NEWS Monday 4th - Monday 11th February 2002

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Weekend Friday 8th to Monday 11th February

Write-off hits positive BSkyB results
Latest Canal subs figures
Kirch opens new chapter
Taiwan gets digital cable
TPS cards marketing suspended
Edinburgh Festival committee announced

Write-off hits positive BSkyB results

British Sky Broadcasting has written off a €1.6 billion book value stake in loss-making Kirch-PayTV after the German media group failed to deliver financial information requested. News Corporation said it did not have, "sufficient confidence" that the value of Kirch would support the carrying value of its investment. News Corp is reported to still be seeking to recover the value of its stake through a put option that can be triggered from October this year if the company has not been floated on the stock market by then.

But Kirch, struggling with some €6.5 billion debt, is considered unlikely to be able to honour the buy-back agreement. News Corp may therefore just value the stake as nil financially, but still use it to try to gain greater control over Premiere, or assets such television rights to formula one motor racing and the soccer World Cup. "We remain focused on protecting our rights and securing the full value from our put option," said BSkyB Chief Executive Tony Ball.

Sky's 10 per cent stake in Manchester United fell from €161 million to €48 million, and other soccer stakes - in Chelsea, Manchester City, Leeds and Sunderland were also subject to write downs. These combined with the Kirch write-off to make BSkyB's pre-tax loss for the period €2 billion compared with a €420 million deficit a year ago.

However, group turnover rose to €2.14 billion from €1.7 billion, and the company also announced improving half-year subscriber figures on Friday (8/2/02). These show BSkyB won 218,000 new subscribers in the three months to 31 December, taking the total of residential subscribers to BSkyB to 5.72 million. Churn is stable at just over 10 per cent.

The total number of subscribers to Sky channels including cable and digital terrestrial viewers is 11.2 million and its share of the UK viewing market is now 5.9 per cent. But Sky has said it is 'keeping its trading relationship with NTL under close review' given the UK cableco's vast debt and current restructuring.

Average revenue per user (Arpu) was up 11 per cent to €536, helping core earnings rise 43 per cent to €180 million. The target is to reach an ARPU of €647(£400) by 2005 and seven million subscribers by 2003.

Nonetheless, set-top boxes subsidies resulted in a pre-tax loss before exceptional items of €100 million.

Ball said that the company had achieved its target of becoming cashflow positive on January 1, 2002. Net debt peaked during the period at €2.97 billion and has fallen to below €2.92 billion at the end of January 2002.
(Also see Kirch report today, 8/2/02)
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Latest Canal subs figures
By Sotires Eleftheriou

Since its integration into the Vivendi-Universal empire, the Canal Plus group has stopped releasing detailed breakdowns of its subscriber numbers each quarter. However, several French dailies (Le Figaro, La Tribune and Satellifax) disclosed some figures this week. According to the papers, the number of subscribers to Canal Plus (the premium channel) at the end of 2000 was 4.62 million and 4.56 million at the end of 2001, a drop of 60,000 subscribers.

Merril Lynch estimates the drop at 51,000 subscribers and a churn rate of around 10 per cent.

Conversely, the number of subscribers to the Canal Satellite DTH platform is up to 1.8 million. The overall number of subscribers has grown from 6.2 million to 6.36 million.
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Kirch opens new chapter

By Dieter Brockmeyer

A new chapter in German media has begun with a statement by Deutsche Bank CEO Rolf Breuer, made during the World Trade Conference in New York, that he could not imagine any German bank providing additional funding to Kirch, whose accumulated a debt is between €5 to €6 billion.

In addition the German TV group's biggest creditor, Bayerische Landesbank, is no longer willing to extend its line of credit. What was really considered to be the most alarming development was that banks usually don't comment in public about their financial relationships with their clients.

The Breuer statement was without precedent in German economic history. This new chapter was prepared a week earlier by the German publishing group Axel Springer - in which Leo Kirch himself holds a 40 plus per cent stake. The group is exercising an option granting it almost €770 million for its 11.5 per cent stake in Kirch's commercial TV-holding ProSiebenSat.1 Media. This figure represents almost 90 per cent of the holdings' current stock capitalisation following the sharp decline in share price over the last couple of months.

Kirch is said to believe this option is no longer valid and announced that his company would go to court to dispute the issue. Previously Kirch and Springer had held negotiations for some time to find a compromise. Kirch's reaction to the surprising Springer decision was widely interpreted as signalling that the Group was running out of cash.

However, by the end of the week rumours that Rupert Murdoch was ready and willing to take over the Kirch assets stirred panic within the German political establishment and among Kirch's competitors. It is feared that a similar situation could occur as to that in the UK where Murdoch came to dominate the newspaper business via price dumping, and now uses his press dominance to influence public opinion. Hectic negotiations are underway behind closed doors to provide an alternative solution for Kirch other than selling to Murdoch. The banks have signalled that they are willing to cooperate.
(Also see BSKyB report today, 8/2/02)
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Taiwan gets digital cable
By Owen Hughes

Taiwan is to be the setting for Asia's first wide-scale digital cable TV rollout, with news of a project between NDS and China Network Systems.

Due to begin construction in March, the system is slated to go live halfway through 2002 and reach a million viewers in three years. The network will support conditional access, enhanced TV services and two way interactivity, according to China Network Systems' COO, Daniel Cheung. NDS is creating the software and assisting with the selection of the set top box maker.

Taiwan is the leading cable TV market in the Asia Pacific, with more than 80 per cent of the island's 5.5 million homes subscribing to pay services. However, profitability has been impeded by the lack of addressability, piracy and a government ceiling on fees.

