NEWS Monday 11th March- Monday 18th March 2002

Scroll down page or click below for news - latest first

Weekend Friday 15th to Monday 18th March

Ish expands broadband network
Premiere closure expected
Austar loss doubled
Comcast to Offer HDTV
NDS hosts anti-piracy event

Ish expands broadband network

German broadband service provider Ish is conducting its first major upgrade of the CATV network in the North-Rhine Westfalia and Baden-Wurttemberg regions. Ish's fibre optic deployments are considered critical to the evolution of telecommunications in Germany.

The current Ish projects entail deployment of 450 km of single-mode fibre cables, supplied by Alcatel, to establish a fibre optic backbone from North-Rhine-Westfalia (NRW) to Baden-WÚrttemberg, linking the northwestern and southwestern provinces of Germany, where a total of 6.4 million households are already connected to the Ish network.

Ish will manage the system traffic for both provinces from its Network Operating Center (NOC) in the city of Kerpen in NRW. The backbone route will extend from the NOC and connect the cities of Karlsruhe and Ludwigsburg, where Ish plans to build network rings similar to the existing ring in NRW. This new ring construction will provide millions of consumers in both regions with the ability to receive enhanced Internet, phone, and cable television services.

"Fibre optic cables are a critical part of our infrastructure, and enable us to offer our customers high-speed, high bandwidth applications," notes Chuck Carroll, Chief Technical officer at Ish, adding, "Alcatel's... products and expertise will be a major resource for Ish as we execute ambitious plans to deliver broadband services throughout western Germany."

"Ish has some very exciting plans for its network. We are delighted to be a part of their progressive strategy," said Jacques Blanc, President of Alcatel's optical fibre activities.
Back to top

Premiere closure expected

Germany's Kirch Gruppe may close Premiere World, the group's pay-TV unit which reportedly looses E2 million a day. One commentator noted that given the seriousness of the E6.5 billion debts, "there are not that many options that can be excluded." Experts looking at restructuring on behalf of the company concluded that KirchMedia, the group's core rights trading unit, could survive a shut-down of Premiere.

A closure of Premiere would force KirchMedia to write off the rights which it sells Premier while still facing about E3 billion ($2.6 billion) in commitments to the studios from 2002 onwards. A minority of creditor banks with loans to Premiere are reported to still oppose closure.

Kirch would prefer to sell majority control of Premiere while cutting costs, but no investors have come forward.

Georg Kofler, Premiere's Managing Director, is due to present his restructuring plan to the Premiere supervisory board meeting in Munich on Tuesday 29/3/02.

Kofler reportedly intends to renegotiate rights and slash about 10 per cent of Premiere's 2,710 workforce by downsizing its Hamburg and Munich call centres.

In addition to further banking manoevres seeking to extend loan periods, Kirch is believed to be preparing to make fresh overtures to F1 carmakers via Speed, the company through which the group holds its 73.5 per cent stake in F1's broadcasting and commercial rights.
Back to top

Comcast to Offer HDTV

Comcast Cable Corp in the US says it plans to transmit high-definition television channels in metropolitan Washington and several other major markets.

High-definition television (HDTV) provides better picture and sound quality but the steep $2,000 (E2260) plus cost of the special TV sets has resulted in low take-up, despite broadcasters receiving $billions worth of airwaves for the new service.

Comcast is to offer the service in Northern Virginia by June, followed by the Maryland suburbs early in the second half of the year, with DC expected next year.

Comcast acquired the city's franchise from AT&T Corp a year ago and it is upgrading the system.

Comcast did not reveal cost for this service, but charged Philadelphia subscribers $10.95 a month for high-definition service in a pilot program.

US broadcasters have fallen behind schedule in building high-definition facilities with 650 TV stations out of 1,600 reported to be in danger of missing a May deadline set by the Federal Communications Commission to begin transmitting a digital signal.

Only ABC and CBS provide most of their prime-time schedules in HDTV. In the Washington area, the local ABC affiliate, which is owned by Allbritton Communications Co, does not transmit a high-definition signal.

Manufacturers last year shipped 1.5 million HDTV compatible television sets to retail stores but do not come with a tuner to pick up HDTV transmissions from local TV stations. Comcast will offer subscribers a second set-top box to serve as a tuner. The cable industry has been spurned on to act after it was noted that virtually all HDTVs at trade shows were connected to satellite services, thus cable was effectively ceding the more affluent market.
Back to top

NDS hosts anti-piracy event

With somewhat ironic timing given the NDS/Canal Plus piracy dispute, the AEPOC (European Association for the Protection of Encrypted Works and Services) yesterday (15/3/02) issued a report of its Board of Directors meeting held in London on 22nd February 2002, hosted by BSkyB and NDS.

In it AEPOC highlighted the importance of strengthening the power of Europol so that it could carry out strong action to resist cyber-crime in the audio-visual sector. Aepoc says it has always been in the front line to support any initiative at European level with regard to technological measures. The Secretary General revealed the programme of a training course to be addressed to the Police Bodies and to the other relevant authorities of the European Union and of the accession countries.

The irony increases as this course deals with piracy against conditional access systems - as well as fraudulent reception of encrypted signals. It is based on technical, commercial and investigative experiences collected by the Aepoc Members in the last active years of anti-piracy effort. "Europe needs to witness the setting up of a special department inside Europol with special technical resources and tools for investigation in order to resist criminal activity. It is also necessary to stimulate the co-operation between national authorities, and in particular between the Police Forces operating in the various countries, the TLC operators and players who know the relevant field better than any others," says Aepoc.

