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NEWS Monday
13th-Monday
20th May 2002
Scroll down page or click below for news - latest first
| Tuesday | |||||
Danish
media bill due
Netgem
ups funding E30m
Italian
merger in dispute
Springer
stakes up for grabs
Sun boosts SEC stake
BSkyB rejects OFT claims
Gemstar
Partners with Thomson
Inclined Capacity - What's It
worth?
Danish media bill due
TV2 is to be privatised, and a rapid introduction of DTT will be made, with the aim of switching off analogue transmissions as early as 2007 under Denmark's new major media bill from the Liberal-Conservative government elected last autumn.
The new media franchise will run from Autumn this year until the end of 2006. Denmark's traditional public service broadcaster, Danmarks Radio-TV, DR, will also be affected. Licence revenues will be frozen at today's level to increase competition, and a new rule is to be introduced to outsource 20 per cent of programme production to external independent producers.
Discussions on the future ownership status of TV2 have been going on for years, with a lot of dissatisfaction about the station's present status as a state-controlled foundation, financed by a mixture of advertising income and some of the licence fee revenues.
TV2 was launched in 1988 and successfully competed with DR-1 to become the country's most watched station; it also enjoys a public service status, which its management has been strongly defending.
TV2 has long argued against privatisation, but now TV2's MD, Christina Lage, comments that the government's published plans are "Something our station can live with." According to government spokesmen TV2 will first be transformed from a foundation to a state-owned company, then the plans are to turn TV2 into a private company as soon as possible.
Several interested customers are reported to be queuing up. These include Egmont, Denmark's leading media group, already a 33 per cent shareholder in Norwegian TV2 and a Major Nordic player in television production; its Norwegian rival Orkla, and the three major Danish morning newspapers, Berlingske, Politiken and Jyllands-Posten have announced their interest in entering the television business.
Denmark is now far behind its Nordic neighbours in relation to DTT, but the new government wants to change to that. A national network is to be established as soon as possible "To offer the whole population a wider choice of programmes and other new services." A 'platform operator' function - with no operating interests - is to be auctioned off, to run the new network on 'commercial lines.' DR and TV2 will each be given space for two channels, free of charge. The rest will be offered to other operators, conforming to Danish or EU specifications. Open standards are to be used, with no state subsidies will be allowed.
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Netgem ups funding E30m
Societe Generale is providing set top technology company Netgem with a E30 million facility to fund its commercial growth and take full advantage of the market potential offered by interactive digital television.
Netgem announced the capital increase facility through the exercise of warrants for a maximum value of E30 million reserved to Societe Generale, enabling Netgem to raise up to E30 million from Societe Generale. For a period of 24 months, Societe Generale undertakes to exercise all warrants that Netgem asks it to exercise, subject to certain terms and conditions. The subscription price will be based on the weighted average stock price over a reference period less a discount of 10 per cent. As financial intermediary, Societe Generale will then sell all shares thus acquired shortly following purchase.
"Netgem has indicated on several occasions that it considers it has sufficient funds to finance its growth. This additional cash is designed to allay market concerns relating to the impact of any delay in the rollout of digital television in Europe," stated Casey Slamani, Netgem's Senior Vice-President for Strategy & Legal Affairs. (Also see ATV Report, Privilege Pages May).
This method of funding gives the Company the flexibility to limit the equity dilution arising from exercising warrants to fractions of the E30 million and to choose the timing based on the most favourable market conditions. Netgem is entitled to limit the capital increase to a minimum of six million euros.
"Thanks to this facility and the quality of its technology, Netgem has the resources to launch and manage new multimedia broadband projects offered by the terrestrial interactive television market in many countries," Casey Slamani added.
This issue of warrants will be submitted to the combined shareholder general meeting planned for June 26, 2002. It also remains subject to approval by the Commission des Operations de Bourse by issue of the relevant prospectus.
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Italian merger in dispute
News Corp Chairman Rupert Murdoch said that his company intends to "enforce all of its rights" under the merger agreement between Vivendi Universal's Telepiu with News Corp's Stream following Vivendi's plan to pull out of the Italian deal.
Last December Vivendi CEO Jean Marie Messier agreed to pay around E430 million for Stream's business, pending approval from Italy's regulators, but it was always clear that the country's antitrust authority would impose strict limits on any pay-TV monopoly. Then on Wednesday (15/5/02) Vivendi said that it would seek to pull out of the merger due to the conditions imposed by the Italian antitrust authority, which would have incurred additional costs for Canal Plus.
News Corp says it has notified Vivendi and Telepiu that their rejection of the deal is contrary to the terms of the original merger agreement.
"Vivendi's current financial constraints are not valid reasons for failing to comply with the agreement," News Corp said.
This latest dispute comes on the back of the March move by Vivendi subsidiary Canal Plus filing a E1.1 billion suit against News Corp subsidiary, NDS, accusing it of stealing technology and encouraging piracy to undermine Vivendi's pay-TV businesses. Vivendi sold its remaining E2.7 billion stake in BSkyB earlier this week.
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Springer stakes up for grabs
Following the failure of a consortium led by Commerzbank AG to take-over Kirch Group's 40 per cent stake in the German publishing group Axel Springer AG, it is now likely that Deutsche Bank will win the prize.
The bank already has a stake securing a E750 million loan to Kirch. Deutsche Bank says it is willing to co-operate with the Springer group and its biggest shareholder, the publisher's widow Friede Springer, and says it is willing to float it on the stock market within a year. At its current capitalisation this would yield some E860 million though this may still not happen.
Other banks that backed Kirch when it acquired its stake in the Formula 1 marketing holding can pull their option by buying it from Deutsche Bank. In the meantime, Kirch's insolvent core business holding, Kirch Media, announced that it has appointed UBS Warburg as the only consultant to accompany the negotiations with potential financial investors. Supervisory board and insolvency administrators have already agreed to the appointment at the beginning of this month.
