NEWS Monday 6th-Monday 13th May 2002

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Friday 10th May 2002

Spanish TV merger

Rival Spanish digital satellite companies Telefonica, Spain's largest company, and Sogecable, controlled by Vivendi Universal and Prisa, Spain's largest media group, are merging to create a single pay-TV company in Spain with 2.5 million subscribers and sales exceeding E1.3 billion the companies announced Wednesday (8/5/02).

The Spanish market was seen as too small to support two competing pay-TV services.

In the merged entity, Telefonica, Prisa and France's Groupe Canal Plus will each have a 23 per cent stake. The rest of the shares will be owned by other investors, although Sogecable will be effectively controlled by Vivendi and Prisa because they have a shareholders' pact.

Sogecable's Chief Executive Javier Diez de Polanco will retain his post. Telefonica will name a new Chairman at Sogecable.

Although the deal will be referred to Spain's competition watchdog, the government's initial opposition to a merger in the media sector has been reduced following the difficulties of Pay-TV operations elsewhere in Europe.
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Liberty Media buying spree

As reported yesterday in ATV, US media mogul John Malone's Liberty Media Corp will pay $185 million (E203 million) in cash and stock to acquire a controlling interest in interactive set top middleware market leader OpenTV Corp.

The company also made a preliminary agreement to buy the 84 percent of ACTV Inc that it does not already own at $2 (E2.2) a share, in a deal valued at roughly $92 million (E101 million). ACTV makes applications for interactive advertising and personalised programming, such as changing camera angles at live events. Any deal must be approved by the respective boards of both companies and ACTV shareholders.

Liberty effectively controls the continent's biggest cableco, United Pan-Europe Communications NV, and owns 25 per cent of UK number two cableco Telewest Communications Plc. It had also sought to buy into Germany's cable systems, a move hit by the local regulator. Now Liberty is upgrading its European cable systems to digital, and interactive services - via the kind of software its two new acquisitions provide - is the next step. And OpenTV's software is widely seen as a more economic deployment option than higher end systems provided by competitors such as Microsoft and Liberate.

Questions have been raised within the industry about the proprietary nature of the Open TV software - versus more genuinely open systems - but in addition to a working solution available now, Liberty also gets access to OpenTV's 24 million installed base. In fact it had been rumoured in recent weeks that it was Microsoft that was about to buy Open TV, for that very reason.

And for Open TV, Liberty's strength in the US will be expected to help it crack that market, where cable operators have held back from investing in interactive television.

Shares in all three parties have risen as investors show support for the convergent synergies of the deal, with OpenTV up 65 cents, (14.7 per cent), to close at $5.08. ACTV jumped 54 cents, (47.8 per cent), to close at $1.67 and Liberty Media rose 58 cents, (5.8 per cent), to close at $10.60.

Open TV itself did not sell the shares. Instead Liberty Media is acquiring a 43 percent economic stake and an 87 per cent voting interest via shareholder MIH Ltd, a British Virgin Island-registered South African provider of pay-TV services.

Liberty has named Peter Boylan III as President and Chief Executive of newly formed Liberty Broadband Interactive Television Inc, which will manage the OpenTV unit as well as develop and invest in interactive television. Boylan told analysts that OpenTV will initially concentrate on interactive ads and "t-commerce." Liberty holds 90 per cent control of LBIT

Boylan commented, "The iTV sector along with other technology areas have been out of favour with investors for the last few years, creating a unique opportunity for us at this time. I firmly believe that with Liberty Media we can create substantial shareholder value in this sector while forging new, mutually beneficial relationships and partnerships with multi-channel video providers and programmers seeking to enhance their existing applications, traditional advertising business and associated revenue streams."

Boylan recently resigned from his positions as co-COO and co-President of Gemstar, a company in which to Rupert Murdoch's News Corp has major stake.
See Privilege Pages Open TV report
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NTL in Ch 11

As expected, UK cableco NTL filed for Chapter 11 bankruptcy protection on Wednesday (8/5/02), as part of its restructure in which it will swap $10.6 billion (E11.66 billion) of bond debt for new shares, slashing its current $17billion (E18.7 billion) debt, NTL finally won the support of its main bondholders and bank lenders to split into a core UK and Ireland operation retaining $6 billion (E6.6 billion) of bank and bond debt, and a group of European assets.

