NEWS Monday 25th March- Wednesday 3rd April 2002

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Easter Break News Thursday 28th March to Wednesday 3rd April

ITV Digital in administration
CNN reenters Scandinavia
Tandberg upgrades Kingston iTV
Liberate counter-sues OpenTV
UPC delays results
AOL/TW seeks growth incentives
Bertelsmann reports profit
Oxygen cuts costs
Kirch negotiations continue

ITV Digital in administration

ITV Digital owners Carlton Communications and Granada are applying to appoint administrators at the loss making digital terrestrial operation in a bid to stave off bankruptcy following failure to renegotiate a £315 million (E513 million) soccer broadcast rights deal with the Football League.

Administrators, Deloitte & Touche, will be reviewing this and other contracts with third party suppliers to prolong broadcasting - or put the business into liquidation despite £800 million (E1.3 billion) of investment in the venture.

Should ITV Digital be liquidated, its digital TV licences would be returned to the regulator for re-award to an alternate bidder - if any could be found.

The UK government wants its DTT spectrum to be run by a commercial operation, to compete with BSkyB, and despite its desire to promote DTT, the government's culture secretary Tessa Jowell has told the BBC it could not expect to run the platform.

Creditors, led by the Football League, will have the biggest claim on ITV Digital's assets, according to insolvency experts, followed by BSkyB, the BBC and Telewest, the cable operator, as well as Carlton and Granada in their capacity as channel providers.

*Earlier the troubled operator found itself in the unusual position of BSkyB offering its sport and movie channels at a reduced rate.

ITV Digital's shareholders, Carlton and Granada, had said they are ready to put the business into administration within days if they cannot reach an agreement with the football league to reduce the amount they pay for soccer rights. Despite the tough stance taken by both sides, with the League rejecting a £50 million (E82 million) offer outright and threatening a £500 million (E820 million) damages claim, it had been thought by many industry observers that a solution would be reached.

In addition to the loss of £60 million (E98 million) in annual programme sales, BSkyB's offer could also reflect fears that if there were no DTT platform it would face tougher regulation, including during this summer's investigation by the UK office of fair trading over the way it wholesales its channels. Also, even if the soccer issue is resolved, ITV Digital is no longer seen as a major threat to BSkyB and is expected to have a much reduced offering following any restructure.
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CNN reenters Scandinavia

Ted Turner's news channel CNN is working on a major come-back in Scandinavia, where has recently been losing ground, particularly on the Internet side. Both in Sweden and Norway the national web news sites were closed during the course of 2001, as various partners pulled out. But now CNN is planning a major come-back, primarily aiming at Sweden and Norway.

According to the MD of CNN Northern Europe, Arthur Bastings, CNN is now looking at introducing a service in Scandinavia, similar to those already operating in Spain, Turkey and Germany, ie services focused on news in the national language.

"Even if the Scandinavian countries are comparatively small, we have taken a vanguard position when it comes to using the television medium in new ways, specially with regard to interactivity," Sven Irving, head of news at TV4 - the assumed partner in Sweden - comments. "In addition, there is a culture in Scandinavia which makes it easier to adopt anglo-saxon channels. Unlike most continental European countries, we do not dub. Our audiences are used to subtitling. For us English is a 'natural language', so we would obviously be able to use most of CNN's original material," Irving continues.

In Sweden CNN already has an established relationship with TV4. Since last year TV4 has been using the CNN Europe feeds on one of its two DTT channels, and the management of the station has spoken in public several times over the last year about its plans to use its two DTT licences for one news-oriented channel and one channel focused on sports and games. Arthur Hastings now confirms that CNN wants to increase the national content in its Swedish feeds, with both Swedish presenters and a greater concentration on Swedish news. Apparently the new CNN Scandinavian service will be based in Stockholm.

Hasting is still very secretive about who the Norwegian partner will be, "But we are certainly aiming high, seeking the best partner(s) available. In Norway we have already had conversations with a number of potential, high level partners."
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Tandberg upgrades Kingston iTV

Tandberg Television is to upgrade the broadcast television system at Kingston interactive, part of the UK Kingston Communications Group.

Under a contract whose value has not been disclosed, the two will work together to implement the iTTV Delivery Platform, designed and developed by Tandberg Television, to upgrade Kingston interactive's facilties. It is designed to control the balance between higher quality video for end users and the management of bandwidth utilisation, to deliver optimal quality across Kingston's broadband television service - KIT.