Its position paper recently submitted to the European Commission proposed such an initiative concerning the setting up of a specific working group at Europol, bringing together technical, judicial and investigative expertise. Consequently, Aepoc will support the Spanish Presidency's measures to be adopted in order to make the Information Society environment safer, and is going to strongly support the proposal to establish an "Alert and Technological Research Centre" within the framework of Europol.

The next Aepoc meeting will be held in Madrid during June and the Europol issue will be the main matter discussed. It is part of the strategy of the Association to aim at the creation of a transnational effort and to lobby in connection with any problem and any possible innovative root against audio-visual piracy.

AEPOC members include Betaresearch GmbH, BskyB, Canal+, Canal+ Polska, Canal+ Technologies SECA, Eutelsat, Irdeto Access BV, Motorola, NDS Ltd., NTV-Plus, Pace Micro Technology, Philips Digital Networks, Premiere, Rai, Sogecable, Societe Europeenne des Satellites, Stream, Telenor Conax, Tele+, Thomson, TPS, Viacess SA France Telecom.
Back to top

Friday 15th March

German interactivity 'not delayed'
Xbox 'channel' on Viasat Denmark
News Corp's NDS a pirate?
Doepfner - 'not anti-Kirch'
German TV advertising down
French free viewing dominant
Set-top delays
UK Online via digital TV

German interactivity 'not delayed'

Liberty Media's failure to take over the cable assets of Deutsche Telekom will not harm the introduction of interactive TV in Germany proclaim public broadcaster ARD and ZDF, and the commercial players KirchGroup and RTL in a joint announcement.

They say that the first set top systems using the jointly agreed Multimedia Home Platform standard (MHP) will be on the shelves by the middle of the year. During their introduction the networks plan to cooperate closely with the manufacturers.

However, Liberty was not the only potential German player sceptical about MHP. The other new German cable operators, Ish and Isey also believe that the new standard, which is meant to provide equal chances to all service providers for accessing digital consumers, is not yet ready for a full market launch.

"With Liberate we know what features are running under commercial needs. For MHP there may be one or two applications up and running in a test environment," a source from one of the companies says.
Back to top

Xbox 'channel' on Viasat Denmark

A new partnership has been forged between Microsoft and one of the biggest Nordic media operators, Stockholm-based Modern Times Group, MTG. Starting yesterday (Thursday 14/3/02), Microsoft has launched a commercial TV channel with the main purpose of promoting its new game console Xbox. The channel will be distributed, initially in Denmark, by MTGs digital DTH operator Viasat.

The Xbox channel will be on the air for eight hours a day, between 3 and 11 p.m. for the coming four weeks. The content will be demo versions of various games for the Microsoft console, but also information about the box itself. Microsoft will also use the whole range of multimedia applications available from Viasat Broadcasting. These include 'pop-ups' in other Viasat channels (MTG covers the whole range from premium pay channels, generalist free-to-air services like TV3, and a number of niche services such as youth oriented ZTV, Viasat Sport, finance channel TV8 etc), mobile phone services, teletext and Internet. Tele2, another organisation in the 'family' created by Swedish multi-billionaire industrialist Jan Stenbeck, is one of the leading Scandinavia telecom operators.

Microsoft will provide all the content to the new service itself, parallel to the launch of a massive pan-European marketing campaign for the Xbox.

"To my knowledge no other game console has been launched in a similar, massive way," said Magnus Langley, Product Manager for Xbox in the Nordic territories. "MTG/Viasat has a target group that matches our need, it is a young group, keen on the potentials of new technologies."

Viasat says it currently has 550,000 Nordic digital subscribers, ie half of its total DTH subscriber stock. The Xbox channel will also be on Viasat's digital 'TV guide,' along with the other Viasat channels available to Danish subscribers, TV3, 3+, Viasat Sport, TV1000 and TV1000 Cinema.
Back to top

News Corp's NDS a pirate?

In the wake of Vivendi's Canal Plus filing a $1billion (E1.14 billion) lawsuit for piracy against News Corp's software subsidiary NDS, (see news 13/3/02) many industry commentators are playing up rivalries between the two chiefs, Vivendi's Jean Marie Messier, and News Corp's Rupert Murdoch.

Others put the dispute into the context of a wider malaise in the European Pay TV market, with James Harding, Media Editor at the Financial Times, noting that the market was, "getting very nasty because of people's high hopes which have ended in disappointment.....about the level of uptake from consumers, the cost of running these businesses and buying the content and the ease with which internet hackers and media pirates are breaking into the systems."

Certainly the two are not alone among European pay-TV operators suffering - though BSkyB is doing better than most. In contrast, the cable industry has had a dire two years, with Holland-based UPC and UK-based NTL both fighting off bankruptcy - and UK number two cableco Telewest also hit by heavy debt. Kirch Groupe's troubles in Germany are not helped by the loss-making Premiere World pay-TV unit - with Murdoch trying to get back a £1billion (E1.61 billion) investment there; Deutsche Telekom's reduction of debt via the sale of its cable to Liberty Media has been thwarted by the regulator; and it wasn't so long ago that Murdoch took a $809 million (E919 million) charge on the sale of Stream in Italy to Vivendi. Plus he failed to get DirecTV in the US to complete his global satellite network.

Murdoch has been rumoured to attribute Messier with some of the blame for the failure of BSkyB to establish pay-TV operations in France and Germany.

Although there are no doubt tensions between the two companies - once partners and now rivals - attributing blame to News Corp's subsidiary for posting the codes to crack the Canal Plus smart cards is a totally different matter. Therefore the crux of any legal case will be to prove that NDS was responsible for making the codes available to pirates.