Both NDS and China Network Systems are News Corp companies, although the latter is a joint venture between its Hong Kong-based Star and Taiwan's powerful Koos Group that runs a stable of cable operations in addition to its other media interests.

China Network Systems shares several executives with Koos' broadband Internet service, GigaMedia. GigaMedia was set to be the vehicle to operate interactive digital TV in Taiwan following an October 2000 agreement between News Corp and Koos, but the accord was restructured to create China Network Systems in May 2001.
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TPS cards marketing suspended
By Sotires Eleftheriou

French DTH platform TPS has temporarily suspended the sale of stand-alone viewing cards as part of its anti-piracy measures.

These cards are used by subscribers who purchase their own terminals, believed to be about 10 per cent of TPS subscribers, as opposed to the majority of subscribers who rent the proprietary decoders from TPS. Many cards are paid for a whole year in advance.

The reason for the suspension is that TPS has been introducing electronic counter measures to combat piracy over the last few months. These measures have considerably disrupted the operation of some makes of decoder, although the TPS proprietary terminals have been less affected.

Some manufacturers have released software patches to enable their decoders to continue functioning correctly with the valid viewing cards, but other manufacturers have not been so quick and there have been many complaints from legitimate subscribers. TPS is also about to undertake a card swap-out, which will begin with the stand-alone cards.
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Edinburgh Festival committee announced

The UK's Guardian Edinburgh International Television Festival (GEITF) has announced the Advisory Committee for the 2002 Festival (23 to 25 August).

The committee will work with Charles Brand, Joint Managing Director of Tiger Aspect and GEITF Advisory Chair 2002, on the editorial content of this year's Festival.

Representatives cover all areas of the broadcasting, with increased coverage of international programming. The committee will debate and agree the industry stories and issues of the year to be represented at the Festival.

This year's committee comprises David Mortimer (Deputy Controller for General Factual Group, BBC), David Abraham (General Manager, Networks, Discovery Networks Europe), Greg Brenman (Head of Drama, Tiger Aspect), Paul Robinson (Managing Director, Walt Disney TV International), Sian Kevill (Head of Political Strategic Policy, BBC), Robert Thirkell (Creative Director, BBC Business Programmes), Rosemary Newell (Head of Programme Planning & Strategy, Channel 4), Sham Sandhu (Controller of Youth, Music & Interactive, Channel 5), John Whiston (Director of Programmes, Granada Content, North), Sara Geater (Director of Rights & Business Affairs, BBC), John Brissenden (Director of Publicity, BSkyB), Tim Hincks (Creative Director, Endemol Entertainment UK), Jane Millichip (Commissioning Editor, Living), Simon Andreae (Head of Documentaries, Optomen Television), David Graham (Managing Director, David Graham & Associates), Katy Thorogood (Director of Programmes, Discovery Home & Leisure), Bill Griffin (Head of Marketing, Channel 4), Steve Perkins (Controller of Advertising & Programme Standards, ITC), Michael Jermey (Director of Development, ITN), Tessa Finch (Creative Director, BBC Documentaries), William Miller (CEO, Pabulum Media), Ed Braman (Head of Factual, Zenith), Debbie Christie (Freelance Producer).

Brand said, "We are delighted to have gathered such an impressive and broad-ranging Advisory Committee for 2002. It is entirely in-keeping with the spirit of GEITF that we have assembled such a diverse and creative group, who will be able to identify the issues central to the television industry today and translate these into a lively and imaginative Festival programme."

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Friday 8th February

Com.hem doubles its broadband speed
Virtual video from Noos
Echostar merger investigated
BSkyB considers Kirch strategy
Yes TV TCC in Korea
Compressing Time

Com.hem doubles its broadband speed

Com.hem, the cable-TV and Internet broadband division of Swedish Telia, says it has doubled the speed of its broadband network from the present 512 Kbps to 1 MB. But clients wanting the new service will have to pay for it. From September 1, when the new service is being introduced, the monthly fee will increase from the present 295 krona (£20) per month to 350 krona, £ 23.50. For those satisfied with the old, slower speed the price will remain the same.

But recently the new MD of Telia, Marianne Nivert, warned that Swedish broadband prices are far too low by comparison with other international offers, and stated that a future level of 600 krona (£40) was a more suitable level. She instantly met a storm of protests.

Some days ago an Internet survey, organised by Sweden's biggest Internet site, aftonbladet.se, showed that over 70 per cent of the 85,000 voters were prepared to pay only 200 krona or less per month. Only 23 per cent were prepared to spend up to 300. So obviously Nivert has a steep uphill climb for acceptance of her pricing plans.

Also UPC, the Swedish branch of the troubled international giant, faces several problems, both with the quality of its Internet cable modem broadband services, with frequent breakdowns, and for its newly introduced digital cable TV services. In the last years UPC has increased its monthly broadband Chello fees, step by step, from 200 krona to the present 299 krona.

Com.hem is also facing problems on its cable TV side, though being, by far, Sweden's market leader in this area, with a 65 per cent national market share. But despite more than four years on the market Com.hem has still only managed to recruit slightly more than 100,000 households for its digital service.

A recent move by Com.hem, to replace EuroNews in its analogue basic tier with Discovery Mix, a 'best of' Discovery's present five services (Discovery Channel, Travel & Adventure, Civilization, Sci-Trek and Animal Planet) has not been taken kindly by the Com.hem customers, particularly as Discovery Mix often changes programmes rather abruptly, in the midst of one service.

