17 billion debt.

Australian investment bank Macquarie is buying NTL's 578-site terrestrial television broadcast system.

In 2002 NTL's Ebitda was A$52 million (E30 million) on revenues of about A$119 million (E70 million).

Macquarie is reported to have agreed unconditional financing, to be used partly for redeeming NTL Australia's outstanding debt of A$227 million (E133 million).

NTL Chief Executive Barclay Knapp, said, "The strong level of interest shown throughout the competitive sale process endorses the quality of NTL Australia; a franchise which has consistently performed above our expectations."

In addition to selling assets, NTL is seeking a cash injection, expected to come from a major debt-for-equity swap - with US media investor John Malone's Liberty Media seen as the front runner. AOL Time Warner, the US media giant, is reported to be considering taking a stake in NTL.

Prior to completion of any restucture NTL faces $130 million bonds (E150 million) interest payments due in April. A $500 million (E570 million) cash payment is also due to France Telecom in May.

Plans to sell the UK transmission tower operations have failed to date though this is seen as a viable, revenue generating asset.

As part of the restructuring NTL is expected to reorganise most of its bonds while leaving its $6 billion (E6.8 billion) bank debt in place.
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Swedish Breadbandsbolaget deal
By Goran Sellgren


Bredbandsbolaget (The Broadband company), Sweden's first broadband operator, has beat its competitors to offer live television services to its customers. Deals have been signed for live carriage of three international channels: Eurosport News, BBC World and BBC Prime.

Signals from the three channels will be transformed into video streams, through Windows Media 8 technology, and 'broadcast' from from the Bredbandsbolaget Stockholm headquarters.

The new service will be immediately available for the company's 70,000 subscribers throughout Sweden. At the end of last year some 210,000 households were connected.

A deal has also recently been signed for a broadband VOD service from Svensk Filmindustri, SF, Sweden's biggest movie producer, distributor, cinema owner etc. SF is part of the giant Swedish media group Bonnier, publisher of several of Sweden's biggest newspapers and magazines, and controller of a number of leading book publishing companies - plus now the majority owner of Sweden's biggest TV station, TV4.

Bredbandsbolaget was formed in 1998 by Jonas Birgerssson, a young Internet consultant who rapidly became the country's most famous representative of the new 'IT revolution.' At the peak of his 'stardom' in the late Nineties his companies made Birgerssson a krona multi-billionaire, but almost quicker than his rise to fame and fortunes he was hit when the 'bubble burst', as he was thrown out of all of his companies and is now back to zero again.

Bredbandsbolaget is now owned by NTL, Investor (controlled by Sweden®s biggest industrial group, the Wallenberg family), The Carlyle Group, Continuum Group and Access Industries. The company has 'strategic cooperation deals' with companies such as Apple, Cisco and Lucent.

Bredbandsbolaget has offices in Norway and Denmark; operations in the UK, France, Holland etc were closed in 2000. At its best Bredbandsbolaget offers 10 Mbps traffic in both directions. Since its launch the monthly fee has been 200 krona (E21), but as of April 1 the fee will increase to 320 krona (E35).
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Yes' Hong Kong iTV launch

Yes Television has launched a commercial trial of its Total Television interactive television service in Hong Kong.

Yes Television, Chairman and Chief Executive Officer Thomas Kressner, said, "This landmark commercial trial will begin today, 22 February 2002, thus fully meeting the Hong Kong SAR Government's timing requirements in connection with the pay TV licence that Yes Television was awarded in December 2000."

"We believe that Yes Television's commercial trial will offer solid proof that the time-free product Yes Television offers is highly attractive to a broad spectrum of Hong Kong people, because it is a truly comprehensive digital solution that embraces live TV, video on demand (VOD), Internet access and email."

The package of the commercial trial contains six highly rated broadcast channels plus two true VOD channels. These include Adventure One, an adventure lifestyle channel produced by National Geographic Asia, China Entertainment Television Broadcast Ltd (CETV) which offers a wide range of information and entertainment programmes in the Putonghua language.

The other channels include STAR Movies, with its Hollywood blockbusters, STAR World for English language entertainment, Channel [V], the leading music television channel in Asia, and Phoenix Chinese Channel, Chinese entertainment channel.