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Sun boosts SEC stake
Sun TV, the satellite-delivered channel focused on mainland China, has announced that will take a 60 per cent stake in the Satellite Entertainment Communications (SEC) group at a cost of nearly E6.6 million, according to news media in Beijing.
SEC is a joint venture between three Japanese TV channels and a Taiwanese businessman, Jerry Wu, while Sun TV is owned by controversial media tycoon Bruno Wu who will become chairman of the new entity. SEC's flagship is Jet TV which is carried by satellite networks in the US, Canada and Australia and aimed at ethnic Chinese communities. The channel is set to be rolled out in Malaysia, Thailand, Indonesia and the Philippines later in 2002; it can already been seen in Taiwan and Singapore.
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BSkyB rejects OFT claims
Satellite broadcaster BSkyB has made a submission to the UK Office of Fair Trading (OFT) rejecting claims that it acted anti-competitively and abused its dominant position as a provider of premium sport and film channels to rivals ITV Digital, NTL and Telewest - a charge which carries a penalty fine of up to 10 per cent of its turnover.
Despite renegotiating channel charges with complainants, which Sky says invalidates the OFT argument, the case is still expected to go ahead, with oral submissions also being made this month and any final decision not due to be made until Q3.
*Telecoms regulator Oftel has published new criteria for conditional access charges made by Sky, to be based on a broadcaster's advertising and subscription revenue, rather than the flat rate currently set by Sky.
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Gemstar Partners with Thomson
Henry Yuen, CEO and Chairman of Interactive program guide (IPG) technology company Gemstar says his company has agreed a deal with consumer electronics manufacturer Thomson multimedia covering licensing of its IPG for inclusion in Thomson products, including satellite TV and cable set-top boxes sold internationally.
Yuen said Gemstar has also agreed a joint venture with Nielsen Media Research.
Yuen also said that in relation to licensing agreements and its legal dispute with Scientific Atlanta, "accusations that we are not applying the correct accounting standards is unwarranted."
Gemstar also is suing EchoStar and Pioneer, claiming that the companies and Scientific Atlanta are infringing its IPG patents.
Gemstar reported first quarter consolidated EBITDA of E112 million, down from consolidated EBITDA of E132 million reported during the same period in 2001. The company reported a loss of E22 million for the first quarter, compared to a net loss of $135 million reported for the same period in 2001.
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Inclined Capacity - What's It worth?
The London Satellite Exchange reports that there is a growing availability of inclined capacity being offered for TV Contribution and Internet Backbones.
The London Satellite Exchange found there to be 60 transponders available over Europe, Middle East and Indian region. With prices starting as low as $350,000 (E385,000) per transponder, the LSE suggests that this would seem to be becoming an increasingly appealing option.
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TV4/Telia in cooperation |
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TV4/Telia in cooperation
Relations between TV4, Sweden's biggest TV station, and the country's leading telco, Telia, have become increasingly close. Now the two parties are taking another major step into what they call 'a strategic cooperation', based on programming, and focussing on digital, interactive and broadband services.
TV4 and Telia Internet Services issued a statement explaining the areas where the new liaison will first appear:
An agreement has been made whereby Telia's cable operating division Com.hem - the Swedish market leader with more than 1.3 households passed (a market share of some 65 per cent) is preparing distribution of TV4's projected new digital sports, games and news channel. The latter is a joint venture with CNN. Com.hem already carries TV4's latest venture, the digital interactive Mediteve service, which was launch some weeks ago.
TV4 and Telia are also preparing a merger of their respective web sites, with the ambition of creating Sweden's biggest media site. The parties have also agreed to enter a project to develop interactive television advertising.
A brand new programming concept, 'Position X' will be launched at the end of the upcoming summer. It's a five-day interactive game show, hosted by one of TV4's most popular personalities, Martin Timell, and based on mobile positioning technologies. 'Position X' is to be produced by Strix and be available to viewers both on TV4's digital services and on the Internet. Strix is the part of MTG that recently sold five per cent of its shares in TV4.
"It is vital for us to secure distribution of our new digital channels," Jan Scherman, MD of TV4, comments. "Together with Telia, we will reach a wide audience. And in the future we will also be able to offer our advertisers a plethora of options in the new digital world."
At Telia Indra Aasander, Head of Telia's Internet Services, states that, "In the future the difference between broadband and television will be negligible; together with TV4 we will be able to lead future development in this area."
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Microsoft exiting Telewest?
Microsoft, which owns 23.6 per cent of indebted UK number two cableco Telewest is withdrawing its three board members - Henry Vigil,Salman Ullah and Dennis Durkin - from its board with effect from Wednesday reports the BBC.
Microsoft issued a statement saying it believed it would be in a better position to manage its relationship with, and investment in, Telewest without board representation, adding that it was still considering selling Telewest shares or "engaging in possible strategic transactions involving Telewest."
Microsoft has appeared to be retreating from the Cable TV industry where, despite billions of dollars investment in US and European cablecos, it has failed to see extensive deployment of its set top box software.
Telewest is cutting 1,500 jobs Ì 14 per cent of the company's total workforce Ì in a £50 million per year cost cutting exercise to reduce its £5 billion in debts..
Telewest shares are down more than 98 per cent on their peak, to 8.6p, giving the company a market value of about £270 million, as investors remain unconvinced that Telewest will not follow the NTL route and restructure, to the detriment of shareholder value.
Given the relatively low value now put on the company, there is increased speculation that it will now merge with UK rival NTL, or be bought by major shareholder John Malone's Liberty Media.
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UPC reports core profit
Europe's biggest cableco, the indebted Amsterdam-based United Pan-European Communications, has issued a statement saying that its "back to basics" strategy of cost-cutting and focus on execution is beginning to bear results, with the company returning to profitability at the core level in the first quarter of 2002.