"We believe that in order to attract and satisfy subscribers we need to deliver a broadband television service that has as good a quality picture, if not better, than traditional terrestrial television. At the same time, like many other operators, we need to manage our use of valuable bandwidth to best commercial advantage. By upgrading to the Tandberg Television head-end solution and adding bit-rate changers we are able to achieve this balance more efficiently than before," says Alf Davie, head of strategic development for the KIT platform.

Tandberg notes that with most of the world's TV programming readily available in MPEG-2, effective MPEG-2 digital turnaround and management is important to KIT as it is essential to include television that meets consumer quality expectations within the broadband triple play mix of high-speed internet, telephony and television. Tandberg says its iTTV Delivery Platform enables the complete management of MPEG-2 video over the KIT network. The system includes encoding, multiplexing and bit-rate changing solutions that enable the flexible input from satellite of MPEG-2 materials. These materials are then decoded, converted from DVB format to an IP stream and re-encoded for onward transmission over the ADSL network. Alternatively, programme feeds can be passed through the bit-rate changer where the outgoing bit-rate is changed without going through decoding and re-encoding. The output of the bit-rate changer is then converted to an IP stream.

"In addition to providing the technology for this upgrade, our systems integration and customer support teams are working closely with KIT engineers to ensure that our solution is able to deliver real business and technology benefits immediately," says Gwyn Pugh, President and CEO of Tandberg Television.

During NAB 2002, Tandberg Television will promote its Broadband Direct to Home (DTH) market offering with the launch of its iTTV Concept range of packaged trial and commercial deployment systems for broadband xDSL and FTTH (Fibre to the Home) operators. The company is launching two new systems that provide a totally integrated package for rapid deployment and operational cost-effectiveness:

iTTV Delivery Platform - a carrier class system for xDSL and FTTH networks, which supports the delivery of television and video on demand services over both IP and ATM.

iTTV Pilot - a broadband in a box fully functioning head-end solution for xDSL and FTTH trials which includes all the components required to launch a technical TVoIP trial. Suitable for telcos, broadcasters and utility companies that want to test the effectiveness and possibilities of TV over IP
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Liberate counter-sues OpenTV

Set top box middleware provider Liberate Technologies has filed a countersuit against rival software company OpenTV, alleging that it has violated several crucial patents on interactive television (iTV) technologies, following February's OpenTV suit against Liberate for allegedly infringing two of its patents.

Liberate's claim against OpenTV is reported by europemedia to consist of infringements by the latter of four patents related to addressable multimedia presentations, iTV transactions, data multiplexing and streaming and management systems.

Kent Walker, Liberate's senior vice president for corporate and legal affairs is cited as saying, "While we have previously not asserted our patent portfolio against other companies, we view this countersuit as a measured and necessary response to OpenTV's resort to litigation."

In addition, Liberate denied OpenTV's allegations of infringement, claiming the patents were both invalid "in view of prior art," and that OpenTV's membership in industry standards bodies limited its ability to assert those particular patents.

Jesse Berg, OpenTV's general counsel is reported to have responded that OpenTV has, "Not yet reviewed the substance of today's counterclaims in detail. However, we have no reason to believe that OpenTV infringes the patents cited."
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UPC delays results

Netherlands-based cable company United Pan-Europe Communications has postponed issuing its Q4 full year results until the beginning of next week, rather than yesterday (27/3/02) as planned, but has not issued reasons for the move.

UPC is currently restructuring its E9 billion ($7.9 billion) debt in a plan which would see E6.5 billion of debt and convertible preference shares swapped for new equity by United GlobalCom, its US owner and largest single creditor.

However people close to the company said the issues were unrelated. "This is a purely technical matter related to putting the numbers together," said one. "The restructuring negotiations [with bondholders] are on track."

As recently as Friday UPC had said the numbers would be released on time. It was unclear what "technical" issue prompted the late decision to delay, but a person following events closely said it reflected the "complexities" of making a filing with the US Securities and Exchange Commission. "It's not every day you restructure a company," he said.

UPC suspended operational and financial guidance when it began bondholder negotiations in February. It also gave its headline year-end numbers at that stage. Consequently, its results had been considered unlikely to contain surprises.

Last month it said it had revenues for 2001 of E1.2 billion in its core business, consolidated capital expenditure within E950 million and made a loss before interest tax, amortisation and depreciation of E185 million to E195 million.