The two exclusive interactive VOD channels, where subscribers can choose their favourite movie or TV programmes and watch any time they want to, are Yes Movies and Yes Entertainment. Yes Movies includes movie titles from Buena Vista International and Mei Ah while Yes Entertainment provides drama, kids, lifestyle, sport, music, news and award winning on demand content from the BBC and Hallmark.

The commercial trial, which will initially target the Hung Hom, Queensway and later the Taikooshing area, will offer all the entertainment channels - plus Internet access and email - to registered subscribers for an all inclusive fee of just HK$328 (E48) per month. Subscribers also get round the clock access to premiere VOD movies for HK$20 (E3) per view, and to classic VOD movies for HK$10 per view.

The commercial trial is designed to prove the viability of a project and provide the data needed for a subsequent launch to a wider Hong Kong audience.

Kressner said, "This commercial trial takes into account the highly specific characteristics of the Hong Kong market, which we have been analysing carefully over the past five years. We believe that this commercial trial, a first for Hong Kong, is ideally structured in terms of offering and price point to test the market in the most realistic way possible."

In addition to the Hong Kong launch, Yes Television has been appointed to be the content consultant for Korean VOD platform operated by The Contents Company, a subsidiary of SK Telecom. In the UK Yes Television also provides the commercial VOD solution for Kingston Interactive Television, serving some 9,000 homes.

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Friday 22nd February

Return of Tele 5

Germany's TeleMuenchen Group (TMG) intends to launch a new channel in the second quarter of this year. TMG is reviving its old Tele 5 brand for the new channel; Tele 5 used to be a general interest channel until the mid-90's when it was fully taken over by KirchGroup to transform it into the sports channel DeutschesSportfernsehen (DSF).

A licence for the project was awarded last year by the Bavarian regulator. The new channel will broadcast a programme mix of comedy, action and suspense features and serial formats, and is expected to be seen on Bavarian cable systems currently still carrying the analogue Premiere One Pay TV channel which is to be switched off mid 2002.

From this base TMG hopes to expand the channel's distribution into other platforms. The new channel will be operated by GetOnAir GmbH, a new company founded by the former TMG manager Jochen Kroehne. Kroehne currently handles TMG's new digital 'Gate' branded channels, to be launched in the isey (NTL in Hesse) and ish (Callahan in North Rhine Westphalia and Baden Wurtemberg) cable TV systems.
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Kirch asset sale proceeds

German media magnate, Leo Kirch, whose Kirch Group is struggling with at least E5.6 billion debts and E2.3 billion liabilities, continues to look at assets to sell in its bid to avoid bankruptcy. This week Kirch Gruppe's advanced sale plans to raise cash were revealed to representatives of Rupert Murdoch's News Corporation plus bankers and financial investors.

Assets expected to be sold include: 25 per cent stake in Spanish broadcaster Telecinco (estimated value E400 million to E500 million); 40 per cent stake in German newspaper publisher Axel Springer (estimated value E1.2 billion); 58 per cent share of SLEC with controls Formula One motor racing rights (at least E900 million and up to E1.5 billion if former owner Bernie Ecclestone and Rupert Murdoch get in a bidding war), and potentially the company's majority share in loss making Premiere World TV channel, and its international broadcast rights for the next two soccer world cups.

The FT reports that Murdoch was in Berlin this week on a "top secret visit". One suggestion was that this was for talks with Berterlsmann's Thomas Middlehoff to join forces in acquiring the loss making Premiere channel. Murdoch subsequently confirmed that commercial ties with Kirch were being severed and News Corp would seek to recoup E1.7 billion invested in Kirch.

Kirch had been looking at ways to transfer assets to Murdoch rather than paying E1.7 billion in cash due in October.

Some assets, such as the Formula One rights, have contingent liabilities, such as being security for loans - including $1.6 billion arranged by Bayerische Landesbank for the F1 purchase, to which JP Morgan Chase and Lehman Brothers each provided $200 million to $300 million.

HypoVereinsbank's planned E1.2 billion offer for Kirch's stake in Axel Springer is reportly delayed as HypoVereinsbank wanted Kirch's eight largest creditors first agree on how Kirch should use the money.
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Russian TV bid made

New bidders are appearing for the Russian broadcasting licence being sold by the exiled businessman Boris Berezovsky's 75 per cent owned television station TV6.

The sale - due to be decided on March 27 -.was triggered by 15 per cent shareholder Lukoil formally requesting closure in late January on the grounds that the station was insolvent - though widely seen as a political move supporting President Putin and silencing opposition.