Prior to its financial restructure, the company reports that earnings before interest, tax, depreciation and amortisation have risen to E55 million in the three months to the end of March, compared with a loss of E61 million in the same period last year, and a E10 million loss in the fourth quarter.
Core performance has been helped by a rise in the average revenue per user, increasing from E11.48 in the first quarter of last year to E12.97 in Q1 this year. Revenues from multiple service users taking television, telephone and internet, increased 19 per cent to E310 million.
Total revenues grew four per cent to E346.4 million, compared with the year-ago period, while net losses fell to E492 million from E2.29 billion in the fourth quarter and E593.4 million last year.
The company's total liabilities were E11.3bn at the end of March following a buying spree of cable systems on the continent as the company led Europe-wide consolidation.
Restructuring plans led by the lead shareholder, John Malone's Liberty Media, entail an exchange some E6.5 billion in debt and convertible preference shares for fresh equity.
The company is in no immediate danger of a cash shortfall as it had E641.2 million in cash at the end of the first quarter, down from E855 million at the end of December 2001.
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BSkyB shares in demand
Although BSkyB's shares dropped 13p to 669p on Tuesday (14/5/02) when traders realised Deutsche Bank and Goldman Sachs were placing the 250m shares owned by French media group Vivendi they rose to 670p as the offer was five times oversubscribed, ending the day up 28.5 at 710p.
FTSE International, which calculates the value of indices, said that the placing (13 per cent of Sky's stock worth £1.7 billion based on the group's current share price) had increased the free-float of Sky shares available. As a result, it would raise BSkyB's weighting by half when it calculates the FTSE 100 from now on.
Deutsche and Goldman Sachs effectively bought Vivendi's 400m shares in BSkyB at 630p a share then sold 150m, with most of the higher price realised for the remaining 250m reported to be passed on to Vivendi. The European Commission had compelle Vivendi to sell its BSkyB stake after it bought film company Universal in 2000 via its merger with US media group Seagram.
Vivendi exchanged its 22 per cent stake in BSkyB with Deutsche Bank in September in exchange for a £2.5 billion loan.
Vivendi needed to use the banks to dispose of its holding in such a way that it could not be accused of using its shareholding in any anticompetitive way, nor of depressing BSkyB's share price.
Vivendi chairman Jean-Marie Messier will not be celebrating, as he had previously agreed to sell the stake when the BSkyB share price was £10.40, then decided not to proceed. Vivendi shares rose to close up five per cent at E31.41.
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ITV Digital parents sued
The UK's Football League has failed to reach an agreement with Carlton Communications and Granada, co-owners of ITV Digital, and so has begun a £500m damages case against them over their refusal to pay £178.5 million outstanding on the Nationwide soccer broadcasting contract, plus insisting that that sum must also be paid.
Carlton and Granada say that they did not sign adequate "parent company guarantees" and are therefore not liable, a stance which the League does not accept, responding that it has proof of their acceptance of liability.
The ITV Digital joint venture agreement states that any commitment of more than £10m would require the unanimous approval of the pay-TV company's owners, which John Verrill, a solicitor with Lawrence Graham, which is acting for the League, notes encompasses the deal with the Football League. In contrast Slaughter & May, who represent Carlton and Granada, say that they are certain the League had no case. In trenchant statements reminiscent of the earlier 'settlement offers' both sides are insisting that they are confident that they will win.
ITV Digital can only be sued once it is placed into liquidation. A spokeswoman for administrators, Deloitte & Touche, was reported as saying it could be "another few weeks" before this happens.
* It is estimated that the Nationwide soccer rights are now worth just £20 million a season, whereas ITV Digital had agreed to pay £105 million a year.
* On May 31 the ITC will release the names of potential buyers of the digital terrestrial licences. Those submitting full business plans after May 30 will have to provide a non-refundable £25,000 deposit if they want to proceed with a full application. It is estimated that any new owner would have to invest £50 m-£100m launch a DTT service.
*Former staff at ITV Digital's Marco Polo House London headquarters are also considering legal action against its two backers as redundancy cheques received this week did not include the 90-day notice period they believed the two firms promised. In a bid to retain staff during negotiations, Granada and Carlton had written to the ITV Digital board stating that they would make up any difference between statutory and contract pay-off terms following a warning from administrator Deloitte & Touche to staff saying that they might not get their full statutory or contractual notice and redundancy terms.
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Napster expects bankruptcy filing
Online US music swap pioneer Napster may file for Chapter 7 bankruptcy protection - a move which involves complete liquidation.
Last year a US federal court prevented the company from offering copyrighted music for free over the Internet. Chief Executive Konrad Hilbers, founder and Chief Technology Officer Shawn Fanning, and four other vice-presidents are also quitting the company.
The move follows the collapse of talks with German media group Bertelsmann over its offer - believed to be between $15 million and $20 million - for a majority stake in the company.
Napster has not yet decided to file for bankruptcy, but indicated that it is most likely as it has been unable to generate revenues since its file sharing service for copyright music was stopped last summer. It had hoped to offer a secure membership-based service which would have provided royalties to record companies and artists.
Napster's technology was the collateral for $85 million of Bertelsmann loans which also gave Bertelsmann an option to buy 52 per cent of Napster.
Since Napster's service stopped, the five major record labels suing Napster - BMG, EMI, AOL Time Warner, Sony and Universal - all launched subscription services in response to the demand for music downloads.
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DT
cable sale - again
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DT cable sale - again
Continued from front page ...............
.........To date no media investor is reported to have expressed interest in acquiring any of the television groups, though Deutsche Telekom says numerous expressions of interest have been received from private equity houses and financial investors according to an FT report.