Dutch telecoms regulator Opta has ruled that Amsterdam cable provider UPC selectively favoured its own pay-TV services over those of Canal Plus - which is consequently exempted from paying some E2 million in transmission fees.
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AOL/TW seeks growth incentives

If the dot-com/new media mania reached its zenith with the January 2000 $181-billion (E207 billion) AOL Time Warner merger, then the subsequent $54-billion (E62 billion)charge for loss of goodwill could well be the nadir, as the forecast "synergies" have clearly not materialised.

Double-digit annual growth was forecast. In fact AOL's on-line unit operating income is now expected to grow by just 10 per cent this year. Overall revenues for the year should grow by five per cent to eight per cent, and operating cash flow by eight per cent to 12 per cent - but investors are still paying 25 times earnings.

In a bid to incentivise growth in the coming year, AOL Time Warner Inc has given its top executives share options - with share price down 30 per cent in 2001- instead of annual bonuses, describing them as an incentive to stimulate growth.

"As a result of this structure, all of the performance-based compensation for these executive officers is solely dependent on future stock performance," AOL said in a proxy filed with the US Securities and Exchange Commission.

In its first year as a combined entity Chairman Stephen Case - former CEO at America Online - and Chief Executive Gerald Levin -former CEO at Time Warner - each received a salary of $1 million (E1.14 million) and options to buy four million shares.

Co-Chief Operating Officers Richard Parsons and Robert Pittman each received 3.5 million stock options. Parsons is to replace Levin as CEO after the annual shareholder meeting May 22 in New York.

The value of options for Case and Levin are valued at $76 million (E87 million) each based on the dates they were granted and $66.6 million (E763 million) each for Parson and Pittman.

In 2001, Case exercised options on 2.7 million shares, realising a value of $127.3 million (E146 million). He had more than 18.2 million exercisable options at the end of 2001.

Further evidence of the failure of the merger to deliver on its promise is that AOL Europe has lost $600 million (E687 million) in 2001, almost as much as its annual revenues, and has over $1.3 billion (E1.5 billion) in debt and preferred securities. Earlier this year, AOL bought Bertelsmann AG's stake in the venture for $6.75 billion (E7.7 billion) in cash, stretching AOL's credit lines to their limit, and adding to its $23 billion (E26.3 billion) in debt.
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Bertelsmann reports profit

AOL may be suffering from the price it paid for Bertelsmann's stake in AOL Europe, the E2.2 billion payment provided a boost for Bertelsmann which reported a net profit for its truncated 2001 fiscal year on Tuesday (26/3/02) with earnings for 2002 forecast to exceed the previous full year.

In the second half of 2001 the company posted net profit of E931 million, helped by its strategy of focusing on becoming a media content provider, selling its AOL Europe share and other holdings.

Bertelsmann reported a net profit of E968 million for the previous full fiscal year, which ended last June, forecast to be exceeded this year

Bertelsmann is switching to a calendar year in preparation for a possible stock exchange offering. Revenues were E9.7 billion in the six month period and ebitda earnings were E1.7 billion.

Bertelsmann's divisional ebitda was E212 million excluding one-time gains and the company's Internet business.
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Oxygen cuts costs

Loss-making UK Internet and cable television company Oxygen Media has cut 20 jobs and reduced its sports programming as it reviews its overall strategy.

The female targeted venture is to reduce sports programming from 31 to some 14 events a year, including tennis and golf, with one sports special a month.

Reuters reports that Oxygen plans to pursue, "high-profile" events as broadcast rights become available. "Our sports strategy is evolving. We are focusing on fewer but higher profile events ... With fewer events, we have made some reductions in the sports staff on the production side to meet that change in our strategy," spokesman Mike Wade was reported as saying.

Oxygen aims to be available in 44 million homes at the end of the year.
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Kirch negotiations continue

Leo Kirch is reported to be seeking a share of the 2006 World Cup rights in return for relinquishing control of Kirch Media as part of a E800 million rescue bid by creditors and investors.

Kirch bought the international rights to the World Cup finals for 2002 and 2006 for 2.8 billion Swiss francs (E1.92 billion) from the soccer organisation FIFA five years ago and says he has already recouped the outlay with half the 2006 contracts yet to be allocated.

Kirch is reportedly seeking 70 per cent of the revenue from the broadcast rights to the 2006 tournament sold to German-language broadcasters as well as a commission for the global rights.

Advisers to media mogul Rupert Murdoch, Italian premier Silvio Berlusconi and other investors have been negotiating this week with creditors to conclude a deal entailing a cash injection of some E800 million in return for control of Kirch Media. The investors have been told that without their support, the company will file for bankruptcy. KirchMedia needs an immediate E150 million to E250 million bank loan to avoid insolvency.