Anatoly Chubais, head of Russian power company UES, is co-ordinating a joint bid by influential 'oligarchs' including Oleg Deripaska, head of Russian Aluminium, Roman Abramovich, the principal shareholder in the oil group Sibneft, and Andrei Melnichenko of MDM bank.
A report in the Independent newspaper notes that they will be competing with alternative bids expected from the banker Sergei Pugachev, who already supports a traditionalist Moscow television station linked with the Orthodox Church, and another project for the restoration of a Soviet-style all-sports channel.

The new bid has been described as a victory for Russia's more pro-western business elite against the more hardline traditional military and security forces. Chubais is one of the leaders of the liberal SPS political grouping thus if the deal went through it could be seen as Putin repudiating charges of stifling opposition.
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News Corp satellite sale

Final completion of the US satellite television venture, American Sky Broadcasting, has resulted in Rupert Murdoch's News Corporation paying WorldCom 121 million preferred shares worth $680 million (E780 million), along with $250 million (E287 million) in cash.

A-sky-B's major assets were sold off in 1999, and the cash and shares deal settles all claims relating to the joint venture.

News Corporation shares fell by 28 cents to $12.57 partly on rumours of the WorldCom deal.
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Infinity CEO resigns

Viacom's Infinity Broadcasting Chief Executive Farid Suleman has resigned to run Citadel Communications of Forstmann Little, where he is now a special limited partner.

Citadel is a radio company focused on mid-sized markets which Forstmann Little bought for $2 billion in June last year.

Suleman was a close associate of Viacom's Karmazin who has reportedly been in dispute with Viacom's Sumner Redstone.
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AT&T Comcast challenged

Investor in the US have challenged the legality of corporate governance proposals for the $72 billion merger of cablecos AT&T Broadband and Comcast, calling on the companies to drop a proposed three-year ban on electing directors.

Shareholders from each of the companies have filed an action in the New York Supreme Court asserting that a provision exempting AT&T Comcast directors from annual re-election until 2005 is illegal.

The newly merged company would be based in Pennsylvania, where the suit says that companies are barred from installing an entire board of directors for a three-year term, a proposal made in documents Comcast and AT&T filed with the US Securities and Exchange Commission last week.

"They are trying to insulate themselves from any accountability for three years," said Robert Harwood, a partner at Wechsler, Harwood, Halebian & Feffer, the New York law firm that filed the lawsuit on February 15 was quoted by the FT as saying, adding, "We know what happens when directors are not held to account."

The companies said they would not hold annual meetings before 2005, after which shareholders could elect directors annually.
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Digital promised, analogue delivered

UK government departments are still buying analogue television sets despite the government's stated intention that it is switching off the analogue signal from as early as 2006, according to a report in Produxion.

Replies to written questions in the House of Commons showed that there is no central policy directive to guide departments to buy digital rather than analogue sets.

An opposition parliamentarian, Conservative media secretary Tim Yeo, tabled a series of questions asking ministers how many digital and analogue sets had been purchased over the past 24 months and what guidance had been given to officials making decisions on purchases.

Junior government Minister Alan Whitehead confirmed that although six digital televisions had been bought, so had 39 analogue sets during the same period.

It was pointed out that when promoting the UK's digital action plan to ensure switch-over between 2006 and 2010 Broadcast Minister Kim Howells said, "The commitment to the digital television revolution comes from the highest level in government."

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Thursday 21st February

Kirch - Murdoch circles as assets are sold
Telenor to merge CATV ops
Berlin's DTT first
HK TV bids for Chinese system
Liberty liberated
Digital TV puts MTG in the black
ORF: New set of directors

HK TV bids for Chinese system
By Owen Hughes

Hong Kong's free to airs want to use China's digital terrestrial broadcasting system - even though their own regulators have already said they want to use the European digital terrestrial system DVB-T.

In a rare show of unity, Television Broadcasts (TVB) and Asia Television (ATV) have each signed a letter to the Information Technology and Broadcasting Bureau calling for a rethink of the DVB-T option which the government suggested in 2000.

They want to be able to extend their broadcasts north of the border into China. Although Hong Kong is part of China, under the terms of the 1997 hand-over of power by the British, the Special Administrative Region as it is known, has autonomy over a number of areas, including media.