The German cartel office's previous blocking of Liberty Media's proposed E5.5 billion acquisition of DT's cable assets has made the financial community doubt the openness of the market.
Expressions of interest for Bavaria, one of the most attractive of the six regional companies, are reported to have ranged from E800 million to E1 billion, about half the price agreed by Liberty.
Consequently, initial estimates suggest Deutsche Telekom might get between E3 billion and E3.5 billion for its cable assets.
NM Rothschild, the investment bank mandated by Deutsche Telekom to conduct the sale, has called for interested parties to form consortia and indicate which regions they would want to bid for. When these are assembled, in early June, the bank will launch one or several auctions by invitation.
There are conflicting reports over suggestions that Deutsche Telekom aims to maximise the overall price by splitting and separately selling the six regions in two or three large blocks, such as a northern, a southern, and an eastern region, and is seeking two or three bidders per region Ì avoiding the long exclusivity period given to Liberty.
Deutsche Bank, which owns TeleColumbus, Germany's largest retail cable operator, is believed not to be a bidder and in fact may seek to sell its current cable business.
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Kirch faces final curtain
Continued from front page ...............
.....The May 8 filing of KirchPayTV for insolvency has allowed Sky BSkyB to excercise its E1.7 billion put option in German media company Kirch's umbrella holding company Taurus Holding on Monday (13/5/02), rather than waiting until October.
KirchPayTV and KirchMedia have already filed for insolvency and now the group is likely to face complete collapse as the company does not have the cash that it is obliged to pay BSkyB.
Sky wrote off E1.6 billion on its 22 per cent stake, valuing it at zero on its balance sheet, and has issued a statement saying that it, "believes that it is unlikely to receive a significant amount, if any amount, as a result of its exercise of the put option."
Taurus Holding and Kirch's investment company KirchBeteiligungs GmbH & Co, which houses Kirch's stakes in the publisher Axel Springer Verlag AG and 56 per cent of the broadcasting rights to Formula One racing, have yet to apply for bankruptcy.
Kirch's flagship German pay TV channel Premiere World is held by a separate, wholly owned company and remains on air but is losing E1.5 million a day and is believed to have only enough cash to last until the middle of June.
* Separately Dresdner Kleinwort Wasserstein, estimated that if a proposed satellite transmission spectrum levy was implemented, it could cost Sky E370 million to E465 million in annual taxes. Shares in Sky, which is opposing the proposed charge, closed down 4.5 per cent down at 682p. They suffered a further drop to 664 pence by 0705 GMT the next day as Deutsche Bank and Goldman Sachs said on Tuesday 14/5/02 that it was bookbuilding to sell some 250.6 million shares in UK satellite broadcaster BSkyB Plc - believed to be all or part of a stake held by France's Vivendi Universal.
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Bonnier increases grip on TV4
Modern Times Group, MTG, the Swedish-based international media group, is letting go of its major influence in TV4 - Sweden's biggest private station, where MTG has been a major shareholder since the station's official national launch in early 1992.
MTG has announced its decision to sell off a million TV4 shares, at an estimated value of E22 million; the buyer is Bonnier, Sweden's oldest and biggest media group, which made its first major investment in the Swedish television business in 1997 by taking over the shares previously controlled by TV4's first Investor, the investment arm of Sweden's dominant finance group, the Wallenberg family.
Through its liaison with Finnish Alma Media - where Bonnier also holds a 25 per cent share - Bonnier is now the most influential shareholder of TV4. Following the latest deal Bonnier controls 21.7 per cent and Alma Media another 23.4 per cent. After having been the biggest single shareholder MTG has seen its holding shrink to 15.1 per cent.
But losing control of TV4 has been a very lucrative business for MTG and its main owner, Swedish tycoon Jan Stenbeck. By investing a mere E1 million in the late autumn of 1991 Stenbeck not only solved a political problem for the Swedish government, but he was also given a 20 per cent share in TV4. Now, by selling off five per cent of the total, for E20 million, Stenbeck still retains 15 per cent of TV4's shares, which at today's prices, would mean a market value of some E60 million.
Market analysts say that the Stenbeck empire is in a rather shaky state, hence this sudden and generally unexpected sale. Metro International, the free-of-charge morning commuter tabloid, which was introduced in Stockholm in 1995 and is now a global operation, is still bleeding red ink, and in bad need of a cash infusion. Rumours also have it that Stenbeck and MTG might want to use cash from the TV4 deal to acquire the Scandinavian parts of SBS's European operations - Swedish Kanal5, Danish TVDanmark and Norway's TVNorge.
MTG's full ownership of TV3 has been a constant conflict with the other owners of TV4. Some years ago Stenbeck and his aides-de-camps were even ousted from the board of TV4, due to 'conflict of interest'. Now this power-struggle seems to be over, following Stenbeck's decision to quit the arena.
In recent weeks there has also been an open war between the two camps, with the battlefield being the business dailies of MTG and Bonnier, FinansVision and Dagens Industri, DI - both tabloids printed on pink paper. DI has officially accused MTG of hiring private detectives to track down prominent DI reporters. MTG has also accused TV4 of making 'secret agreements' with the Minister of Culture, Marita Ulvskog, with regard to TV4's involvement in the Swedish DTT project, claiming that TV4 received secret tax rebates by promising to develop new DTT channels.
Some days ago Ulvskog retaliated by renewing her requests for a new "media concentration law", 'Lex Bonnier', directed at the Bonnier group. Only last winter Ulvskog failed to have her proposals passed through the Swedish parliament, but with the recent deal where Bonnier has increased its presence on the Swedish media scene, Ulvskog is again warning about 'media concentration'.
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Italian PayTV merger snags
Canal Plus (CNLP) says it will study new conditions set by Italian regulators before deciding on a planned merger between its Italian unit Telepiu and the part Murdoch-owned digital broadcaster Stream, but one report suggested, "it did not look at all good".