Kirch and his family's 79 per cent stake in the company could fall to 14 per cent - which would be pledged to the banks; creditor banks would get a third of the company and minority investors the remainder.
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Wednesday 27th March

Murdoch to get KirchMedia?
ITV Digital lingers longer
French DTT applicants
Austar secures its $200 m debt
VOD contract awarded
Liberate reaches 2.8 m

Murdoch to get KirchMedia?

Rupert Murdoch's NewsCorp, along with other investors, look set to take the majority share of Kirch Media AG, the central part of Leo Kirch's German media conglomerate KirchGroup. Other investors include Silvio Berlusconi's Mediaset and Fininvest; the private equity arm of Lehman Brothers; and Prince al Waleed's Kingdom Holdings, which together control 12.2 per cent of KirchMedia - plus the banks which include Bayerische Landesbank, Commerzbank, DZ-Bank and Hypo- Vereinsbank, represent a joint E3 billion in Kirch loans.

The search by German creditors for a solution to the Group's financial crisis resulted in this weekend's talks between creditor banks and KirchGroup officials making such a move almost inevitable. It was leaked yesterday (25/3/02) that Kirch had finally agreed to give up 60 per cent of his profitable Kirch Media venture and its 52 per cent in the commercial free TV holding ProSiebenSat.1 Media AG, for a bridging credit of up to E800 million - a move expected to happen this week. Kirch Media assets include five terrestrial television channels and the TV rights to the football Bundesliga and the next two world cups.

This new credit also secures the existence of the loss-making digital platform Premiere until September. But in October an E1.7 billion payment is due to BSkyB which is exercising its option to back out of Premiere World. With Murdoch as major Kirch Media shareholder, the end of Kirch Gruppe appears close, with Leo Kirch about to step down from the empire he created.

Dieter Hahn, Kirch Gruppe's managing director and his designated successor would consequently be forced to resign.

Another result is the de facto foreign takeover of ProSiebenSAT.1 Germany's biggest TV broadcaster, which is 52 per cent owned by KirchMedia - though negotiators emphasise that none of the foreign investors will have an outright majority in KirchMedia. This is because, despite Germany's theoretical stance of allowing foreign media ownership, previous actual moves - such as US media guru John Malone's failed move to buy Deutsche Telekom's cable network - have been blocked and political concern has already been voiced about ProSiebenSAT.1 being foreign owned. Chancellor Gerhard Schroder was reported to have thought a "national solution" to Kirch's problems would be preferable - though the government "did not want to put off" foreign investors.
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ITV Digital lingers longer

UK digital terrestrial platform ITV Digital is pursuing negotiations with the Football League over its E512.7 million broadcasting rights contract. While the UK government insists that the dispute is a purely commercial matter, it has a vested interest in ensuring DTT does not fail as a platform, and Richard Caborn, the Sports Minister, offered to act as an intermediary in any negotiations.

One factor in the decision not to wind up the loss making service was City estimates that the cost of closure could reach E651 million. JP Morgan calculated that it would cost E325.5 million to close the ITV Digital platform and E325.5 million to close the ITV Sport channel. Refunding of some 300,000 customers with pre-paid packages is put at E48.4 million - and the reputation of ITV's brand would also be harmed by a protracted legal dispute with the Football League.

Carlton's shares fell 231/2p to close at 2621/2p, and Granada's fell 81/2p to 1381/4p - wiping out gains made when it had been expected that ITV Digital's closure would happen, and cost just E80.8 million.

In addition, if ITV Digital fails to maintain the service, it is liable to a financial penalty of up to three per cent of revenues - which are expected to reach E418.2 million this year.

The League has threatened to sue Granada and Carlton for up to E808 million.
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French DTT applicants

Below is the full list of applications filed with the CSA for French DTT (digital terrestrial television) licences (see report, advanced-television.com news archive Monday 25/3/02).

Applications have been received from the following media groups:

AB Groupe: a leading French production company, which already supplies a range of 18 channels to cable and satellite operators. All of the group's DTT applications are for completely new channels, with the exception of the general entertainment channel RTL9, which leads the ratings for cable/satellite specific channels.

Domino (leisure channel, free), Mix (music channel, free), Neo (young adults, free), DT1 (entertainment, free), Post (culture, free), Tooka (children's, free), AB1 (entertainment, pay), RTL9 (general, pay), Jules TV (modern man, including X-rated at night, pay), Terra Nova (environment, pay).