Currently TVB and ATV's programmes top the ratings in southern China where they are illegally rebroadcast by cable operators, or picked up as signal overspill. The announcement by Beijing that it will extend digital broadcasts throughout the country by 2015 adds impetus to the call by the Hong Kong
stations.

China has yet to decide on what system it will use with seven local, US, European and Japanese under consideration. State-run news agency Xinhua says it will finalise its digital TV system by the end of 2003.
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Liberty liberated
By Dieter Brockmeyer

Liberty Media has resisted the German Cartel Office's demands that it alter its plans for upgrading the TV cable systems reaching over 10 million homes which the company aims to take over from Deutsche Telekom AG.

In a letter Liberty send to the Kartelamt it explained again why it considered the original concept to be the best one for the German market. The authority is now expected to prevent the deal, which needed to be approved by the end of the month. Liberty did not apply for a 'Ministererlaubnis' (Secretarial permission) from the German Federal Secretary of Commerce, which would allow the operator to continue even without the regulator's consent, which has led many in Germany to believe that Liberty is no longer interested in a strong market position in Germany.
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Digital TV puts MTG in the black
By Goran Sellgren


Digital satellite TV has been a real winner for the Swedish media company Modern Times Group (MTG) which has just published its 2001 financial results.

The losses from 2000 of 271 million Swedish krona (€30 million) have been turned into a profit of 317 million krona (€34.4 million). In total MTG had a turnover of €700 million in 2001, an increase of 18 per cent.

The debt incurred during 2000 was the result of a substantial €60 million krona investment in the digitisation of Viasat, one of Norway's two leading DTH operators. Of Viasat's 1.1 million subscribing households, almost half have converted to digital services.

Viasat now claims to have achieved substantial costs savings from its conversion to digital transmission technology. In addition, it has seen a 49 per cent increase in its Viasaton pay TV service - TV1000, a two channel premium pay service which increased its subscriber numbers by 50,000 to 1,125,000 households, almost half of which are now digital.

MTG's advertising-supported operations, now in eight counties, including Russia and Hungary, saw a more modest increase of profits of two per cent.

Modern Studios, which include successful productions companies Strix à focusing on docusoaps, and movie producer Sonet Films, has seen an increase in profits from three to €8.6 million. MTG's interactive division, Modern Interactive, and the new media affiliate, remain in debt.
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ORF: New set of directors
By Dieter Brockmeyer

The new General Director of the Austrian public broadcaster ORF, Monika Lindner, and the network's supervisory board, has announced nine new directors for its regional affiliates, and that the Programme Director Karin Zechner has resigned.

New ORF directors appointed include Gerhard Draxler, heading the news department, Reinhard Scolik in charge of TV programmes, while Kurt Rammersdorfer will oversee the radio department. Alexander Wrabetz remains as economic director.
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Wednesday 20th February

Liberty buy unlikely, Compere steps in
Irdeto Access supplies Chinese market
Diminishing HK TV players
Kirch cash bid to survive
NTL bond-holders view options
Quiero TV for sale

Liberty buy unlikely, Compere steps in

London-based private equity firm Compere Associates said on Monday (18/2/02) that it intends to bid for Deutsche Telekom's six regional cable networks if - as seems increasingly likely - the €5.5 billion Liberty Media deal fails to get Cartel Office approval by February 28.

David Colley, Chief Executive of Callahan Associates, suggested that upgrading of his company's current two German cable networks presented a big enough challenge by itself, but did not rule out a bid later. "First they have to become available, then we'll have to consider our investors," Colley told reporters at a Berlin cable conference.

Had the deal gone ahead, it would have given Liberty control over 60 per cent of the country's 18 million cable subscribers. The Cartel Office said its objections to the sale would be dropped if Liberty agreed to upgrade the network for telephony and high-speed Internet access. However, Cartel Office official Hanfried Wendland confirmed that Liberty had failed to provide the required assurances on key sticking points in its final request for approval.

Liberty has said that upgrading as quick as the Cartel Office would like would prove too costly - though Liberty legal representative Frank Montag said the company still hoped the deal would go ahead.

Wendland said that the Cartel Office's other concern was Liberty's plans to use a proprietary set-top box technology (expected to be Liberate) for its cable services rather than an MHP open standard box - with Liberty again appearing to go for the lower cost option.