Italy's anti-trust authority had said on Monday (13/5/02) that it had approved Canal Plus parent Vivendi Universal's merger with the Italian broadcasters, with 10 conditions designed to preserve competition.
Vivendi Universal and the Canal Plus group issued a statement that they, "wish to examine closely the new conditions imposed by the (Italian regulator) Antitrust ... in order to evaluate the future financial viability of the merged entity." In December, Vivendi CEO Jean Marie Messier agreed to pay around E432 million for Stream's business pending approval from Italy's regulators.
Stream, with some 700,000 subscribers, is estimated to have lost at least E220 million last year while Telepiu lost some E330 million with 1.4 million subscribers. Despite these losses, the authorities are wary of any Pay TV monopoly, and among the restrictions are that any new soccer broadcast contracts cannot last more than two years, and the teams could break a contract at the end of one season. Vivendi has said it needs three year contracts to produce a viable business plan.
If Vivendi backs out of the acquisition, Stream is expected to file for bankruptcy - but Telepiu would find purchase via the bankrupcy courts extremely time consuming.
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NTL opens network
UK cable company NTL has opened its broadband network to rival internet service provider Freeserve, the France Telecom-controlled ISP.
Following Monday's announcement (13/5/02) Freeserve customers can get fast access from NTL if they swap their BT teleophone accounts for cable telephony.
NTL, which now has 200,000 broadband customers, aims to increase broadband usage within its six million franchise homes, with the new offer starting in Autumn.
Freeserve, which is the UK's largest ISP with 2.48m accounts, will keep broadband access fees from NTL cable customers. Freeserve, part of the Wannadoo group, controlled by France Telecom, will also manage customer accounts and sell broadband hardware to customers online and in high-street stores such as Dixons.
NTL currently charges £25 (E40) a month before installation fees to broadband users also taking a telephony and television service. No figure has been given for the new service. NTL will get network fees from Freeserve, and hopes to drive take-up of its bundled telephony and cable television products.
John Pluthero, Freeserve's chief executive, said, "This agreement gives Freeserve unrivalled options for the distribution and availability of Freeserve Broadband.
"Consumers in NTL's broadband cable franchises are now free to choose Freeserve Broadband as part of bundles with cable telephony and TV packages. Plus, we now have a way of capturing existing Freeserve customers in NTL broadband areas with our own fast-speed cable offer."
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DTT Licence deadline looms |
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DTT Licence deadline looms
Despite the fact that few initial applications have been made for the UK Digital Terrestrial Television licences which became available when ITV Digital went into administration last month, former parents Carlton Communications and Granada have been warned off bidding.
The deadline for applications is this Thursday, though the licences will not be awarded until June 13. It is believed that Crown Castle and SDN, a group comprising indebted cable operator NTL and S4C, the Welsh Channel 4, are currently the only interested parties.
Nonetheless, The Mail newspaper reports that Patricia Hodgson, Chief Executive of the TV regulator, the ITC (Independent Television Commission), warned the two ITV companies that it would be politically unacceptable for them to try to buy back the licences and re-enter the pay-TV market with a slimmed-down version of ITV Digital.
*The Football League, which is owed £187.5 million for its contract with ITV Digital, is still threatening to sue Carlton and Granada for £500 million in damages. It says the firms gave parent company guarantees and it holds them responsible for ITV Digital's failure to pay.
However, Football League Chairman Keith Harris is reported by the Sunday Times newspaper to be close to television rights contract deal with the owners of collapsed pay-TV firm ITV Digital.
A meeting was scheduled with Charles Allen, Chairman of Granada Plc and Gerry Murphy, Chief Executive of Carlton Communications Plc on Friday, the two owners of ITV Digital.
"We're in discussions. It will be unbelievably damaging if I say any more than that," Harris was quoted as saying.
"I think there are better odds for it not going to court now. I am hopeful of a settlement. Their actions have damaged the ITV brand. With the changes in the broadcasting bill, these companies can go on a (new) corporate path, and they need a settlement as much as we do," he said.
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Poles take anti-monopoly measures
Poland's telecommunications authority has decided to take anti-monopoly administrative measures against both the country's digital operators in Poland, Canal Plus Cyfrowy and Polsat Cyfrowy, because they have refused to sell subscriptions without decoder rental says Jacek Silski, President of Comsat, a Polish satellite company supplying Astra-TV.
This move by the operators is seen as contravening subscriber regulations, as well as restricting competition and infringing consumers rights too. Canal Plus Cyfrowy now has a monopoly in the country after its merger with Wizja TV (UPC) last year.
Silski informed advanced-television that his company applied to initiate the antimonopoly proceedings.
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UK Coms bill stings BSkyB
Last week's draft UK Communications Bill included an initially overlooked proposal in its notes to levy a tax on satellite operators for the use of broadcast spectrum - currently satellite broadcasters have free access and only terrestrial frequency users pay, ITV paying £360 million last year, hence satellite could also face a bill in the millions. Where appropriate, opportunity cost pricing should be applied to spectrum use says the bill.
BSkyB is leading opposition to the move, seeking support from over 30 satellite operators throughout Europe whose signals can be picked up in Britain. These include Astra and Eutelsat, owned by BT, France Telecom and Deutsche Telekom, who argue that they are the most efficient users of the radio spectrum.
Additional costs could also limit take-up of digital TV, says Sky. It is not clear if the tax would be levied on the satellite broadcaster or users of its dishes.
A BSkyB spokesperson quoted in the Guardian newspaper, said, "The plan would discriminate against dozens of satellite operators and users across Europe and be counter to the government's idea of encouraging digital rollout."
Professor Martin Cave of Warwick Business School previously produced a report, for the Department of Trade and Industry and the Treasury, which suggested all users of the radio spectrum should be charged a fee - and the new bill says it will take on board the findings of the Cave report.