Amaury Groupe: Publisher of the sports daily newspaper L'Equipe, has applied for its Equipe TV channel, which is already present on cable and satellite (sports news, pay).

Disney: Disney has filed for its Fox Kids channel, already present on cable and satellite (pay).

France Television: The public sector broadcaster has applied for two pay channels, already present on cable and TPS satellite platform, to complement the eight free channels it has already been allocated: Festival and Histoire (evening pay channels).

Canal + Groupe: all projects for pay channels; all are already present on cable and satellite: 13e Rue, Canal Plus and Canal Plus Jaune (multiplixes of premium channel), i-Television (news), Sport + (channel formed by acquisition of Pathe Sport).

Lagardere: Media group, a shareholder in channel supplier Multithematiques, has applied for four channels, of which two (Maison H and Nature TV) are new: MCM (music, free), Maison H (lifestyle, pay), Match TV (people, pay), Nature TV (pay).

M6-Suez: Terrestrial commercial broadcaster has applied for a selection of its existing cable/satellite channels, in addition to the simulcast of its terrestrial channel. It has specified M6Music as its 'bonus' channel. M6 (simulcast, free), Club Teleachat (shopping, free), M6 Music (free), Fun TV (youth, pay), Paris Premiere (pay), Teva (feminine, pay).

Pathe: Media group: TMC (free), Commedie (pay), Cuisine TV (pay), Voyage (pay).

TF1: Leading French commercial terrestrial broadcaster whose president has been a strongly outspoken critic of the DTT project, has nevertheless applied for a number of channels: TF1 (simulcast channel), Shopping Avenue (free), Eurosport France (pay), LCI (news, pay), Odyssee (documentaries, pay), TV Breizh (Bretton, pay).

TPS: Satellite platform, has filed for a number of its existing channels: Cinefaz (classic movies, pay), Cinetoile (movies, pay), TPS Star (movies and sport, pay), Teletoon (children's, pay).

Applications from consortia

Canal+, Liberty Media, Lagardere: Cinecinemas (movie channel, currently on Canal Satellite and cable; pay); Planete (documentary channel, currently on Canal Satellite and cable, pay).

TF1 and M6: TF6, entertainment for the 15-35 age group, currently on TPS and cable, pay.

MTV, Game One, Cine Info: TOA, new channel.

Applications from independent suppliers:

Equidia, horse racing channel already on cable and satellite. The proposal includes placing bets via the decoder.

KTO: Catholic channel, already free to air on satellite.

Tele Generation: new channel.

Tele Senior: based on existing Tele Melodie and Tele Films channels.

TFJ: Jewish community channel, already on TPS and cable.

TVST: channel for the hearing impaired. All programmes are subtitled (teletext subtitling in France is half-hearted to say the least, and suppressed on the satellite versions) along with magazine programmes. Already present on Canal Satellite. Pay.

Zalea TV: freedom of information militant TV. Viewers will be required to pay a moderate contribution to its running costs.

Applications from groups new to TV

Bollore: Direct 8, free general entertainment channel, specialising in live broadcasts.

Jean-Luc Azoulay: production company, DO TV, children's channel.

NRJ: radio station, My NRJ, free music channel for 11- 35 age group; NRJ-TV, semi-general entertainment, semi music.

Other applications

Alliance TV

At Sky: a selection of web content for downloading onto PC hard discs and viewing off line. Already offers a similar service free via satellite.

Cinaps
e-Vision
Everyday TV
Ici TV
Infoturf TV
Privilege TV
Sun TV
Guide TV an electronic programme guide.
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Austar secures its $200 m debt

Australian pay TV platform Austar United Communications (Austar) has completed the renegotiation of its $200 million (E228 million) debt facility in a development that will remove long-standing financial pressures from the company.

Austar had breached the covenants on its loans with a syndicate of banks on December 31 when it failed to re-structure the loans, despite months of negotiations. But further talks have led to this week's agreement under which Austar has until 2006 to pay back its loans, and allowing some liquidity to pursue its plans to offer digital interactive services to all of its 460,000 subscribers.

Under the deal, Austar expanded the security of the syndicate members beyond the core pay TV business and now also includes its assets like the TelstraSaturn joint venture in New Zealand, the XYZ programming joint venture with market-leading pay TV provider Foxtel and E57 million in cash.