In a joint statement issued Monday Deutsche Telekom and Liberty accused regulators of refusing to consider most of their arguments on the deal, saying, "Something must have gone badly wrong if a review of the case so completely ignores the advantages to competition that this merger would bring about."

Executives at Liberty are reported by the FT to have warned German chancellor Gerhard Schroder that the country would become an also-ran in Europe's communications race if its deal was blocked. Malone had also said that the deal could attract €13billion in foreign investment to build up the country's communications infrastructure.

Although Schroder cannot intervene in a cartel office decision, the FT suggests that Liberty wants to start a political debate about the obstacles to foreign investment in Germany in the event that Malone can re-negotiate in six months to a year.
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Irdeto Access supplies Chinese market

The China State Administration of Radio, Film and Television (SARFT) has approved Irdeto Access as a conditional access supplier for the Chinese market. Irdeto Access is one of only two foreign conditional access suppliers approved by the SARFT.

During the Conditional Access (CA) System Lectotype Selection Meeting held in October last year, the Digital Television Experimental Work Group formed by 20 conditional access technology experts, assessed the proposals provided by 17 foreign and domestic CA technology providers. As a result the SARFT released a list of the approved CA technology suppliers that are allowed to sell their products in China. The list, in which Irdeto Access ranks first, contains only two foreign CA suppliers.

Irdeto Access is a subsidiary of MIH Limited, headquartered in the Netherlands, with offices in China, the USA, South Africa, Australia, and Singapore.

Irdeto Access worked with a Chinese partner to integrate a Chinese algorithm with its systems converting its most advanced conditional access system into a product meeting the requirements of the Chinese government. In September 2001, Irdeto Access presented and demonstrated the first localised foreign CA product to a group of SARFT experts.

"The endorsement of our technology by the SARFT and being first to market with a localised solution is a demonstration of our ability to respond to the SARFT's requirements through an early commitment to the Chinese market," says Graham Kill CEO of Irdeto Access.

Since its entrance into the Chinese market in 1998, 17 Chinese customers have chosen Irdeto Access' technology, 13 IRD manufacturer partners have been licensed and completed their integration with Irdeto Access' CA, and Irdeto Access' products are now offered with Chinese GUIs and the conversion process is nearing completion. Irdeto has established its legal structure in China, 'Irdeto Access Technology (Beijing) Co, Ltd.
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Tuesday 19th February

Berlusconi power increases
Gorillaz and Static 2358
BBC digital channel launch
Religious channel in hot water
ProSieben opposes KirchMedia merger
HDTV price cuts in Korea

Berlusconi power increases

A new board of directors expected to be appointed this week at Italy's state-owned broadcaster Rai is forecast to be more sympathetic to the ruling centre-right coalition of PM Silvio Berlusconi, owner of the country's largest private television network, Mediaset, giving Berlusconi direct or indirect control of some 90 per cent of the country's television market.

Berlusconi is accused of compounding a conflict of interest with a concentration of power, which could threaten press freedom, and result in a political tilt in news, current affairs and drama programmes.

In theory the appointment of a new board is down to the two speakers of parliament, and Berlusconi has promised not to interfere, but he is reported to have lobbied strongly for loyalists to get the top jobs. Relations with Pier Ferdinando Casini, a centrist member of the ruling coalition and the speaker of the chamber of deputies, are reported to have opposed the move, seeking more neutral appointments, and there is now dissension in the coalition over the issue.

Traditionally, two of the board are opposition figures, leaving three places to be shared between the four government parties.

Umberto Bossi, leader of the coalition's Northern League, was reported in the Guardian as saying that that unless his party got a seat it would not cooperate in May's local elections, making defeat likely. Gianfranco Fini, head of the coalition's National Alliance, has annoyed Berlusconi by blocking his candidate for the president of the board. The opposition has threatened to boycott the board unless an independent 'guarantor' is appointed president.

Berlusconi's view of ensuring Rai impartiality and provision of balanced information is reported to mean correcting an alleged leftwing bias.
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Gorillaz and Static 2358

Static 2358, a wholly-owned subsidiary of OpenTV, is developing interactive TV content in conjunction with EMI's virtual band Gorillaz. A new game, Zombie Kong, featuring Gorillaz band-members will be made available to more than 5.7 million digital satellite homes in the UK from Friday, 22 February, on PlayJam - Static's interactive television channel.

Following the launch of the game, the group will get 24-hour, seven-day-a-week television coverage while helping to drive additional viewers to the PlayJam channel.