"Satellite operators do not face the opportunity cost of the spectrum they use and have little incentive to use spectrum more efficiently. Moreover, it places terrestrial operators, who pay licence fees, at a competitive disadvantage," the Bill said.
Tessa Jowell, the Secretary of State for Culture, Media and Sport, will be making her decision on the issue over the summer.
It is also proposed that regulator Ofcom would be able to make any new owner of a UK station accept changes to its licence, thereby preventing foreign media companies from dramatically altering the content of a station. This is something Murdoch has done previously in Germany (turning a women's channel into a soccer channel) and could lessen his potential interest in acquiring Channel 5 in which BSKyB CEO Tony Ball insist the company has no interest.
Sky faces potential restrictions in other areas too. Further proposals call for Sky to be obliged to carry public service channels at 'cost price' on its platform after analogue switch-off, as cable and digital terrestrial television do, cutting between £20 million and £30 million of the combined access levy paid by all five terrestrial broadcasters each year to Sky.
Chris Bryant, the former BBC executive turned Labour MP, believes that the platform and content businesses should be separated - a comment which appears to be aimed at Sky.
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Gamblers get new TV service
UK gambling company Ladbrokes is investing £15 million in its 1,900 UK betting shops to broadcast its own branded in-shop television to its customers.
Currently betting shops get a broadcast feed from industry supplier Satellite Information Services (SIS). Now Ladbrokes tailor is content to suit the different requirements of customers across the country with the SIS feed forming just one element
Consequently, for example, Arsenal and Spurs odds could be shown in North London shops, while Everton and Liverpool odds would be displayed on Merseyside.
The company also plans to package its own studio broadcasts, and to hire betting experts to suggest different winning combinations.
The service starts next week in the Spring Garden branch, Manchester. A £500,000 revamp includes new digital displays, touch-screen displays on how to bet, telephone lines to Ladbrokes' betting call centre and free internet access.
Ladbrokes Chief Executive Chris Bell said, in the Guardian, "This is the largest phase of our sustained investment which is reinventing the entire betting shop experience. We have already invested £40 million on electronic point of sale and the biggest shop refurbishment programme in the industry's history."
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Options for NTL employees
Employees could get options for around one in 10 shares in "New NTL", the British and Irish business to be spun off from indebted UK cableco NTL's other European operations according to a report in the Telegraph newspaper. The 10 per cent of New NTL shares earmarked for the scheme will cover existing employees across the group, as well as those recruited over the next couple of years.
Chief Executive Barclay Knapp is expected to be a chief beneficiary if he remains head of the company.
Leading bondholders, including distressed-company specialists Angelo Gordon and Appaloosa, are said to have approved the deal while ordinary shareholders stand to loose virtually the entire value of their stake.
NTL made a pre-arranged Chapter 11 filing last week to protect it from creditors during its vast $10.6 billion debt-for-equity swap restructure.
There has been recent speculation that NTL Broadcast, the company's profitable television transmission service which handles programmes for ITV, and Channels 4 and 5, could be up for sale to further reduce debt.
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Star dispute settled
Star appears to have settled a long-running dispute with cable TV operators in the Philippines and carriage has been restored to five of its channels carried on the country's dominant SkyCable/Beyond Cable.
Star had been blacked on the system since late 2001 over a dispute centering around the News Corp-owned companies' claim to be owed arrears by SkyCable for the supply of the channels. The new accord seems to involve the payment of $3.5 million in arrears. In exchange Hong Kong-based Star has agreed to sign multi-year supply contracts for ESPN, Star Sports, Star Movies, National Geographic Channel and Star World with SkyCable/Beyond.
The agreement does not cover the Viva Cinema channel which carries movies in the main Filipino language, Tagalog, because the service is a direct competitor with movie services generated by SkyCable. SkyCable/Beyond is a 50:50 joint venture between SkyCable owned by the powerful Lopez family, and Home Cable, owned by a subsidiary of Philippines Long Distance Telephone.
Carriage disputes are common in the Filipino cable TV industry with operators often unwilling or unable to pay what they consider to be the inflated prices charged by content providers. In turn, the channels complain that piracy is rampant in the market, as is chronic underreporting of subscriber numbers. It was the second time in five years that ESPN had been pulled from the schedules of HomeCable, which merged with SkyCable to form the country's largest operator two years ago.
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BSkyB
results beat expectations |
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BSkyB results beat expectations
British Sky Broadcasting (BSkyB) reported a reduced pre-tax loss for the three months to March 31, at E49 million, but even this included an exceptional charge of E36 million following the collapse of ITV Digital and goodwill amortisation of E47 million - with the result that operating profits in the nine months to the end of March were up 33 per cent, exceeding expectations.
The company says it is still seeking "opportunities to ensure the continued availability" of its Sky channels on the digital terrestrial TV platform, from which it received carriage fees, premium channel subscription revenue and increased circulation of around 1.2 million users, boosting advertising rates. UK audience share for Sky is now put at 6.7 per cent - up 18 per cent, with Premier League football viewing up seven per cent.
Digital satellite subscribers reached 5.89 million - up by 171,000 in the third quarter, but with the target of seven million by 2003 still seen as 'challenging'.
On the way to its Arpu (Average revenue per user) target of £400 (E640) per user, the company saw an 11 per cent rise to £341 (E546), churn remained steady at just over 10 per cent.
Tony Ball, Chief Executive, noted that the company's, "Operating profit increased by 33 per cent to E207 million and positive free cashflow in the quarter resulted in a reduction in net debt of E224 million" Excluding goodwill and exceptional items, BSkyB reported a pre-tax profit of E0.9 million) in the third quarter, compared with a loss of E113 million in the same period last year. Operating profits increased from E74.6 million to E95 million, while revenues were up 15 per cent at E1,175 million.