As one Swedish Com.hem customer furiously comments, "Discovery Mix is just a desperate attempt to make people buy digital set-top boxes in order to see the full channels, without any interruptions."

In Com.hem's digital offering all five Discovery channels are available, as is EuroNews.
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Virtual video from Noos

Leading French cable operator Noos has introduced a virtual video club, called Mon video-club, for subscribers to its high speed cable Internet service Noosnet.

To watch a film Internet subscribers must purchase tokens (five tokens for five Euros, 25 tokens for €20 or 60 tokens for €40). They can then 'rent' films on streaming video, price between four and six Euros, for which they can watch the film on their PC, pausing and replaying as they wish, during a 24 hour period, just as they would a rented cassette. They can also 'buy' the film for 15 tokens, for which they can download the film and view it as often as they want with no time limit.

The Noos 'video club' has started with a catalogue of 150 films on line. According to Noos the quality of the streamed films is comparable to VHS, while that of the downloaded films is close to that of DVD. Noos has also said that the system is protected against unauthorised copying.
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Echostar merger investigated

The proposed creation of a 16 million subscriber US satellite giant via the merger of EchoStar and DirecTV has been further delayed by US regulator the Federal Communications Commission issuing a 15-part request for additional information.

The FCC has requested details on Vivendi Universal SA's $1.5 billion stake in EchoStar, the company's high-speed Internet services, subscribers by location and the companies' rivals, costs and sales. Vivendi Universal SA plans to develop five separate video programming channels for the platform from its film and television library.

Echostar's official response to the FCC request was upbeat, issuing a statement saying, "We're pleased to see the FCC review process of our pending merger moving forward. The companies intend to cooperate in a timely and thorough fashion with FCC's request. We're confident that the commission will find that the merger serves the public interest."

EchoStar chairman Charlie Ergen stresses that the $31 billion merger with DirecTV will create a true competitor to cable TV monopolies - but that argument doesn't apply in rural areas where Echostar would suddenly have a monopoly.

EchoStar and DirecTV have until February 25 to respond to a batch of filings logged Monday (4/2/02) with the FCC by opponents of the deal. These include the FCC include The American Cable Association, Northpoint Technology Ltd, the National Rural Telecommunications Cooperative, the Regulatory Commission of Alaska and the Writers Guild of America, with competitor Paxson Communications complaining that EchoStar would not honour statutory mandates that conflicted with the company's private interests.

Unsuprisingly, Vivendi Universal's FCC filing supported the deal, saying, "The merger will serve the public interest by increasing the diversity of programming available to the American public. Following the merger, EchoStar and DirecTV will eliminate the redundant programming carriage which will result in more efficient use of direct satellite broadcasting."

EchoStar Shares fell 69 cents to $25. DirecTV parent Hughes Electronic Corp saw its shares fall 33 cents to $14.52.
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BSkyB considers Kirch strategy

Rupert Murdoch was reported to be meeting the board British Sky Broadcasting yesterday (Thursday 7/2/02) to discuss proposals to exercise an €1.6 billion 'put' option which could trigger the collapse of the German media company Kirch Gruppe. A final decision on whether BSkyB's will sell its 22 per cent Kirch stake in October is not expected to be made at the meeting.

On Wednesday Dieter Hahn, the Kirch Gruppe Vice Chairman, resigned from the BSkyB board as he "accepted that there was a conflict of interest."

Triggering its put option could cause Kirch's bankruptcy with the result that BSkyB would not get the money it sought, but have to see what it could extract from the banks. Kirch's debts are about £4.1 billion. Alternatively, BSkyB could take control of the loss-making German pay-TV business and develop it.

Some minority shareholders at KirchMedia, Kirch Gruppe's largest subsidiary, are reported by the FT to have told the media group to sell off assets or seek a foreign backer. But German politicians are seeking a 'national solution' to prevent Murdoch's News Corporation taking control of Kirch or its stake in Axel Springer, publisher of the Bild Zeitung newspaper.

Despite earlier signals to the contrary, German media giant Bertelsmann has ruled out a bid to keep Kirch German owned. German media ownership regulations prohibit any company from owning more than 30 per cent of the free-to-air market, which, if maintained, prevent any rescue bid from Bertelsmann and RTL.

The planned June merger of KirchMedia rights and broadcasting business with publicly listed television subsidiary ProSiebenSAT.1 is now in severe doubt.
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Yes TV TCC in Korea

Korean interactive television service provider The Contents Company (TCC) has appointed Yes Television to provide content consultancy for its IP based interactive television.

Yes Television will act as a consultant for TCC to acquire video-on-demand (VOD) services rights for interactive TV content for its system. TCC is a wholly owned subsidiary of SK Group, one of the largest conglomerates in Korea.

TCC deploys IP based interactive television services throughout Korea. Its fiber infrastructure enables TCC to offer VOD, Internet access to partner sites, E-mail access, T-commerce, live broadcast channels and near Video-on-Demand (NVOD). Additional services via IP will include interactive games, shopping on demand, home delivery services, financial services, short messaging services, and Internet lottery.

"Yes Television has been a leader in the acquisition of content rights for VOD services since 1996, having secured movie, television and other content rights for our many VOD trials and services globally. We are now pleased to be expanding our capabilities by offering this resource to TCC in support of their own pioneering VOD efforts in Korea," said Lanny Huang, General Manager, Commercial Services, Yes Television in Hong Kong.