Jasper Smith, CEO of Static2358, said, "This is an exciting opportunity. We believe that Static's partnership with Gorillaz will allow us to draw on the synergies between the two brands, exploiting their combined commercial value, and enable us to maximise the broader brand development opportunities that PlayJam's interactive entertainment offers. We are fortunate to be working with Gorillaz - one of the first entertainment groups to realise the potential that co-branded formats like this offer."

PlayJam interactive television channel is available to more than 22 million viewers worldwide, including Sky Digital, NTL and Telewest in the UK, TPS and Canalsatellite in France and Cablevision in the United States. More than 1.4 billion games were played on the station in its first year of operation and the average time spent by each viewer now stands at just over half an hour.
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BBC digital channel launch

UK pubcaster the BBC will launch its fourth channel (BBC Four) on March 2 with an interactive art exhibition.

Some 120 paintings, including works byartists such as Degas, Constable and El Greco, will feature.

BBC Four controller Roly Keating describing the interactive TV first, added that the paintings could never come together in one gallery in the real world, "but in the digital world, they can."

The channel's first evening will be broadcast simultaneously on BBC Two.

Keating described the channel as a "classic, mixed-genre public service channel with a twist," in that arts and culture are at the centre of its schedule.
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Religious channel in hot water

Hot on the heals of a scandal at the Vatican's TV service, the FT reports that Pentecostal and Baptist church satellite channel Inspiration Television Network in Nigeria is on the brink of bankruptcy.

The religious station is backed by former UK soccer star and the country's ambassador for sport, John Fashanu, plus one of Nigeria's biggest banks, Hallmark Bank.

Launched in September 1999, the 24-hour channel is said to be loosing money as advertising declines, and is believed to have net liabilities of about €3.27 million (£2 million).

Marc Wabara, Chairman and Chief Executive of Hallmark Bank in Lagos told shareholders of holding company Mission Today that the business needed €246,929 (£150,00) immediately to avoid closure.

Wabara, an aide to Nigerian President Olusegan Obasango, took control of the channel from Nick Tarling, a retired partner with law firm Freshfields. Unconfirmed reports say that an unnamed consortium has expressed interest in rescuing the business.

Religious organisations are not allowed to own TV or radio stations in Nigeria but there are no restrictions on religious content.
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ProSieben opposes KirchMedia merger

Last week institutional investors with 25 per cent of a ProSiebenSAT.1 bond sought to block the broadcaster's planned June merger with KirchMedia, the largest subsidiary of Kirch Gruppe which is labouring under €5.6 billion of debt and €2.3 billion in contingent liabilities.

ProSiebenSAT investors were previously given assurances that the company would remain legally independent. Norton Rose, a London-based law firm, has been appointed as advisor to the investors who are demanding the early redemption of the €400m note or the cancellation of the merger.

A merger, technically equivalent to a KirchMedia flotation, would allow Kirch access to capital markets for further funding. But with Kirch's survival in question investors and shareholders in ProSiebenSAT.1 are anxious about the prospect of the merger.

The FT reported a fund manager with a European investment group involved in the initiative saying, "A merger would clearly break the bond's covenant. If it is to go ahead the bond needs to be redeemed. There is no other way."
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HDTV price cuts in Korea

Korean electronics firms Samsung, LG and Daewoo have slashed prices by up to 40 per cent for their high-definition television (HDTV) sets, including projection, Braun-tube, liquid crystal display (LCD), and plasma display panel (PDP) sets according to local press reports.

Samsung Electronics' 55-inch projection HDTV (with built-in digital broadcast reception system) fell from W6.2 million (€5,428) to W5.4 million (€4,728) recently. Its 32-inch Braun-tube HDTV set has been cut to €2,627 from €3,152 - the moves made in a bid to hinder Japanese firms' entry into the Korean TV market.

LG Electronics, the second largest electronics producer in the country, has lowered prices from €9,630 for a 64-inch projection HDTV set by 40 per cent, to €5,867.

Daewoo Electronics reduced the price of 32-inch Braun-tube HDTV set from €2,802 to €1,742.

Japanese HDTV makers had been expanding their market share of about 20 percent in Korea.