The BBC Newsnight TV programme reported a discussion board site called Par8 on which illegal access to the codes appeared to be conducted. On it was an exchange between a "Georgio Gun" and someone called "Mayhem" which Newsnight reported as follows:

"My gold card doesn't take the codes anymore since last week. Someone told me that IYV Digital (UK digital terrestrial pay channel ITV Digital) had zapped the card, anyone know where I can get it reset?"

"Take it along to you local computer fair - most will have someone who can reprogram it there and then."

"Cheers mate, will try it. How much should I pay for it roughly?

"About £10 to £15, (E16 to E24) but if it keeps happening it would be cheaper to buy your own Elvis (the replication device) and do it for yourself. Cards are about £2 to £10 depending on quality."

There was also a message purporting to give the April code numbers for ITV Digital.

There's no doubt that the Canal Plus smart card code has been cracked and is being traded illegally, the issue is, who is responsible for cracking it and making it available.

It is reported by Datamonitor that NDS has financial links between its British arm and Thoic.com, a web-site closed last year which openly distributed smart-card codes pirated from Canal+ technology. Krishna Rao, analyst at Datamonitor, reports allegations that a senior figure responsible for security at NDS and also a board member of a pan-European industry action group set-up to combat piracy, has directly passed funds into the personal bank account of the founder of Thoic.com. If proven to be true, this would provide a strong basis for a heavyweight ongoing legal battle - likely to damage the interactive TV business by throwing doubt upon its security.
Back to top

Doepfner - 'not anti-Kirch'

The CEO of the German publishing conglomerate Axel Springer Verlag AG, Mathias Doepfner, commented on media reports that his company would consider to force German TV tycoon Leo Kirch into bankruptcy.

This never would have been the intention of his company when it decided to pull the full option Kirch had granted to it, he said in an interview with German business magazine Tele Boerse. Kirch had agreed last year to pay a fixed price of E767 million for the 11 per cent stake Springer holds in KirchÆs commercial TV holding ProSiebenSat.1 Media AG which it was intended would be merged with its parent Kirch Media AG later this year. In addition to Kirch's tight financial situation, stock capitalisation for the TV holding had come down drastically.

Rumours were circulating that Springer might use the situation to make Kirch sell his 40 per cent stake which he holds directly in Springer, in order to balance his books. It is now thought that this will happen anyhow as part of the rescue plan outlined by the creditor banks. Springer founder Axel Springer's widow Friede has already said she is interested in taking over a part of the shares herself, increasing the 50 per cent share that the Springer family currently holds.

Spinger is also believed to be interested in winning a stake in Kirch Media itself. The rescue plan for the Kirch conglomerate is achieving some progress. The creditors are optimistic that they will soon find a solution.

Kirch has already begun divesting some minor investments in regional TV, including the loss-making tv.berlin, which it is believed will be shut down soon. Also the company's beta business tv gmbh, the country's largest service provider of internal business communication services (business TV) for corporate clients, may soon be closed. The number of employees had already been severely cut over the last few weeks after failing to achieve optimistic business forecasts.

It would be an extreme step for Kirch to shut down his metropolitan TV projects, such as tv.berlin, because he always considered this segment to be strategically important to maintain dominance in the future. However, media regulation is reported to make it difficult to find a working business model.
Back to top

German TV advertising down

Gross revenues in TV advertising in Germany shrank by about eight per cent (E963 million compared to E1,044 billion in the previous year) across all networks in the first two months of this year, according to a survey published by the research company Media Control.

All major commercial networks, RTL, ProSieben and Sat.1 had lower gross income. Also the public broadcasters ARD and ZDF are only allowed 20 minutes of advertising during weekdays in the 'pre-prime' time from 5:00 pm to 8:00 pm resulting in a significantly lower revenue stream. Only the independent music channel VIVA and the entertainment channel VOX, which belongs to the RTL family of networks, were able to increase their gross revenues slightly.

Gross revenues only provide a partial picture of the situation as they do not contain, for example, any of the discounts which many channels give to good clients, especially in better times.
Back to top

French free viewing dominant

Results of the latest Mediacabsat panel in France, published on Tuesday (13/3/02), show that the mainstream terrestrial channels still dominate viewing, although their market share is dropping, ever so slightly.

The survey, now carried out twice a year, monitors the detailed viewing of a panel of 973 multi-channel homes on a quarter of an hour by quarter of an hour basis from 3 September 2001 to 17 February 2002. There are 11.866 million people in France aged four and over that now have access to multi-channel TV, out of a total TV population aged four and over of 53 million. These are split 4.586 million cable subscribers, 5.005 million Canal Satellite, and 3.06 million TPS.

Nevertheless, in these homes viewing of the traditional channels, whether by analogue terrestrial or via the new media access, dominated, accounting for an aggregate viewing share of 68 per cent, leaving only 32 per cent for new media channels. The corresponding figure during the previous survey (February 2001 to July 2001) was 68.8 per cent. Children (aged four to 14) were bigger consumers of thematic channels, accounting for 45.5 per cent of their aggregate viewing time.

Almost all of the thematic channels achieved viewing shares of below 1 per cent. Even the multiplexed versions of premium channel Canal Plus only got 1.4 to 1.7 per cent, compared to 4.4 per cent for Canal Plus proper. It would appear that viewing habits are difficult to break. Other channels exceeding 1 per cent viewing share (percentage of viewing among the population of subscribers) were Cine Cinemas (1.2 per cent), Canal J (2.0 per cent), Cartoon Network (1.4 per cent), Cinefaz (1.2 per cent), Disney Channel (2.1 per cent), Eurosport (1.8 per cent), Fox Kids (1.1 per cent), LCI (1.5 per cent), M6Music (1.0 per cent), Odyssee (1.0 per cent), RTL9 (4.1 per cent), Serie Club (1.4 per cent), Teletoon (2.8 per cent), TF6 (3.6 per cent), Tiji (1.4 per cent), TPS Star (2.6 per cent), 13e Rue (1.5 per cent).