Parent company, UnitedGlobalCom, has set up a E34.2 million buffer account as part of a plan to secure the support of the banks. This will be used as a last resort if Austar cannot fund its business plan from existing sources.
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VOD contract awarded

Time Warner Cable (TWC) in the US, a division of AOL Time Warner, plans to deploy nCUBE Corporation VOD products in seven additional markets in the United States.

TWC uses nCUBE technology in its Los Angeles division and now plans further video on demand trials in sections of its 12.8 million nationwide subscribers,

Companies using nCube systems or products include AT&T Broadband, Charter Communications, Gemstar-TV Guide, Kingston Communications, Liberate Technologies, Motorola, OpenTV and Scientific-Atlanta.

Michael Pohl, President and Chief Executive Officer of nCUBE Corporation says that as digital penetration and available content increases, the on-demand services landscape will continue to evolve and, "VOD will become the portal to a new era of television where everything, from prime-time programming to games and weather, will be available on-demand."
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Liberate reaches 2.8 m

Liberate Technologies says it has deployed its interactive TV software to nearly three million set top boxes.

Approximately 2.8 million cumulative deployments had been achieved by February 28 this year. UPC launched Liberate's new interactive digital television offering to subscribers in Norway and Sweden. Omne Communications, the third-largest cable network operator in the UK has also commercially launched a service based on Liberate TV Platform software.

Liberate says it expects to achieve profitability on a pro forma basis sometime during the first half of its fiscal year 2003. For the remaining three-month period of Liberate's fiscal year, which ends May 31, the company said it anticipates generating pro forma revenues in the range of E101.7 million to E102.3 million, and a pro forma basic net loss per share in the range of 25 cents to 26 cents.
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Tuesday 26th March

Kirch debt plan discussed
Telstra TV expansion OK'd
Extreme/Einstein cooperate
Yes TV content deals
Results this week at NTL, UPC

Kirch debt plan discussed

German banks and representatives of News Corp Chief Rupert Murdoch, and the Italian prime minister and Mediaset owner Silvio Berlusconi, have been discussing plans to salvage the Kirch Gruppe - but reportedly without founder Leo Kirch. Plans drawn up by four German banks with more than E3 billion ($2.7 billion) in loans to film rights and free-TV business KirchMedia, would reduce Leo Kirch's personal stake to a minority shareholding. Kirch currently has a 72 per cent stake in KirchMedia.

The four creditor banks were believed to be asking minority investors Berlusconi's Fininvest and Mediaset and Murdoch's News Corporation to approve an E800m capital increase that is essential to keep KirchMedia afloat.

Other minority investors at the meeting, representing a 12 per cent holding, were reported to include the private equity arm of Wall Street investment bank Lehman Brothers, and Saudi prince Al Waleed's Kingdom Holdings. They were told that without a significant capital injection, KirchMedia would be declared insolvent this week. According to a report in the Sueddeutsche Zeitung newspaper, the banks' cash injection would allow Kirch to stay in business for about six months.

The banks backing the plan are DZ Bank and Commerzbank as well as Bavaria's HypoVereinsbank and Bayerische Landesbank.

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Telstra TV expansion OK'd

Ziggy Switkowski, Chief Executive at Telstra - Australia's largest teleco - has proposed buying a major media company, expected to be a free-to-air TV station, and Richard Alston, the Communications Minister said on Sunday (24/3/01) the government would not necessarily prevent such a move.

Nonetheless, while giving the OK in principle, Alston said the proposal did raise major competition issues which would need to be addressed.

The government, as both the reluctant majority owner of Telstra and the regulator, could already be described as having a conflict of interest.

Alston said the government would want to ensure there was real competition between media outlets. "But beyond that we don't have to get involved in the commercial day-to-day operations of telephone companies or anyone else these days. We have not exercised our rights in that way."

Kerry Packer's Channel Nine has also been cited as a potential acquisition.

Expansion by Telstra into the media sector has been considered by the Australian Competition and Consumer Commission (ACCC) meeting to discuss the Foxtel/Optus deal this week. However, ACCC Chairman Allan Fels reportedly made it clear that cross-media rules would not restrict Telstra.

The ACCC is meeting representatives of Seven Network, Hutchison Telecommunications, Vodafone and Austar to establish the implications of the radical pay TV deal struck three weeks ago. The ACCC also expects to get a formal submission this week from Foxtel and Optus detailing their agreement.