Hakman Kim, Director of Global Business at The Contents Company adds, "We want our customers to be able to enjoy a comprehensive range of high quality content. Working with Yes Television, we are pleased to be able to expand the selection of valuable content we can provide to our customers."
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Compressing Time

Bill Hendershot, an engineer from San Jose, California, has invented what he calls the Time Machine - a device that compresses time on TV programmes to allow more commercials.

The machine runs through programmes frame-by-frame, and when two identical frames appear consecutively, one is removed. This takes 30 seconds of time from a typical 22-minute program - the length of most US sitcoms without commercials.

Given that programme ad avails are often pre defined, and programmes have been painstakingly edited to the time required, it looks likely that the machine will end up being a 'dumb' editing device, allowing less clumsy unskilled cutting.

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Thursday 7th February

French DTT tenders out
NTL appeals on de-listing
DT cable sale still on
Pro Sieben profit down 27%
German anti-Murdoch alliance gathers
nCube digital insertion rollout
Allied DSL for Telefonica
DVB World - speakers confirmed
Vivendi shares suffer

French DTT tenders out

By Sotires Eleftheriou

France has finally issued the call for tenders for commercial DTT. This follows the publication on Friday (1/2/02) of the last of the decrees regulating DTT, which the broadcasting regulator CSA had been impatiently awaiting since last October. Meeting in plenary session on Tuesday (5/2/02), the CSA set the closing date for applications at 22 March, almost four months later than it had originally intended. The CSA will publish the full list of candidatures during April and spend four months analysing the propositions and interviewing the candidates, before announcing the successful candidates in July. This will be followed by a technical stage of hammering out the details with the successful candidates before signing the conventions and issuing the licences in November. Theoretically service could begin as soon as the conventions are signed, but commercial service is widely expected to start in the middle of 2003.

The plan is that most of France will have access to 33 DTT channels (39 in the Paris region), around half of which should be free to air. Hopefully this process will result in a balance between pay and free channels. The power level in most of the areas receiving coverage should be sufficient to enable the use of indoor aerials.

An attractive range of genuine free channels will be made available to stimulate public take up including commercial channels as well as local and associative channels. This offer contrasts with the UK, where the free DTT channels include competing news channels and low interest shopping channels giving the public perception that the number of new channels is actually very small. The pay channels in France will be pushed by the operators to stimulate further take up of DTT.

What will the new channels be?
Several operators have already made their plans public. The public sector broadcaster, France Televisions, will operate three channels in addition to simulcasting the existing analogue channels. These are: a news channel, a replay channel and a regional channel in eight different versions.

The private channels, TF1, Canal Plus and M6, can take up two channels, one for simulcasting of their existing analogue channels and one for new content. They also have a priority on two further channels.

AB Groupe, a major French TV production company which operates 18 satellite channels, has said that it will file candidatures for three free channels: one for seniors, a cultural channel for the higher social categories, and a channel for 15 to 34 year olds. It will also propose its flagship RTL9 channel as a pay channel and is considering proposing the same for its XXL channel.

Bollore Media has said that it will submit a proposal for a free channel.

Canal Plus is planning to propose five or six channels including a movie channel, a news channel as well as its premium channel and possibly a time-shifted version.

Lagardere Active, which already operates several cable and satellite channels, wants to put its existing 'people' channel Match TV as a pay channel and is planning two free channels. Likely proposals include children's channel Canal J and music channel MCM.

TF1 has pointed out that it already operates several cable and satellite channels, including documentary channel Odissey, news channel LCI, as well as TF6 which it operates jointly with M6. It has not disclosed which channels it intends to put forward for DTT.

The NRJ group, which operates a youth-oriented radio station on the FM band, is planning two music channels, for the 15 to 34 age group and for middle-aged adults.

The Pathe group is planning a free to air talk show and discussion channel in joint venture with production company Reservoir Prod, and a sports and comedy channel as pay channels.

All of these proposed channels will clearly not make it onto the limited resources of DTT. The discussions in the coming months should be interesting. Meanwhile, debate is continuing with the cable and satellite operators who are taking strong positions against DTT, and a 'must carry' decree issued last Friday.

Cable operators will be obliged to carry the free-to-air DTT channels without charge and make them available to their digital subscribers free of charge. This also applies to the 'basic antenna service' subscribers, who pay a token one Euro a month for a service that effectively replaces communal aerial systems. The cable operators have found out that the free channels signal is to be carried in DVB-C format, which means that people wishing to use the 'antenna service' via cable connection will have to obtain specific digital decoders from the cable operator.
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NTL appeals on de-listing

Nasdaq-listed UK cableco NTL has asked the New York Stock Exchange for six month's grace to prevent its shares being de-listed after plummeting to record lows, down 23 per cent to 29 cents on Tuesday 5/2/02.

Shares which have been below $1 for 30 consecutive trading days can be de-listed according to exchange rules, and NTL shares have been below a dollar throughout January.

NTL is restructuring to cope with its €20 billion ($17 billion) debt, appointing banks (4/2/02) to negotiate a swap of its outstanding senior bonds into new equity. NTL says it will not declare dividends - traditionally paid in the form of additional shares - on some of its preferred stock.
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DT cable sale still on

Deutsche Telekom AG intends to sell its cable television network even if regulators prevent Liberty Media of the US buying it the company announced, contradicting a Financial Times Deutschland report on Tuesday (5/2/02) which said DT was preparing to keep its cable assets if the deal failed.

"We continue to view our cable network as a non-core activity and it continues to be our plan to divest ourselves of such assets,'' said a company spokesman quoted by Reuters.

The suggested alternative strategy entailed DT continuing to operate the network itself, at minimal costs and with virtually no new investment.