These Japanese firms have also used price cutting to boost market share in the country. Sony dropped the price of its 57-inch projection HDTV set to €4,815 from €6,128 in December last year.
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Monday 18th February

Microsoft cuts its UPC losses
Noos and TPS joint marketing
Liberty concedes nothing
Pre-pay cards for ITV digital
ESPN Star Sports losses
Goodfellow quits CNBC Asia-Pacific
Thai regulation rationalised

Microsoft cuts its UPC losses

Microsoft has pre-empted the dilution of its UPC holding ahead of planned debt restructuring and sold its 7.8 per cent stake in the company on Friday (15/2/02) - which at the closing price of €0.27 was worth just €7.7 million.

Microsoft bought its shares for $300 million (€344 million) in January 1999, which at one point were worth €2.3 billion. Microsoft still holds two warrants giving it the right to buy 11.4 million UPC shares.

The restructure to tackle a gross debt of €9.3 billion at UPC entails a €7.5 billion debt-for-equity swap via United GlobalCom, UPC's US parent, and UGC's 72 per cent shareholder, Liberty Media, which would result even further falls in the value of Microsoft's holding. Not only was the investment a financial disaster for Microsoft, the company did not succeed in deploying its broadband TV and digital services software technology on the UPC network, loosing out to Liberate Technologies which was able to meet the digital roll-out deadlines.

An interesting point raised by the FT is what Microsoft might do about its stakes in indebted UK cablecos NTL and Telewest, where it again failed to deploy its technology and faces potential share dilution through financial restructuring. Presumably it would like to sell, if a buyer could be found.

The FT reports that LA-based US investment group Capital Group is shown by US Securities and Exchange Commission filings to hold 8.4 per cent of UPC ordinary shares through one of its subsidiaries: Capital Research and Management Company, which owns 37,934,990 UPC shares of the 452.3 million outstanding.

It is presumed that the shares were bought during 2001, given that the US group's prior documented interest in UPC made no mention of it holding ordinary shares. Its financial interest had previously comprised part of a €1.43 billion ($1.25 billion) convertible preference share issue in September 2000.
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Noos and TPS joint marketing

Four months after its launch on satellite, TPS Star, the film and sport premium channel from the TPS stable, is to be carried on Noos cable networks from next week.

The deal is more than simply carriage, it also forms part of a more structured joint marketing deal. Noos and TPS have close ties and have a shareholder (Lyonnaise) in common.

Under the terms of the deal, TPS Star will figure prominently in the new 'best of' package that Noos is to launch in March. This will comprise a selection of the most popular channels (drawn mainly from the TPS stable) for a package price of €29.72 a month, plus €8.86 for the rental of the digital decoder.

"Studies found that many subscribers found our range of packages too complicated," said Karl Bisseuil, Noos's Head of Marketing.

During the first six months all subscribers will get the package for half price, €15. At the end of the six months, subscribers may either continue with the 'best of' package, or take one of the a la carte packages on offer. These are based on the 'star' system which Noos launched two years ago: each subscription level is worth a certain number of tokens or 'stars.' Each channel is attributed a cost of a certain number of stars and subscribers may make up their own package up to the number of stars that they have subscribed to. In particular, they are able to change the composition of their personalised bouquet each month, free of charge. "20 per cent of subscribers change the make-up of their package each month," said Bisseuil.

Bisseuil added that promotions were a determining factor in recruiting new subscribers, 90 per cent of subscriptions being the result of some promotion or other, such as free installation, free channels, or a special tariff.

The campaign has a target of 30,000 new subscribers in Paris alone in two months. Noos currently has 878,901 TV subscribers, a penetration level of 25 per cent, and 92,593 subscribers to cable Internet.

Noos is also about to test a low price unlimited access Internet service, for just €15 a month, half the previous price, including modem and installation, in the Paris region. The speed is 64 kbps, lower than the high-speed cable internet service, but better than is attained in reality by dial up modems. In particular, it does not tie up the phone line and is always on. Noos will monitor reaction to this offer before extending it to all of its networks.

High speed Internet remains available for €45 a month for 512 kbps and a 'pro' service for €106 a month.
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Liberty concedes nothing

Liberty Media and the German Federal Cartel Office appear to have reached a stalemate over Liberty's €5.5 billion bid to buy Deutsche Telekom's cable assets, with Liberty's submission on Friday (15/2/02) refusing to accede to the regulator's demands that Liberty provide telecoms services to compete with DT, as a quid pro quo for gaining cable TV dominance.