Rival metropolitan operators Foxtel and Optus agreed to share programming, while Telstra, a 50 per cent-owner of Foxtel, has also been granted the right by the other Foxtel shareholders, News Ltd and Publishing & Broadcasting Ltd, to sell cheap packages of pay TV, telephony and Internet services.

The fears are that Telstra, via its Foxtel links, could potentially monopolise content for future services, including interactive TV and 3G mobile.

Teleco carriers are concerned that they will be unable to match the telephony and Internet prices offered by Telstra as part of its pay TV bundles. Also, media and teleco players are expected to seek guarantees from the ACCC that the Foxtel/Optus deal will not restrict access to content and infrastructure.

Foxtel shareholders and Optus are to decide on the deal by the end of May.
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Yes TV content deals

Broadband TV solutions provider Yes TV, which launched its commercial trial in Hong Kong last month, has reached agreements with major global content suppliers including Asia Television Limited (ATV) from Hong Kong, BBC Worldwide from the United Kingdom and Channel NewsAsia from Singapore's MediaCorp Group.

"The co-operation with these major suppliers signifies a long term relationship for the exploration of programme titles for our video-on-demand service," said Lanny Huang, President of Yes TV, adding, "Furthermore, Yes TVC's channel capacity and multi-media capability will provide a unique interactive platform for the outstanding content provided by these suppliers."

ATV, which is strong in local entertainment and drama, news and current affairs, will provide current affairs programmes for Yes News after the live broadcast of the programmes on ATV.

BBC Worldwide brings to Yes TV's VOD channels the strength of the BBC's global reputation for quality programming across the genres - factual, children, light entertainment and drama. Yes TV subscribers can pause, fast forward and rewind to capture programme details.

Channel NewsAsia, which belongs to the MediaCorp Group in Singapore, has several current affairs programmes on Asia including 24 Hours in 24 Minutes covering South Korea, India, Vietnam, Japan and Australia. Channel NewsAsia is an English News and Information channel providing a view of the World from an Asian perspective.

"By co-operating with these credible content suppliers, we will be able to bring a new and exciting television experience to our customers who can explore more the multi-media content and interactivity of Yes TV," added Huang.

Peter Kwan, Senior Vice President of ATV said, "I am very delighted to enter this meaningful partnership with Yes TV. By providing Yes TV with some of ATV's strongest programmes, ATV further enhances Hong Kong viewers' choices and helps in promoting Hong Kong as one of the leading centres of interactive entertainment in the region."

John Neill, General Manager, BBC Worldwide Asia comments, "We are delighted to be building further upon the relationship we already have with Yes TV in the UK. This new agreement reflects our commitment to interactive television services and our desire to become a major player in this growing market."

Lawrence Chia, Regional Director of Channel NewsAsia, said, " With our network of coverage of the region, we are very pleased to be able to share our programmes with Yes TV and help viewers make sense of developments in Asia, and indeed, all parts of the globe."
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Results this week at NTL, UPC

The vastly indebted Eurpean cablecos NTL and UPC, are both reporting full-year results this week with no major restructuring plan expected t to be announced prior to results being issued.

Plans by the two to swap high-yield debt - which totals more than $11 billion at NTL and E7.5 billion at UPC - for new equity are are reportedly delayed, with NTL senior bondholders not agreed whether to accept new shares only or a mixture of shares and new debt in exchange for their bonds.

Liberty Media and AOL Time-Warner are seen as the most likely new investors in NTL, though any such move is put as 'several months away. It would also take at least three months to complete any restructuring at UPC - helped by Liberty Media beign both a leading bondholder and a lender.

Financial figures are due from both on Wednesday. NTL and UPC are expected to meet their respective full-year ebitda targets of £485 million profits and E185-E195 million losses.

There is also pressure on UK No2 cableco Telewest to restructure as a report by Merill Lynch, Telewest's joint company broker suggests that after a restructuring, current shareholders could be left with about 15 to 16 per cent of Telewest, compared with less than five per cent at NTL and UPC.

Monday 25th March

French file 69 DTT projects
UK digital terrestrial demise?
ITV Digital's £500 m law suit
Single Chinese cable network

French file 69 DTT projects

Applications for a total of 69 channels were filed with France's CSA by the Friday (22 March) 5 pm deadline for DTT projects in France. Some 55 projects were from existing operators and 14 from new players. Seven of the 55 were from independent operators, the other 48 from a total of 10 media groups. A total of 26 projected channels are completely new, the remainder being already present on cable or satellite.