The proposed E5.5 billion sale of the networks to Liberty would help DT cut its €65 billion ($56 billion) debt. However the German cartel office has raised serious objections to Liberty's post-purchase plans, particularly its intention not to deliver telephony, which by creating telecoms competition with DT, would have offset concerns about cable TV dominance.
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Pro Sieben profit down 27%

Germany's Pro Sieben Sat.1 Media AG says its full-year net income fell 27 per cent in 2001 due to the slump in the advertising market, adding to the woes of majority owner €5.5 billion indebted Kirch Group which has just lost the support of its lending banks.

Pro Sieben's consolidated net income fell to E68 million, according to preliminary figures for the full year, while pre-tax profit almost halved to €106 million from €205 million in 2000. Consolidated revenues fell 6.5 per cent to €2.015 billion.

Pro Sieben shares plunged 70 per cent in the last six months - down 20 per cent over the last four weeks - as a result of Kirch's financial problems - leaving the company valued at around €467 million.
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German anti-Murdoch alliance gathers

Germany's domestic media incumbents are seeking to prevent the possible collapse of the Kirch Group from enabling Rupert Murdoch's aggressively competitive predator News Corp to establish itself in Europe's leading media market, with control over Germany's largest group of private broadcasters and the country's most extensive film and sports-rights library.

Bertelsmann AG appears to be leading moves to avoid disruption of the cosy German media market's current status quo where a handful of major players enjoy friendly relationships. The Germany TV market is dominated by Kirch and Bertelsmann in commercial TV and the two public broadcasting networks ARD and ZDF. Although Kirch controls the largest TV-rights library, it often foresakes exclusivity, selling rights to rival broadcasters for domestic political reasons - that would not apply to a foreign competitor.

According to a WSJ report this week Bertelsmann Chief Executive Thomas Middelhoff is concerned that a Kirch bankruptcy could upset the 'equilibrium' in the German television market, where Bertelsmann's RTL competes with Kirch. Bertelsmann would be unlikely to buy the company if it failed due to antitrust laws. German publishers Axel Springer Verlag AG and WAZ Group, a Bertelsmann TV partner are also reported to be concerned.

Helmut Thoma, the former head of RTL is quoted by the WSJ as saying, "If Murdoch or someone else were to get control of Kirch's assets, the situation could prove unpleasant. It's hard to imagine having a nicer competitor than Kirch."

Kirch's €5.5 billion debts are exacerbated by its recent loss of credit from the banks and its apparent failure to restructure the loans or delay repayments.

Middelhoff met German Chancellor Gerhard Schroeder before and after the Christmas holidays as Kirch's liquidity crisis worsened. Schroeder also has an interest in seeing Kirch remain, though the official government line is that Schroeder isn't getting involved in any rescue plan for Kirch.

Murdoch has a 22 per cent stake in Kirch's pay-television division and a 2.48 per cent stake in the group's rights business. He also has an option to sell back the stake for €2 billion - which Kirch would appear unable to raise. However, Murdoch has said there are no plans to make a hostile bid by News Corp, but he is considering his options.
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nCube digital insertion rollout

Time Warner Cable, a division of AOL Time Warner in the US is using nCUBE's Digital Program Insertion (DPI) solution to insert digital and analogue commercials at its Milwaukee Division headends.

This is nCUBE's second commercial DPI deployment. nCUBE's DPI solution is also being used in conjunction with Adlink and Terayon Communications Systems to provide digital advertising insertion at a second US installation, in Los Angeles.

"The stream capability and reliability is as robust as the analogue delivery since it all comes from the same server. We are pleased to have worked closely with nCUBE to deliver the ability to insert commercials on both the analogue and digital tier without affecting our operational process," said Tom Sharrard, President, Time Warner Cable Milwaukee. "The ease of doing both types of delivery from one platform with the same excellent quality is what we hoped for when the digital tier finally arrived."

Time Warner Cable is currently inserting advertising at four headends in the Milwaukee area, averaging some 40 analogue insertion channels per location. Using nCUBE technology, Time Warner Cable is also inserting digital commercials on four DPI channels and plans to expand their DPI channel insertion to at least six networks in two zones from the same platform that already delivers the 40 analog channels in each zone. nCUBE enables Time Warner to use the same server and MPEG-2 video file for both analogue and digital insertion. The nCUBE platform allows an operator to expand and insert commercials in up to 40 analogue and 40 digital channels from the same server.
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Allied DSL for Telefonica

Telefonica SA, the leading telecommunications operator in the Spanish-speaking world, has signed a million dollar deal with Allied Data Technologies in partnership with its Spanish distributor Iberica.

Jeroen van Eersel, Vice President Sales & Marketing, Allied Data Technologies, says. "The 'KIT ADSL USB' is a strategically important product for Telefonica. Although Telefonica already had an ADSL product, it did not have an ADSL device with USB connection. Including the CopperJet 800 in this new package significantly expands Telefonica's consumer market offer. Our CopperJet 800 is built upon the highly integrated Texas Instruments AU5-chipset to meet all the high performance and feature rich demands for the fast growing ADSL market."

The order involves the delivery of Allied Data's CopperJet 800 modem within the next six months. The CopperJet 800 will be included in the ADSL subscription package, also known as 'KIT ADSL USB', of Telefonica and will be sold via the Telefonica outlets throughout Spain. The order was the result of an intensive co-operation between Allied Data Technologies and its largest distributor in Spain, Iberica de Control y Telefonica, SA (ICT).
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DVB World - speakers confirmed

The International Academy of Broadcasting (IAB) in conjunction with the DVB Project Office has completed the programme of speakers for this year's DVB World 2002 International Conference to be held in Dublin in March.