The mainstream channels, TF1, France 2, France 3, M6 got 26.9 per cent, 15.4 per cent, 11.3 per cent and 9.1 per cent respectively.

The viewing shares are not an accurate reflection of total viewing, as many of the channels are only on some of the platforms. The best scores were obtained by channels offering general entertainment and series (RTL9, Serie Club, TF6, 13e Rue), premium channels (Canal Plus multiplexed versions, TPS Star) and children's channels (Canal J, Cartoon Network, Disney Channel, Fox Kids, Teletoon, Tiji).

What is certain is that the number of channels cannot all be viable and some mergers and acquisitions will take place. The two rival movie information channels, Cine Info and Allocine TV, for example, both pipped in with a 0.1 per cent audience share, merged a few weeks ago, as did the classical music channels Mezzo and Muzzik.

Detailed results are available at www.mediametrie.fr
Back to top

Set-top delays

UK set-top box manufacturer NovaPal, which planned a June launch for its free-to-air (FTA) low cost digital box, has postponed launch to at least September and says it may not put the product on the market at all this year.

The report, which comes from the BBC itself, recognises that a major concern on the part of the manufacturer is that the new BBC digital channels will not be enticing enough to drive sales.

Oliver Durkin, the Chief Executive of NovaPal, is reported by the BBC as saying he is concerned that the new BBC channels will not persuade the 60 per cent of the UK population who have failed to take digital TV to buy an FTA box.

"We've spent the last two years building what we believe is the best digital TV receiver, but I don't know if 2002 is going to be the gold rush for set-top boxes," said Durkin.

"We've now got eight weeks to decide whether to press the button to start manufacturing for a September launch, but I'm only going to launch when things are hot," he added.

Durkin told the BBC, "To make a £100 (E160) box work commercially, we've got to have a certain volume and get the economies of scale. We need to sell 20,000 per month and the only way we're going to do that is if older people think it's really worth their while going digital."

Durkin is concerned the BBC's new digital offering - children's channels CBeebies and CBBC, youth service BBC3 and culture and arts channel BBC4 - will miss the most resistant market, the old, who he feels need something more mainstream, "like BBC bingo for the blue rinses."
Back to top

UK Online via digital TV

The UK government's 'E-envoy' Andrew Pinder has held talks with the UK's major digital TV providers to deliver a UK Online portal via digital TV "within the next few months."

A March report to the Prime Minister says that the service could be launched before the end of spring 2002.

Digital TV delivery trials began with Sky last December. Access to UK Online content would also be provided through public kiosks and mobile phones.
Back to top

Thursday 14th March

NRK's high hopes for mobile
Two year plan for Canal +
NTL Broadcast's £40m win
Austar in Two Way TV deal
Aussie rules 'limit competition'
China vets CATV staff
NDS counter-sues Canal Plus
UK media ownership relaxes

NRK's high hopes for mobile

NRK, Norway's the state-controlled public service broadcaster, forecasts that by the end of 2006 mobile services such as MMS and other interactive services will equal 10 per cent of today's licence revenues.

These projections were made by the Director of Future Media at NRK Utvikling (NRK Development), Anne Halvorsen. Halvorsen says that NRK is investing time and money to become a market leader in mobile services.

"We do indeed believe in the great economical potential, the opportunity to make big money in sales of live sounds and images, an area where NRK certainly has a national leading position. Now, that it is finally possible to use mobile technology for transmitting these live sounds and images, or even videos, we see our chance to become a market leader in this area, too."

Halvorsen continues, "We have in-house access, and also rights to a lot of highly attractive content. Humour/ comedy and sports are the first areas which we are going to exploit."

The development of these new media services, with a particular focus on MMS, is being carried out in partnership between NRK and Telenor Mobile, with NRK focusing on content while Telenor is using its expertise to develop technical solutions.

The new Director General of NRK, John G Bernander, is reported to have given his full support to the plans of NRK Utvikling.
Back to top

Two year plan for Canal +

Interviewed at length in French financial daily La Tribune last Friday (8/3/02), just three days after announcing the Vivendi group's loss of E13.6 billion, Jean-Marie Messier said that he is giving Pierre Lescure and his team two years in which to bring Canal Plus back into the black.
Asked whether Vivendi had paid too much for the acquisition of Seagram and Canal Plus, he said that they were indispensable cornerstones to the strategy of the group. "When you buy in cash, you have to be sure to buy at the right time. When you buy by exchange of shares or merger, it's the parity of exchange that is determining. The markets being what they are, the share price of Viveni is E5 or E10 more than it would have been without the acquisitions."

He explained that the write off of E6 billion of depreciation for Canal Plus was a "goodwill gesture" following the bursting of the Internet bubble. He stressed that digital television was at the centre of the group's strategy. "The growth of subscriber numbers in Europe is set to develop, as is the revenue per subscriber.

"Nevertheless, the difficulties with Canal Plus results are very real. While growth in revenue has been 13 per cent, operational performance has not been on a par with its ambitions." The negative cash flow of E500 million cannot last, and the current management has two years in which to redress the balance.

Measures to be taken are: to complete the merger of the platforms in Poland and Italy. In France, as elsewhere, programme costs must be brought down. Then comes the deployment of the new generation of decoders. The aim is 400,000 to 500,000 within two years. The manufacturer for the first of the second generation decoders will be chosen during the next two months (Sony or TMM).