There is also one application for an electronic programme guide. French DTT will carry a total of 33 channels. The eight channels for the public sector have already been attributed - four to simulcast the analogue France 2, France 3, France 5, Arte; the parliamentary channel, a regional channel (in eight variations), a news channel, and a replay channel. Applications for the capacity on three local channels have yet to be made.

The three private sector incumbents are each attributed one channel of simulcast and one 'bonus' channel to use as they wish. So, the present call concerns just 19 channels, since the 'bonus' channels are included in the applications. The CSA will now consider the applications and hold public hearings of the candidates over the next four months. Between 13 and 18 channels of the final line up will be pay channels, the remainder free.
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UK digital terrestrial demise?

The UK government is keen to ensure the survival of the digital terrestrial television (DTT) platform as part of its 'Broadband Britain' strategy, and is calling on the BBC to play a more supportive role in the restructuring of DTT company ITV Digital. The establishment of a "digital coalition" between the main UK terrestrial broadcasters, ITV and the BBC is subsequently being discussed this week, intended to culminate in the formation of 'freeco'.

BBC involvement development and promotion of a low cost set-top box for free digital TV services is seen as a crucial factor in the survival of ITV Digital - whose owners (Granada and Carlton Communications) are already threatening closure of the platform if they are unable to re-negotiate their deal with the Football League (see below).

A low cost box would allow ITV Digital to cease set-top box subsidies - currently given away free - which would transform the platform's economics.

If the service collapsed, it would be uneconomic to collect set top boxes from former subscribers, so they could be expected to continue to be able to get 12 or so free-to-air digital channels, without paying for a pay-TV service.
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ITV Digital's £500 m law suit

ITV Digital's problems worsened over the weekend with the threat of being sued for £500 million (E814 million) when damages are added to the original £178 million (E290 million) UK Football league contract which ITV Digital wants to renegotiate downwards.

Keith Harris, Chairman of the UK's Football League has said over the weekend that he is convinced there is a case to sue both ITV Digital owners Carlton and Granada for up to £500 million (E814 million). They in turn respond that the league never requested guarantees from Granada and Carlton that the money would be paid.

The £178 million (E290 million) owed - and demanded - under the remaining two years of the agreed contract with ITV Digital would be boosted by more than £300 million (E488 million)in what the League says are lost revenues if matches are no longer broadcast.

The clubs have commercial contracts, such as shirt sponsorships, linked to its number of TV appearances. The League will seek the additional funds to compensate its clubs if ITV Digital closes and these TV appearances do not materialise.

ITV Digital had offered just £50 million (E81 million) for the remaining two years.

The ITV board is meeting today to discuss the issue, while also looking at appointing Deloitte & Touche as administrator if talks collapse.

ITV Digital's board says it is willing to offer the league a new extended contract stretching beyond 2004 which would also give the league a share in the profits of ITV Digital once the broadcaster claws itself out of the red. But the Football League is reported to have ruled out any profit-sharing deal.

*BSkyB is reported to have prepared itself should the company collapse, and has drawn up a plan to convert the premium viewers among ITV Digital's 1.2 million subscribers - those signed up for Sky's movie and sports channels. Sky could also reduce the price it pays for the Premier League rights when that contract is renewed - which would hit player wages.

Many commentators echo the view that the TV companies have been on to a loser with ITV Digital ever since the regulators stopped BSkyB being a partner. That could change following the proposed new Media Ownership Bill which would prevent Murdoch buying into ITV or Channel 5 - but could potentially extend his digital pay-TV reach by allowing him to buy ITV Digital - at a knock down price.
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Single Chinese cable network

China has signalled that it will create a single cable TV network to administer the fragmented sector, according to a senior official with the regulatory body, the State Adminstration for Radio, Film and TV (SARFT).

SARFT's Chen Xiaoning, who has been named as the head of the China Cable Broadcasting Network, said the new body will seek to unify the country's provincial and municipal cable to TV systems that currently reach more than 90 million subscribers.

He was quoted as saying "Our plan is to offer value-added services on the unified platform on a revenue-sharing basis with regional players."

Currently Chinese cable TV subscribers pay between $1 and $2 a month. Chen said that the move will help in raise technical standards and programming quality. It is also another sign that China is actively working to bring its media sector as a whole much more closely under government scrutiny. The creation of the network follows the rollout of the China Radio, Film and Television Group that will bring together all state-run broadcast and visual media in December, and the announcement of the SinoSat platform that all overseas TV channel providers will be obliged to join to gain carriage.

SARFT said that the new body will be fully operational in three years.
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