Richard Green, Chief Executive Officer of US CableLabs will give his organisation's vision of Digital Media Delivery;
Ismo Silvo will outline Finnish broadcaster YLE's experiences of being the first to launch MHP services;
Philips's Albert Stienstra is to describe the options and opportunities for DVB and IP;
Georg Luettke of the European Information and Communications Technology Industry Association (EICTA) will offer his insight on the challenges of MHP in the mobile environment;
Daniel Sauvet-Goichon of TDF and Vice-Chairman of DVB Technical Module along with Graham Mills of BT and Chairman of DVB Commercial Module will address the new challenges of DVB 2.0.

The conference will be opened by Dr George Waters, President of the IAB, and will be followed by the Keynote Address from Dan Flinter, Chief Executive Officer of Enterprise Ireland.

Helmut Stein of Premiere Medien and Chairman of DVB Promotions and Communications Module will chair DVB World 2002 opening session where Theo Peek of Philips and Chairman of DVB will give an assessment of the DVB Project to date, how far it has come and what it has learned. A summing up of the conference and an outline of current DVB plans for 2002 will be delivered by Peter MacAvock, Executive Director of the DVB Project.

Other speakers include Sean Hayes of Microsoft, Bill Foote of Sun Microsystems, Panasonic's Wilfred Geuen, Carter Elzroth of Mindport, ITV Digital's Chris Hibbert, Ken McKann of ZetaCast, Tandberg's Peter Barnett, Crown Castle's David Crawford, Paul Bristow and Jon Piesing of Philips, Rainer Schaefer from IRT, Martin Tomlinson of WebSat and the University of Plymouth, Stategy & Technology's David Cutts, David Wood of the EBU, RAI's Mario Stroppianna, Barry Smyth of ChangingWorlds, Ossidian's Donal Hickey, Alexandar Todoravic of the IAB, and Ruud Vadar from Techno Trend.

DVB World 2002 will take place on the 6 and 7 March at the Alexander Hotel, Dublin, Eire.
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Vivendi shares suffer

France's Vivendi Universal saw a five per cent fall in share values on Tuesday (5/2/02) - down 25 per cent this year - to make the company the worst-performing French stock.

The rapid transfomation of the company from utility to media group makes the performance hard to analyse, and the company is suffering anti-conglomerate sentiment in the wake of the Enron scandal. A new set of results using US accounting standards are not expected until March 5.

A report in the FT quoted a dealer as saying, "US investors are wary of groups which have financed their external growth and their diversification by issuing paper at a time when the share price was high. With the new US accounting practices, they are going to have to dip into the till."

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Wednesday 6th February

Kirch credit runs out
Science specialist heads BBC TV
Alenia Sapazio awards 2 satellites
MTG moves into publishing
Viacom dispute unsettles shareholders
Capital/Disney kids radio planned
Slovenian broadcast centre supplied
WorldGate supplies Puerto Rico Cablevision
Discovery in Yes Israel distribution
Australian pay-TV mergers
Microsoft supports Macromedia iTV

Tuesday 5th February

BT slashing broadband costs
Management changes for Canal+
DVB-T beats ATSC in Korean tests
Pace IPTV partners appointed
New COO at Bertelsmann
Cartel's DT objections clarified
FCC/DOJ jurisdiction spat

BT slashing broadband costs

Ben Verwaayen, who took the post of Chief Executive at former UK monopoly telco BT on Friday (1/2/02), is reported in the UK press to be about to announce halving the cost of its broadband services this week, while Chairman Sir Christopher Bland is due to defend BT's broadband record to a committee of MPs.

Wholesale costs for broadband are expected to fall from £30 pcm to about half, with consumer costs - currently some £40 to £50 per month targeted to fall below -£30 pcm to achieve mass take-up.

The move is expected to boost Britain's dismal uptake of just 150,000 broadband subscribers, compared with more than two million in Germany. A recent OECD survey put the UK 22nd out of 30 countries in terms of broadband penetration while Germany was in the top 10.

Verwaayen's commitment to cheaper and better broadband services will be welcomed by ADSL providers such as Video Networks which delivers VOD over ADSL, as well as Internet service providers who use BT's wires to deliver the service. However, price cuts are likely to be criticised by some rivals, such as indebted cableco NTL, and could face opposition from telecom regulator Oftel.

The Government too had criticised the slow pace of BT opening its local networks to rivals as the market required some kind of move by BT to stimulate the broadband market in the UK.

One Internet service provider quoted in the Telegraph newspaper said, "We have held back on broadband because BT wholesale is the only game in town and because it is just too expensive. Even if people pay, you could not guarantee a level of service - and it is the reputation of my brand name at stake, not BT's."
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Management changes for Canal+

Canal Plus finally put an end to speculation by announcing details of an impending reorganisation of the group on Sunday (3/2/02). The restructuring is widely seen in France as a way of reducing the power of Michel Denisot and Alexandre Dubrigny, who were put in charge in December 2000, shortly after the group was swallowed in the Vivendi-Unviersal merger.

Canal Plus' official line is, "following the success of the new schedules that Canal Plus recently introduced, President Pierre Lescure and Director General Denis Olivennes, are embarking on a new stage in the renovation of Canal Plus." This covers ongoing renovation of the schedules and integration of Canal Plus as part of a coherent digital package of premium sports, news and film channels.

The first outcome of the new ambitions will be the launch of a new sports channel in September, complementary to the Canal Plus premium channel. The new channel will be available only to digital subscribers. Lescure and Olivennes have made several management changes in the lead up to the new channel launch.