The supply of content will also be considered. One possibility is a link with John Malone's Liberty Media, which would result in the leading programme supplier in Europe. The fact that Liberty has sold its stake in Multithematiques (which was held alongside Canal Plus and Lagardere) does not preclude it from entering a joint venture which would include the channels from Multithematiques, Universal and Liberty Media.

A merger between CanalSatelite Digital and ViaDigital in Spain is a distinct possibility for this year, bearing in mind the losses by ViaDigital and following the success of the mergers in Italy and Poland.

On UMTS, Messier said that the group would be ready to launch a service early in 2004, when 80 per cent of GSM sites could be used. The additional investment, to start in 2003, will not exceed E250 milliona year. "Cegetel (the telecoms operator in which Vivendi owns a share) is one of the rare mobile operators not to be in debt, so we will deploy UMTS as the infrastructure becomes available."
Back to top

NTL Broadcast's £40m win

UK cableco NTL's transmission arm, NTL Broadcast, has won a £40 million (E65 million), ten-year contract renewal to continue transmission of the S4C channel across Wales. NTL's initial contract win with SC4 was in 1992.

The newly signed 'total broadcast' contract comes into effect on 1st January 2003, and will provide end-to-end analogue terrestrial transmission of the S4C channel to homes across Wales from over 200 transmitters. The signal will be delivered by fibre from S4C's studios in Cardiff to NTL's transmitter at Wenvoe which in turn feeds numerous relay stations serving the south Wales valleys.

The distribution element also includes a four-hop analogue link and a seven-hop digital link feeding transmitters in north and west Wales. In addition, NTL Broadcast will make modifications to future-proof the S4C network for the duration of the contract.

S4C is a UK government-funded channel which broadcasts across Wales, offering locally generated material primarily in the Welsh language. S4C also distributes most of Channel 4's programming to Wales.

Arshad Rasul, S4C's Director of Engineering and technology, comments, "NTL Broadcast has provided us with excellent customer service over the past ten years, and has a proven track record in providing broadcast services for the channel. The existing partnership has been very successful and we look forward to working with NTL Broadcast over the next decade."

Steve Holebrook, NTL Broadcast's business director for media solutions added, "We are obviously delighted to be continuing this partnership; it's a great vote of confidence in our long-term ability to provide excellent service and expertise in broadcast transmission."
Back to top

Austar in Two Way TV deal

Interactive games provider Two Way TV, 46 per cent owned by former BSkyB head Sam Chisholm, has signed a five-year deal with Austar United Communications to expand its games service.

Austar, Australia's second-ranked pay TV platform with 420,000 subscribers has been using Two Way TV games on a quasi-trial basis for the last two years after it launched its interactive service.

Two Way TV will provide an expanded games playing service, including leaderboards and the ability for top players to win prizes.
Back to top

Aussie rules 'limit competition'

Australian pay TV operators Foxtel and Optus have signalled to the government that they want officials to complete a review of their proposed channel and satellite-sharing plan within 10 weeks.

The Australian Competition and Consumer Commission (ACCC) has been told that the deal is conditional upon the body approving it by mid-May. The commission says it needs to review the details of the alliance because of concerns that it may limit competition in Australia's urban markets.

Last week Foxtel said it would share its channels with Optus, take over the cost of the latter's movie channels and take transponders on Optus' C1 satellite to cut programme acquisition costs. Foxtel's 50 per cent owner Telstra, will also start to bundle telephony with Foxtel's service in a bid to increase revenues from subscribers.

The ACCC makes recommendations on business issues that can be accepted or rejected by the government. The body has been accused by some sections of Australian business of ignoring the realities of doing business. A week before the channel-sharing announcement was made, Foxtel CEO Kim Williams said that regulators wrongly treated pay TV as if it was a mature industry, rather than a nascent one.
Back to top

China vets CATV staff

Cable TV operators in China have been ordered to vet their employees after a provincial service ran a documentary about the banned Falun Gong sect for nearly an hour.

Scheduled broadcasts were interrupted by the documentary at Changchun Cable in Jilin province that has 300,000 subscribers. The ruling Communist Party's Publicity Department called an emergency meeting to discuss the issues and cable TV operators are among the media organisations warned to check the background of workers and their families.

Senior staff have also been ordered to review staff rosters and to make sure that senior editors are present outside normal working hours to prevent further incidents of 'sabotage' according to reports from Beijing.

Chinese leaders regard Falun Gong as a major threat to the stability of the country and its practitioners are routinely imprisoned. However Falun Gong followers regularly stage demonstrations at key public events to the embarrassment of the government.
Back to top

NDS counter-sues Canal Plus

News Corp software encryption subsidiary NDS plans to counter-sue Canal Plus, describing the original allegations against it for piracy as "outrageous and baseless."

NDS, which has not yet been served with the complaint, says it file a counterclaim once it has had an opportunity to fully review Canal Plus' suit - whose evidence has not been revealed. NDS reiterated its long-standing commitment to eradicating piracy from the conditional access industry.

NDS President and CEO Dr Abe Peled countered suggestions that his company had any involvement with piracy problems suffered by Canal Plus since 1999 saying, "That problem is due solely to the inferior nature of Canal Plus' conditional access technology, the failure of its business plan to contain measures to protect against piracy and its failure to deal with piracy once it began." He added, "The clear evidence is that the pirate community targeted Canal Plus early in 1998 and succeeded without any help from anyone, particularly NDS."

Peled continued, "All smart cards can be hacked if left in the field long enough, which is why NDS' business plan calls for periodic replacement of cards. NDS also designs its system to permit electronic counter measures to be sent over the air to disable counterfeit cards. Canal Plus' card has not provided effective counter measures."