A nine month loss of E2 billion was reported following BSkyB writing off its stake in KirchPayTV, which filed for bankruptcy; this compared to a E585 million loss for the same period in 2001.
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Telewest
director benefits slammed
Shareholders of UK number two cableco Telewest are forecast to react negatively
at the company's annual general meeting on June 11 following revelations
reported in the FT, that the indebted company paid £690,000 (E1.1 million)
last year in bonuses to four directors when the company share price fell
40 per cent and pre-tax losses rose by 63 per cent.
Chief Executive Adam Singer, Finance Director Charles Burdick, Strategy
Director Stephen Cook, and Chief Executive of Telewest's content division
Mark Luiz have new targets are based on ebitda and do not include share
price peformance. Which is just as well for them Telewest shares have
fallen 83 per cent since January, yet they could still be in line for
maximum bonuses of more than £1 million (E1.6 million) this year if targets
are exceeded.
The fall in share prices followed speculation that Telewest may seek to
reduce its E8.5 billion of debt by following the NTL lead and pursuing
a debt for equity swap which would slash the value of current shareholdings.
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Premiere
seeks suitors
Four weeks after Germany's Kirch Media filed for insolvency it was followed
by Kirch Pay TV, parent company of the digital platform Premiere World.
However, Premiere itself currently has about 2.4 million digital subscribers
and is not affected by its parent's chapter 11. It has sufficient liquidy
to last until about mid-June, regarded as enough time to find new investors,
says Premiere CEO Georg Kofler.
Negotiations with old shareholders and new investors keen to avoid chapter
11 for Kirch Pay TV led to nothing because of the complicated structures
of the conglomerate, while there was considerable interest in Premiere
says Kofler. Now the company's insolvency provides the opportunity to
reform the company in line with today's price levels and provide the opportunity
for new shareholders to come in without the burdens of the past, he said.
Among investors reported to be interested in relaunching KirchPayTV are
Rupert Murdoch and John Malone. Murdoch's British satellite broadcaster
BSkyB already owns a 22 per cent stake in KirchPayTV, but has said repeatedly
it isn't interested in investing more money into the division. Kofler
said executives are working on a plan to cut the channel's debts and costs
and put it on a more independent footing.
Other companies in the Kirch Pay TV conglomerate facing chapter 11 include
the program licensing subsidiary Pay TV Rechtehandel, and Beta Digital,
the company that provides the technical satellite uplink and technical
services to digital content providers. Originally, the managing director
Wolfgang van Batterey had announced that insolvency of his company would
follow that of Kirch Pay TV.
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Iberian
media shakeup
Changes forced on the Iberian media scene as a result of the advertising
crisis and Argentinean crash are forecast to create more viable entities
for the future.
Spanish media group Prisa, which reported a 37 per cent drop in operating
profit and a 4.7 per cent fall in revenues for the first quarter, also
saw its shares jump 7.3 percent to E11.10 following the news that pay-TV
operator Sogecable, in which Prisa holds a 21 per cent stake, has agreed
to merge with the digital satellite TV platform Via Digital, owned by
telecoms group Telefonica.
Prise reported EBITDA falling E23 million with revenues down to E280 million.
However, Prisa's net profit rose 2.8 per cent year-on-year to E33 million,
including tax gains.
Jesus de Polanco, the Chairman of Prisa, which was the largest media group
in Spain until former PTT Telefonica began acquiring media assets, had
earlier attempts to expand his media business blocked over the last five
years by Spain's centre-right government which used Telefonica to prevent
its expansion.
Telefonica's media division never made a profit, and lost E347 million
last year and E627 million in 2000. Satellite broadcaster Via Digital
with 806,000 subscribers and losses of E162 million last year was the
company's biggest money-loser.
Cesar Alierta, Telefonica's Chairman, is understood to have convinced
"the highest levels of government" that losses at the media division had
become unsustainable, thus they would have to abandon their anti-Polanco
war. The planned merger will still have to be referred to the European
Union's competition authorities, given Vivendi Universal's 21.3 per cent
stake in Sogecable, parent company of Canal Satelite Digital, but it is
clear that Spanish government approval has already been granted in principle.
Telefonica will subscribe to a 23 per cent capital increase at Sogecable,
which is jointly controlled by Prisa and Vivendi Universal. Via Digital
will be absorbed by Sogecable, along with about E600 million of debt.
An expanded Sogecable will have 2.5 million subscribers and sales of E1.3
billion and following the demise of DTT platform Quiero, will be the only
provider of pay-television in Spain until cable companies can deliver
broadcasting services.
Elsewhere on the Iberian Peninsula, Portugal is to eliminate a channel
at the money-losing state TV network, sending the stock of rival media
company Impresa soaring.
Presidency Minister Nuno Morais Sarmento said the centre-right government
wants to move from two channels on state network RTP to a single public
service channel with no advertising. SIC and the TVI network, part of
the Media Capital group, are forecast to benefit from the end of advertising
on RTP. Evaluation of future plans for RTP are said to be underway.
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Kirch
channels get boost
Some of Kirch's struggling metropolitan TV channels have been given new
hope. According to news reports Hanno and Erich Soravia, two Austrian
brothers from the construction business, have already spoken to the notary
about taking the majority stake in tv.munchen, which serves the Bavarian
capital, from Thomas Kirch, son to the founder of KirchGroup Leo, who
retains 100 per cent of the company. To keep Kirch in the company the
Austrians need to apply for a new licence with the German regulators.
The Brothers are said to intend launching a satellite service produced
in Munich for delivery to all German language territories.
The future also looks much brighter for Kirch's metropolitan project in
Hamburg, hamburg1. Kirch's smaller co-shareholders in the venture include
the Jahr family, a minor shareholder in the Bertelsmann magazine publishing
subsidiary Gruner + Jahr, who is believed to intend providing new money
so that the channel can survive.