Among these, Bibiane Godfroid, currently Vice Director General of Channels and Services, will become Executive Director General of Canal Plus (premium channel). Dominique Farrugia, will be Director General Delegate in charge of programmes and production. Michel Denisot will be in charge of all the sports activities of the group including the launch of the forthcoming channel. He remains President of the Board overseeing the news channel i-Television. Finally, Jean-Claude Paris, Director General of i-Television will also be in charge of news at Canal Plus. Alexandre Dubrigny is leaving the group.

The changes take effect from 11 February. Dominique Farrugia was a well known comedian and presenter on Canal Plus for several years. He founded the Comedie! and Cuisine TV channels. His arrival to manage the programmes is seen as a way of bringing back the cheeky, almost impertinent, reputation to the channel.
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DVB-T beats ATSC in Korean tests

Tests completed by a committee of South Korean broadcasters claim to confirm the superiority of DVB-T over ATSC digital television broadcasting.

The comparison was conducted by members of the Korean Broadcast Engineers & Technicians Association and Munwha Broadcasting Corporation under the aegis of the South Korean Digital Terrestrial Television Broadcasting (DTTB) Comparative Field Trial Committee.

Advanced-television is informed that a two year old DTVM-2000 COFDM DVB-T receiver from Broadcast Technology, incorporating a first generation chipset, out-performed the very latest 8VSB ATSC receiver from LG Electronics in mobile and stationary tests made with omni-directional outdoor and indoor antennas. DVB-T performance was described as between 10 and 20 per cent superior to the ATSC system at stationary sites and even further ahead in mobile reception measurements.

The test committee has now advised the South Korean broadcasting authorities to adopt the DVB-T standard on the basis of its proven stability and with an eye towards the rapidly expanding market for DVB-T receivers. DVB-T(COFDM) has been selected for use in China, Europe, India, Latin America and South East Asia compared with two countries (USA and Canada) that have chosen ATSC (8VSB).

The US remains at standstill three years into its digital broadcasting project and Japan has postponed its digital broadcasting schedule to 2003. Taiwan, which initially selected ATSC (8VSB), gave up ATSC(8VSB) for DVB-T(COFDM) following a comparative study in 2001.

BTL says that this independent evaluation vindicates the superior performance of both the DVB-T signal format and BTL receivers.
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Pace IPTV partners appointed

UK-based digital home gateway technology company Pace Micro Technology, says it has launched its IPTV Partner Programme to deliver 'proven, end-to-end interactive TV solutions for telecom service providers and broadband IP network operators.'

The new programme allows Pace and its partners to develop and test a range of high-demand interactive TV solutions and streamline the process of deploying these services to the rapidly expanding interactive TV over IP market.

Developers and suppliers involved in Pace's IPTV Partner Programme include ANT, Canal+, Envivio, FutureTV, Harmonic, iMagicTV, Intertrust, Kasenna, Minerva, MPTechnologies, nCUBE, NDS, Orca Interactive, SecureMedia, Vicinium and Yes Television.

"This programme further validates our commitment to deliver superior, turnkey solutions for customers who are deploying revenue-generating home entertainment services over broadband IP networks," said Gary Stephenson, Head of Global Alliances for Pace's IPTV Division. "Due to the nature and complexity of developing IPTV solutions, it is essential that digital television technology leaders join forces in a unified effort to simplify the process of deploying digital television and other enhanced IP-related services. This programme encourages the earliest possible interoperability testing of the various elements of an end-to-end IPTV solution."

Pace says its IPTV Partner Programme contains the following member benefits:

Development and demonstration systems. Guidelines to Pace's software development kits (SDKs) for porting and developing additional software, such as middleware, utilities, advanced IPGs (Interactive Programme Guide); an IPTV evaluation system complete with set-top box, documentation and basic server resident software; and joint collaboration on the development of demonstration systems.

Roadmap and advance product information. Influence over Pace's IPTV roadmap and advance product information for features and functionality of future IPTV products; participation in Pace's IPTV Partner conferences to share deployment experiences and the latest IPTV product developments; and first access to advanced units of new products, such as future versions of Pace's IP-based digital home gateways.

Commercial and market data. A dedicated point-of-contact at Pace for sharing product developments, joint marketing opportunities, market intelligence and research reports; access to evaluation systems and other Pace products and services; and an opportunity to collaborate with other Pace partners.

Marketing and communications. Collaboration on joint media relations, industry trade shows, speaking activities and marketing collateral, and inclusion in Pace's end-to-end solutions guide 'How to build interactive TV over IP systems.'

Training and technical support. Sales and product training courses for in-depth knowledge on the features and benefits of Pace's IPTV products; technical training courses; and free access to a dedicated technical support package, including a secure Web site for in-depth technical support information and services.

Companies who become certified members of Pace's IPTV Partner Programme are also able to progress faster toward deployment of services and technology on Pace's IP-based digital home gateways, gain quick access to critical technical specifications and support, and reduce overall costs associated with porting to Pace's family of IPTV products.
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New COO at Bertelsmann

Ewald Walgenbach is to be presented before German media group Bertelsmann's supervisory board for a Wednesday (6/2/02) vote on appointment to the newly-created position of chief operating officer (COO) ahead of a planned 2003 flotation.

The 42-year-old Walgenbach is intended to help Chief Executive Thomas Middelhoff in the Bertelsmann group's day to day operations. Under German law the COO position has less responsibility than the typical US COO, and Bertelsmann Chief Financial Officer Siegfried Luther is considered to be Middelhoff's right-hand man.