NDS cites the following as factors which it says discredit the claims against it:

"Recognizing the inferiority of their own conditional access technology, Canal Plus approached NDS in December 2001 with the idea of merging the two companies, and attempted to use these baseless allegations to gain leverage in the negotiations.

"Canal Plus acknowledges that it has reversed engineered its competitors' cards.

"For the past year, Canal Plus has been trying (without success) to hire away the very employee they claim gave their code to DR7. In fact, their own lawyer has been involved in this poaching process, despite the fact that the employee is under contract with NDS. Why would Canal Plus want to hire a person they claim was involved in such activity? NDS intends to counterclaim against Canal Plus for this tortious conduct as well as tortious interference with other employment and contractual relationships of NDS."

Peled concluded, "This lawsuit is a blatant attempt by Canal Plus both to deflect criticism of its new generation card, which is not believed to be state of the art, and to shift blame for its inadequate technology and its past losses."
Rupert Murdoch's eldest son, Lachlan, joined the board of NDS in February.
NDS shares quoted on Nasdaq were cut by 25 per cent to just over $17.
Back to top

UK media ownership relaxes

Tessa Jowell, the UK Culture, Media and Sport Secretary, has confirmed that the British government plans to relax cross-media ownership rules in the draft of its communications bill to be published in late April.

Relaxation of cross-media ownership limits are forecast to result in mergers and acquisitions among UK terrestrial ITV companies, including the long discussed merger of Carlton and Granada, and a Channel 5 and BSkyB deal.

A final version of the bill is scheduled to receive a parliamentary reading before the end of 2002, and become law by the following year. It is also intended that there will be an increase in the threshold limits of 15 per cent of total audience share for any one ITV company. Any merger or takeover which followed relaxation of the rules would still be subject to standard competition laws.

A separate clause which prevents the owner of a national newspaper from holding more than 20 per cent of a terrestrial channel remains up for discussion. It currently prevents News Corporation, owner of The Sun and The Times, or BSkyB, its satellite broadcasting operation, from making a bid for either Carlton, Granada or Channel 5.

Concerning the possible collapse of ITV Digital, and whether the government would rescue it, Jowell said that it was not the government's role to intervene in the problems of operating companies as it maintained a policy of neutrality towards cable, satellite and terrestrial platforms.

*In a separate development, Trade Secretary Patricia Hewitt was reported as saying that the UK government is 'very seriously' considering ordering TV manufacturers to only build and sell digital sets, to help the government meet its 2010 analogue switch-off date.
Back to top

Wednesday 13th March

Canal Plus to sue NDS, couterclaim expected
BSkyB soccer bid fixed
TV4's interactive launch
Single UK ITV?
Council established for iTV
FCC reorganises

Canal Plus to sue NDS, couterclaim expected

Vivendi Universal and its subsidiaries, Canal Plus, and Canal Plus Technologies Inc, have launched an anti-piracy legal battle against NDS Group, which is 79.2 per cent owned by News Corp's Sky Global Networks, alleging the software firm was Vivendi Universal and its subsidiaries, Canal Plus, and Canal Plus Technologies Inc, have launched an anti-piracy legal battle against NDS Group, which is 79.2 per cent owned by News Corp's Sky Global Networks, alleging the software firm was engaged in a conspiracy to harm Canal Plus' via software piracy.

Canal Plus, Europe's biggest pay-TV company, claims NDS "spent large amounts of money and resources" to illegally hack its previously unbroken security system software which allows authorised TV customers to watch its services using a smart card. NDS was alleged to have used, "electrical and optical examination of the protected internal software code of the card using expensive machinery designed and operated to defeat Canal Plus Technologies' protective measures."

The code was successfully extracted in 1998 and then in March 1999 it was, "made available to a Web site frequented by counterfeiters," Canal Plus said in a lawsuit filed in the Northern District Court of California on Monday. Canal Plus' law suit alleges violations of The Racketeer Influenced and Corrupt Organisations Act, The Copyright Act, the California Unfair Competition statute, and other violations of tort law.

"After the code was published on the Internet, criminal organisations flooded the market with counterfeit cards," says Canal Plus.

The Paris-based group said it believed NDS started its reverse engineering about three years ago, using its R&D facility in Israel to work on the code. Canal Plus also said that the lawsuit was filed in California because that was where the pirate website was operating. It would not name the site.

Canal Plus has 15.9 million pay-TV subscribers, and claims that NDS's piracy may have cost it in excess of E1.14 billion ($1 billion). Italian authorities have estimated that millions of counterfeit Canal Plus smart cards are in use in that country alone.

More than 20 pay-TV groups, including ITV Digital in the UK and ZeeTV in Asia use Canal Plus's smart card technology and may have been affected by the fraud.

"No person or company is above the law and we intend to see the law applied to halt NDS's illegal actions," said Canal Plus Chief Executive Francois Carayol. "We hope that NDS will immediately stop this unlawful and anti-competitive activity."

The Paris-based group said it believed NDS started its anti-competitive behaviour about three years ago, using its R&D facility in Israel to work on the code. Canal Plus also said that the lawsuit was filed in California because that was where the pirate website was operating. It would not name the site.

"The future of digital television depends on the industry working together to combat signal theft and to protect the integrity of distribution systems," said Fran¯ois Carayol, executive vice-president of Canal Plus.

Canal Plus will procede with a card swap out. "We have been preparing a card swap out for two years," said Carayol, "but it was important to first have an injunction against the lab. After all, there is no point in going to the expense of bringing out new cards only to have them reverse engineered within a few weeks." The card swap out will begin next month in Spain, to be followed by Poland, Italy, Benelux, the UK and France. The complete swap out will be completed before the end of the year.