However, the future of Kirch's Berlin venture, tv.berlin, is less clear.
The federal capital is the most competitive regional TV market in Germany.
In the greater Berlin region , which has about 4.5 million inhabitants,
tv.berlin is competing with the commercial channel FAB and two public
TV services run by Berlin regional public broadcaster SFB and its Brandenburg
sister ORB.
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Phoenix
sees losses
Phoenix Satellite TV Holdings - the Hong Kong-based Chinese language broadcaster
- has reported falls in revenue and net losses that it blames on the cost
of launching new services and the fall in advertising earnings.
In the January to March quarter the company reported a net loss of E5.7
million, compared to a E1.34 million loss for the same period in 2001.
At the same time, Phoenix reported revenue for the three quarters to March
fell to E70 million, a fall of 9.1 per cent compared to the corresponding
period in 2001.
Deputy Chief Executive Leung Noong Kong blamed a number of factors for
the figures. It launched the InfoNews Channel earlier this year, only
to fail to gain carriage in either China or Taiwan because the broadcast
regulators in each market refused to grant it permission; Leung said the
company was continuing to lobby both sets of authorities. In addition
Phoenix also launched Phoenix North America Chinese Channel aimed at Mandarin
speakers.
Leung also said that the global advertising slowdown had also impacted
on Phoenix's revenues. He saw a source of advertising revenue coming from
the World Cup in May and June. Although Phoenix does not have any rights
to the event, he believed football-related programming could have a beneficial
knock on effect for the company.
Phoenix will continue to trim operating costs with programming expenses
identified as a target for savings. Currently Phoenix outsources production
to News Corp's STAR which has a 38 per cent stake in the company. Leung
indicated that he planned to save around E2.8 million over the next 18
months by taking some production in-house.
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iTV
MHP management
Sofia Digital has launched Sofia Backstage Publisher for managing iTV
services using the MHP, Multimedia Home Platform. The company says it
is suitable for use by any interactive TV broadcaster or other iTV operator.
Sofia Backstage Publisher controls the content of iTV services on any
object carousel, enabling the addition of iTV services to the broadcast
stream to be received with the video stream on a viewer's TV.
Sofia Backstage Publisher integrates the object carousel of the operator
to the existing multichannel publishing systems that the operator is already
using. This company says that as a result, the operator can easily deliver
the same content used in other media on an iTV service. For instance,
the operator can send the same text to the web and to the iTV service.
Sofia Backstage Publisher is a part of all six of Sofia Digital's iTV
products. Sofia Digital says it has made the world's first MHP services
in regular use.
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Japanese
DTH service launch
The first of two new pay TV platforms to be carried on Japan's new satellite,
CS110 Digital, is to be PlatOne, owned by Nippon TV, Mitsubishi Trading,
Wowow and the national telco, NTT. It will relay 46 24-hour channels provided
by seven content producers.
PlatOne aims to attract three million subscribers by the end of 2010.
Its service began at the end of April with a monthly subscription rate
of between $2.25 and $15, depending on the channel package.
The second service, run by direct to home satellite provider SkyPerfecTV,
will start its service this month offering 44 channels from 11 content
providers.
CS110 was launched last year in the same orbital slot as the BS110 satellite
that carries Wowow and two analogue free to air DTH channels provided
by state funded broadcaster NHK. CS110 can offer interactive services
to subscribers, but with Japan's economy still in a downturn, there are
doubts about the speed of uptake of such services.
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Travel
launch in Germany
Sonnenklar (sun bright), a new German travel channel on the digital Astra
transponder, shared with Premiere World, launched on May 15th initially
airing four hours a day. 'Sonnenklar' was already atravel show format
seen on the interactive German Neun Live channel. It's parent company,
Euvia Media AG, is also the parent company of Euvia Travel GmbH that operates
the new venture. Euvia Media is jointly owned by HOT Networks AG (48.6
per cent), ProSiebenSat.1 Media AG (48.4 per cent) and its CEO Christiane
zu Salm (3 per cent). ProSieben is the profitable subsidiary of insolvency
hit Kirch Media AG, but is not directly involved with parent company's
problems.
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Pinnacle's
PCTV enters Argentina
US-based Pinnacle Systems Inc has introduced a new PCTV card in the Argentinean
market.
Pinnacle's multi-channel matrix enables users to choose TV channels from
the Internet and watch them on a PC. The card provides a high-digital
video quality and allows the user to surf the net simultaneously.
Pinnacle Systems designs, manufactures, markets and supports a wide range
of digital solutions that enable businesses and consumers to create, store,
distribute and view video programs. The Company's products use advanced
realtime processing hardware and innovative, user-friendly software to
develop and deliver rich media on the airwaves, videotape, DVD, and the
Internet.
Pinnacle PCTV's features also include Microsoft Netmeeting for videoconferences,
Intel's Intercast for additional information about the programme that
the person is watching (such as history or rating) and the option of recording
parts of the TV programmes, and saving them as digital videos that can
be e-mailed.
If the user wants something more creative they can use RealNetworks Real
Producer to create a video using the captured images and add headlines
or comments to them.
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AOL
Time Warner appointments
Michael Lynton has been appointed President of AOL Time Warner's non-US
operations. Lynton's new role will also encompass his current role as
President of America Online's international operations, which has 8.5m
subscribers in Asia, Latin America and Europe. He will work closely with
other senior executives at AOL Time Warner to help integrate international
initiatives, alliances, acquisitions and investments, the company said.
Mr Lynton will report to Robert Pittman, COO-elect of AOL Time Warner.
When Gerald Levin steps down as Chief Executive at AOL Time Warner next
week his successor Dick Parsons will formally take over.
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