Walgenbach is currently COO of Bertelsmann's television arm RTL Group, where his departure is expected to prompt a management reshuffle at the pan-European broadcaster with Chief Executive Didier Bellens seeing his role enhanced.
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Monday 4th February

Dispute expected at UPC re-cap
Knapp quits CE CoreComm post
Kirch rescue becomes political
Australian datacasting undecided
Chinese TV format rights upheld

Dispute expected at UPC re-cap

John Riordan, President and Chief Executive of Holland-based cableco United Pan-Europe Communications (UPC), wrote to all stake holders on Friday (1/2/02) ahead of the company's recapitalisation which he described as "purely a financial process". However, there is speculation in the Financial Times that restructuring negotiations could see future management changes. Former Chief Executive Mark Schneider quit last year so the finger appears to be pointing at Charlie Bracken, the company's Chief Financial Officer.

Significant dispute are expected between equity stakeholders facing significant dilution of their share of the company, as independent bond holders seek to salvage value and a syndicate of senior banks decide how hard an approach they take to convenants related to UPC's remaining debt.

The FT reports that shareholders will be left with less than five per cent of the enlarged equity once €6 billion ($5 billion) of debt and €1.5 billion of convertible preference shares are swapped for new ordinary shares.

UPC's US parent United GlobalCom (UGC), is likely to see its 53.8 per cent stake rise to 65 per cent or 70 per cent.

Among relationships likely to be strained by the restructuring is that with 6.3 per cent stakeholder Microsoft whose digtial set top operating system was rejected. Some €3.2 billion of a €4 billion credit facility has been drawn down, and talks with these lending banks, not included in the restructuring, are also vital.
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Knapp quits CE CoreComm post

In the wake of a massive €20 billion debt restructuring at UK cableco NTL, the company's Chief Executive Barclay Knapp, is giving up his second Chief Executive job at US telephone and Internet company CoreComm. Knapp is now expected to focus almost entirely on NTL. However, Knapp will continue to be paid a salary by CoreComm, becoming Chairman of the company, replacing George Blumenthal, currently Chairman of both CoreComm and NTL. Blumenthal will become a Non-Executive Director of CoreComm.

NTL Inc, which is traded on the New York Stock Exchange, provides CoreComm with management, financial, legal and technical services in exchange for fees.

NTL previously bought internet services from CoreComm, by paying €17.3 million cash for unsecured convertible CoreComm notes, later exchanged for CoreComm shares.

NTL subsequently recognised the potential conflict of interest in the CoreComm deal which it said had been approved by non-officer members of NTL's board.
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Kirch rescue becomes political

Fears that debt-ridden German media giant Kirch Gruppe could fall into foreign hands have led to German Chancellor Gerhard Schroder meeting Rolf Breuer, Chairman of Deutsche Bank, to discuss the group's future.

About €5 billion ($4.4 billion) owed to Deutsche Bank by Kirch falls due within weeks. There are fears that the company could default, or be taken over by a large foreign concern such as Rupert Murdoch's News Corporation.

Murdoch has a €1.5 billion "put option", which could force Kirch to buy him out of his 22 per cent stake in Premiere, the German group's loss-making pay TV unit.

Alternatively, a default could lead to domination of the German media market by Bertelsmann, through its RTL subsidiary - currently balanced by Kirch, through listed ProSiebenSAT.1.

The German press is also looking at the political dimension ahead of to the September 22 general election when a Schroder rescue could result in support from conservative Leo Kirch.
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Australian datacasting undecided

Australia's commercial TV stations are divided about whether or not spectrum allocated by the government for an abortive datacasting service should now be used for a pay TV platform.

Market leader Nine Network owned by Kerry Packer's Publishing & Broadcasting Ltd wants to bar the use of the service for pay TV, although rivals Seven and Ten have refused to back its submission to officials.

Communications Minister Richard Alston cancelled an auction of the spectrum in May 2001 after which players would have been backed out. He argued that the prohibitions on what they could carry meant the project was commercially unsound. The free-to-air channels had argued that the restrictions were needed to protect their €290 million investment in digitising their networks and that the government had ruled there would be no terrestrial competition before 2007.

In a submission to the government about new uses for the spectrum Nine said there would be "serious anti-competitive effects if any single entity was able to offer a combined over-the-air commercial and subscription broadcasting offering."

Seven and Ten have made their views known through the industry federation, but observers noted that its submission did not take any clear position on the issue. The government, having invited interested parties to make their comments on what to do with the spectrum, are now said to be considering five different options.
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Chinese TV format rights upheld

Shenzhen Cable, a state-owned Chinese TV station, is to be forced by a Chinese court ruling to pay €231,660 to London-based ECM for licensing the rights to a British game-show format in a ruling with huge implications for the foreign distributors.

ECM officials say that Shenzhen Cable bought the format for the show, Go Bingo, in July 1998 but refused to pay the contract fee.

Arbitration was won in Beijing, then ECM took Shenzhen Cable to court, which ruled that the contractual amount, plus interest, had to be lodged in the court's bank account for payment to ECM - which has now been carried out.

BBC quiz show, The Weakest Link is expected to be among the first subsequent beneficiaries. Its format has been licensed by the BBC and ECM to China and is due to be screened across the country starting in mid-February - but the Shanghai station has launched a very similar show, prompting the BBC to complain to the channel and central government. This week, the BBC's Teletubbies was licensed for a Chinese version, demonstrating the new found acceptability of western product for the Chinese market.

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