Ironically, just a week before, Peter Chernin, President and Chief Operating Officer at News Corporation, had made the call for stronger anti-piracy laws a key point of his speech at the FT New Media conference.

.......NDS counter-sues

News Corp software encryption subsidiary NDS plans to counter-sue Canal Plus, describing the original allegations against it for piracy as "outrageous and baseless."

NDS, which has not yet been served with the complaint, says it file a counterclaim once it has had an opportunity to fully review Canal Plus' suit - whose evidence has not been revealed. NDS reiterated its long-standing commitment to eradicating piracy from the conditional access industry.

NDS President and CEO Dr Abe Peled countered suggestions that his company had any involvement with piracy problems suffered by Canal Plus since 1999 saying, "That problem is due solely to the inferior nature of Canal Plus' conditional access technology, the failure of its business plan to contain measures to protect against piracy and its failure to deal with piracy once it began." He added, "The clear evidence is that the pirate community targeted Canal Plus early in 1998 and succeeded without any help from anyone, particularly NDS."

Peled continued, "All smart cards can be hacked if left in the field long enough, which is why NDS' business plan calls for periodic replacement of cards. NDS also designs its system to permit electronic counter measures to be sent over the air to disable counterfeit cards. Canal Plus' card has not provided effective counter measures."

NDS cites the following as factors which it says discredit the claims against it:

"Recognizing the inferiority of their own conditional access technology, Canal Plus approached NDS in December 2001 with the idea of merging the two companies, and attempted to use these baseless allegations to gain leverage in the negotiations.

"Canal Plus acknowledges that it has reversed engineered its competitors' cards.

"For the past year, Canal Plus has been trying (without success) to hire away the very employee they claim gave their code to DR7. In fact, their own lawyer has been involved in this poaching process, despite the fact that the employee is under contract with NDS. Why would Canal Plus want to hire a person they claim was involved in such activity? NDS intends to counterclaim against Canal Plus for this tortious conduct as well as tortious interference with other employment and contractual relationships of NDS."

Peled concluded, "This lawsuit is a blatant attempt by Canal Plus both to deflect criticism of its new generation card, which is not believed to be state of the art, and to shift blame for its inadequate technology and its past losses."
Back to top

BSkyB soccer bid fixed

Renewal bids by UK satellite provider British Sky Broadcasting for Premier League football rights cannot be lower than the present £1.1billion three-year deal, according to one Premiership Club Chairman cited in the FT. A clause in the contract is alleged to stipulate that if the pay TV company bids again next time, it cannot offer less than the present contract.

Digital terrestrial TV platform ITV Digital has sought to renegotiate its E509.3 million rights deal with the 72 clubs in the Nationwide League. The FT reports executives at the parent companies Granada and Carlton to be considering closing ITV Digital and ITV Sport, the digital sports channel, within the next four weeks, if a deal cannot be reached or radical restructuring agreed.

Sports rights are seen as having passed their peak, and it had been assumed that the Premiership rights would be reduced next time around. Preliminary talks on the next round of rights deals would be expected to kick off in about a year.

Despite the clause, BSkyB is unlikely to pay more than whatever the market rate is at the time of the deal. Consequently it had been suggested that the FA may set up its own TV channel to take the rights should it not receive high enough bids from third parties.
Back to top

TV4's interactive launch

TV4, Sweden's biggest TV channel, has announced its first interactive pay service via the Internet.

The new service was launched last weekend, giving access to live 'exclusive' reports from the opening of this year's Formula 1 racing in Australia. The event was broadcast in normal, delayed, TV on Sunday evening, but during the night between Saturday and Sunday enthusiasts were offered a chance to access the event, live, via TV4's Internet site, www.tv.se, at a price of 10 Swedish krona (E1.13).

The users were charged on their ordinary phone bills, so no transactions needed to be conducted over the Internet.

"Like most other modern media sites, we are looking at alternative models of new revenue sources, in addition to advertising and sponsorship," Marica Finnsjoe Gefvert, editor of TV4's interactive services, comments. "But we have taken a general decision for our site to be free of charge. It is utterly important for us to run an 'open' site, even if we now start to experiment to charge extra for additional services."
Back to top

Single UK ITV?

A single company would be allowed to run the whole of the UK independent TV network should legislation proposed by opposition Tim Yeo comes into force.

The Tory culture, media and sport spokesman's 10-minute rule Bill comes after Iain Duncan Smith, the Conservative leader, ordered his team to make better use of Parliamentary procedures, reports the Guardian.
Back to top

Council established for iTV

The Interactive Television Council (iTVC) has been formed in the US to promote the development and deployment of iTV services to consumers.

Founded by a group of interactive television developers, the council, operates under the auspices of the Information Technology Association of America (ITAA), and include Canal Plus Technologies, Concurrent Computer Corporation, OpenTV, Liberate Technologies, MetaTV, Microsoft, Sonicblue, TeleCruz Technology and TiVo.

Europe Media reports that the group plans to lobby on behalf of member companies on issues including information security, taxes and finance policy, digital intellectual property protection, telecoms competition, online privacy, consumer protection and e-commerce policy.

"IDC expects interactive television services will reach 36 million US households by year-end 2005," said ITAA president Harris N Miller.
Back to top

FCC reorganises

Reorganisation at the US Federal Communications Commission is due to go into effect on Monday, March 25.