Liberty's John Malone is reported to say that he is willing to walk away from the deal rather than agree to demands that he does not wish to comply with. The cartel office has until February 28 to make a final ruling on the acquisition.

If Malone does not buy the systems, the other main consolidators in the German cable industry are Dick Callahan and Klesh - but it would be a major upset to both DT plans, and to the cable industry's expectations if Liberty were not to go ahead, having upped its stake in UPC in a move widely seen as part of a bid for European cable dominance.
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Pre-pay cards for ITV digital

Pre pay cards could be made available for UK digital terrestrial TV service ITV Digital by April, alongside next generation set top boxes, enabling viewers to see digital channels without paying an annual subscription fee.

Carlton, which jointly owns ITV Digital with Granada, is reported by the UK's Mail on Sunday as seeing the cards as a crucial part of attempts to revitalise the loss-making service.

ITV and the BBC plan to work together to supply additional free digital channels to encourage uptake of digital terrestrial viewing.

Unlike pay-per-view, offered to subscribers for individual sporting events, pre-pay, viewers would buy set amounts of airtime for a range of channels - without having to pay a subscription. The mail report quotes a spokesman for Carlton saying, "When the costs of set-top boxes are reduced, we can be much more flexible. We ought to be able to offer a pick 'n' mix of channels, and in the same way that Vodafone, say, offers a £25 phone card, we will sell pre-pay cards that allow customers to view a couple of hours of UK Gold, for instance."

ITV Digital currently has 1.26 million paying subscribers but it is not clear if the new initiative will provide a 'taster' to increase subs, or drive up the service's current churn rate of nearly 25 per cent as viewers can simply buy what they want, when they want. Nor is it announced how much per minute pre-pay will cost (hence how the cost compares to subscribing).

ITV Digital is reportedly preparing to renegotiate its existing three-year £90 million (€148 million)-a-year TV rights deal with the Football League, saying the existing contract is too expensive to be kept and should be cut by two thirds, possibly with less games shown. Yet it is this type of exclusive content which could drive 'casual' viewers. The League is expected to try and maintain the existing deal, or possibly sell the rights to a third party such as the BBC.

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ESPN Star Sports losses

Walt Disney and News Corp-joint venture ESPN Star Sports has reported a sharp fall in EBITA losses from $6 million (€6.88 million) to $1 million (€1.15 million) in the quarter to December 31, according to an earnings release issued by News Corp.

The Singapore-based company which marked its fifth anniversary in November last year reported a net loss of $3 million for the three months to December 31, compared to the $8 million it lost in the same period in 2000. Net losses for the second half of last year were $8 million (€9.2 million), compared to the $16 million (€18.4 million) for same period in 2000.

Revenues were also improved, rising from a $47 million (€54 million) total in the second part of 2000, compared to $62 million (€71 million) for the same period in 2001. In the same period viewership has grown from 141.5 million to 111.5 million.

In Hong Kong, another News Corp company, Star, said that revenues had grown by more than 12 per cent in the three months to December 31, although it did not break down the figure.
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Goodfellow quits CNBC Asia-Pacific

Business channel CNBC Asia Pacific has announced that CEO Scott Goodfellow has left the Singapore-based service after 18 months in the job.

The unexpected news was disclosed on Thursday as Goodfellow was back in his native US when staff were sent an email that announced he was resigning from CNBC for what were called 'personal reasons.'

Reports from Singapore said he was due to return to his office next week to explain to staff the reasons for his departure. The new acting Chief Executive is Shawn Galey, CNBC Asia Pacific's Vice President and General Counsel who joined the company last year.

CNBC was formed from the merger of General Electric's CNBC and the Dow Jones-owned Asia Business News in 1998.
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Thai regulation rationalised

Thailand's plans to rationalise its regulatory environment for pay TV have received a setback after the country's administrative court that arbitrates bureaucratic squabbles ruled as void the election of 14 prospective members of a proposed body.

The National Telecommunications Commission has been designed to take over the responsibilities of disparate regulators including the Public Relations Department and to bring telecoms and TV under the same official umbrella. The concept was unveiled more than two years ago, but since then little has been done to move it forward.

Selecting the commissioners has been made more difficult by accusations of political posturing, neoptism and even corruption. The decision is likely to go to appeal before the Thai constitutional court for a final decision, but it is not clear when the proceedings will take place.

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