The FCC has formed a new Media Bureau which will be responsible for cable and DBS post-licensing policy - previously handled by the Cable Services Bureau. The Media Bureau also will develop, recommend and administer policy and licensing programs relating to electronic media, including broadcast television and radio.

Sky Report notes that Cable Services Bureau Chief Ken Ferree will serve as chief of the newly created bureau. Ferree has named Deborah Klein as chief of staff of the Media Bureau. Klein will be responsible for overseeing all bureau operations.

Satellite-licensing remains under the Satellite Division at the International Bureau which will increase its focus on satellite policy issues, as well as consolidating resources for licensing and rulemaking.

Tuesday 12th March

Italian privatisation 'unlikely'
Matav Israeli cable merger approved
Kirch briefing
Rural access for Aussie PayTV
Indian DTT system supplied
BBC and C4 spectrum charge
AOL head resigns

Rural access for Aussie PayTV

The Australian Competition and Consumer Commission is to force Foxtel to guarantee rural customers access to pay TV in return for approving the company's proposed deal with Optus says Chairman Allan Fels.

The proposal allow bring pay TV to customers in places such as Victorian Bendigo and Ballarat, delivered via minor competitor Neighbourhood Cable.

Foxtel's agreement with Optus to share content, announced last week, amounted to the establishment of a monopoly on pay TV programming, Professor Fels told the Seven Network's Sunday Sunrise.

"It has very far-reaching potential effects on pay television, on telephone competition, the whole broadband development, including in rural and regional Australia," he said.

Conditions the ACCC might impose on Foxtel could include obligations to carry channels such as C7 and obligations to supply content to smaller competitors such as Neighbourhood Cable.

ACCC commissioner Ross Jones said the ACCC had been trying "for years" to get Neighbourhood Cable access to Foxtel content. Cable companies can offer broadband and telephone services over their networks as well as pay TV, but pay TV is the biggest lure for customers, so companies denied access to Foxtel content generally expect to struggle.

The ACCC is particularly concerned that Foxtel, by refusing content to smaller competitors, might stifle the potential for telephony competitors for Telstra - its 50 per cent shareholder.

Jones said the ACCC would also examine what Foxtel could charge competitors for access.

Telstra chairman Ziggy Switkowski told the Seven Network yesterday that network access "shouldn't be an issue". "We will ask for commercial terms; I assume that Foxtel will happily carry other people's content and channels, particularly in the digital environment," he said.

Switkowski also said that Foxtel's move to the "digital environment" could come as soon as next year, in a signal the Foxtel-Optus agreement had hastened the process.

Communications Minister Richard Alston has signalled he would consider legislation regulating access to Foxtel if the ACCC is unable to effect satisfactory conditions on the agreement.

Trade Minister Mark Vaile, speaking on Ten Network's Meet The Press, said the government remained "resolute" in its intention to ensure regional Australians received adequate pay-TV services.
Back to top

AOL head resigns

Audrey Weil is resigning in May as head of AOL Broadband after just 18 months, to be replaced by Lisa Hook, a former Time Warner Telecommunications executive who recently headed the AOL Anywhere initiative.

Weil is to return later in the year in an unspecified new role. Hook joined Time Warner in 1989 as a special advisor, then became chief operating officer of Time Warner Telecommunications. She left the company to work as a media and telecoms banker, but joined AOL in 2000 as a senior vice president of AOL Mobile.
Back to top

Monday 11th March

Samsung takes Pace place at NTL
AOL to invest in European cable
Kirch demise lifts ProSieben shares
ZDF head appointed

Samsung takes Pace place at NTL

Korean set top box manufacturer Samsung has signed an estimated £30 million (E49 million) box supply deal with indebted UK cableco NTL, following UK supplier Pace Microtechnology cancelling delivery of 300,000 boxes due to inability to get credit insurance.

Pace saw its shares crumble by two thirds in a day last week when it gave its third profit warning, saying sales would be £150 million (E244 million) short of expectations. Now there are fears reported in the Independent on Sunday that Samsung could become NTL's sole supplier - NTL accounts for some 30 per cent of Pace sales. KS Lee, Vice President of Samsung's Networking Division was reported by the IOS as saying, "We view this initial contract as the start of a very important long-term relationship between Samsung and NTL."

NTL is adding subscribers at the rate of about 190,000 per quarter, and last took delivery of 200,000 boxes from Pace at the end of last year, hence needs to re-stock now.

Pace had halted manufacture of another order for NTL to prevent stock build-up.

Inevitably, there is now speculation about Pace's other main customers - who include the struggling digital terrestrial service ITV Digital, and the other UK cableco, not quite as deeply indebted as NTL - Telewest. Telewest has said it has not plans to switch STB suppliers. Of more concern for the future, Pace says it now expects to ship 200,000 boxes to the US, not the 500,000 estimated earlier. The US is very much seen as the driver of future growth for the company.

Back to top

Asked about Germany, he said that the authorities had effectively closed the market by blocking Liberty Media from acquiring the cable activities of Deutsche Telekom. For the time being the German market is neither open nor competitive, so AOL is looking to cable options in the UK, France and other Euroepan countries.

Case also said that the group is planning to expand the proportion of its income from international activity from the current 20 per cent to 50 per cent during the next ten years by internal growth and acquisition. He admitted that the group had fallen short of its targets recently, which he attributed to the downturn in the advertising market in 2001.

The group will make the most of increasing and innovative synergy over the next ten years, such as music not only on the Hi-Fi, but also via mobile phone, PC or TV.

In Berlin over the weekend AOL Time Warner played down any talk that it could get involved in a break up of Kirch, as shares its ProSiebenSat1 jumped on hopes of a US saviour.

Back to top

For the very latest news go to Home Page ............