Chief Executive Barclay Knapp, and Chief Financial Officer John Gregg will remain in office at least until the company comes out of Chapter 11, expected within 90 days.
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Granada and Carlton shares rise

Shares in Granada and Carlton Communications rose following the UK Government's Communications Bill facilitating a merger of the two ITV companies - and enablling foreign bids for the group - more likely post-merger.

Granada shares leapt 10 per cent to 139.5p (E2.4) as it was transformed from UK predator to international prey, while Carlton's rose 7.5 per cent to 272p. However UK media Consultant David Elstein suggests that the merger could actually be delayed through the deregulation as each company seeks 'better offers' elsewhere - though a buyer of just one player could find their future room for manoevre severely limited, delaying final merger even further.

Bertelsmann is seen as the most likely potential European bidder, and more likely to buy one operator prior to a merger to keep out the major US broadcasters, several of whom are seen as potential candidates to buy the entire ITV network.

General competition laws still apply and could prevent any merger in the short term - though talks could start soon so as to clear any competition hurdles before the new Bill becomes law, probably late in 2003.

BSkyB Chief Executive Tony Ball previously expressed an interest in owning Channel Five which is jointly owned United Business Media (35 per cent) and Bertelsmann-controlled RTL the remainder. The channel is valued at about £750 million (E1,230 million). RTL is not only unlikely to want to sell, but more likely to pursue its interest in ITV. Owning both Channel 5 and ITV would raise competition issues as RTL would control more than 60 per cent of the advertising market, but structural changes in the company's holdings could avoid this.

Bertelsmann's Chief Executive Thomas Middelhoff is reported to be "considering the implications" of the draft communications bill.

Media stocks in the UK have risen across the board as a result of the greater than expected level of liberalisation in the Government's proposed new media bill.
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BSkyB CA charge scraped

UK Telecoms regulator Oftel has instructed satellite broadcaster British Sky Broadcasting PLC to scrap its flat rate charge to cable operators for providing BSkyB's conditional access service.

BSkyB's charges should take into account the retail revenue broadcasters receive from subscribers and advertising, rather than a flat rate paid by each broadcaster said Oftel, adding that these principles also apply to any successor to ITV Digital.

"Establishing a closer link between the price paid for conditional access and retail revenues generated from subscription and advertising will make it easier for single-channel subscription broadcasters to enter the market," said Oftel Director-General David Edmonds.
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IBM supports Viacom vision

IBM and Viacom Inc's new technology and consulting initiative could, say the companies, "lay the foundation for future digital entertainment services and enhance the performance of Viacom's technology infrastructure.

The deal includes MTV Networks, Showtime Networks, Paramount, CBS and Viacom Corporate, and covers US operations spanning eleven locations in four states.

Working with IBM, Viacom will establish a cross-enterprise computing platform able to support digital media as well as computing services delivered on demand. IBM will also provide the technology skills and systems management processes to help Viacom evolve its computing infrastructure.

IBM will deploy a team of business and IT consultants with expertise in the media and entertainment industries to help Viacom develop new initiatives in such areas as digital management of entertainment content, wireless content delivery and computer services delivered on demand. In addition, the consultants will explore areas in which the two companies can collaborate in the future.

"IBM is helping Viacom prepare for the digital entertainment future by enhancing our computing operations, creating cross-enterprise efficiencies and forming new technology initiatives," said Russ Pillar, President, Viacom Digital Media Group. "In addition to significant cost savings, this relationship will bring us competitive advantages while allowing us to focus on the creation and distribution of world-class entertainment content." IBM General Manager, Media and Entertainment Industry, Dick Anderson, commented, "IBM will provide the tools, industry expertise, and technology services to help Viacom deliver on its vision for a digital future."
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Kirch dissolving in insolvency

KirchPayTV, which had more than E700m ($633.7m) in bank debt when it filed for insolvency on Wednesday (8/5/02) reports that it sought court protection from creditors in Munich and Hamburg a one month after KirchMedia, because it was no longer able to fund its day-to-day expenditures of some E2 million per day. KirchPayTV has already announced plans to cut about 1,000 jobs from a total workforce of 2,400 and is hoping to renegotiate existing broadcast contracts.

Consequently Leo Kirch has lost control of his entire empire with the exception of holding company TaurusHolding, and KirchBeteiligung, KirchGruppe's investment arm whose most valuable assets, including shares in Formula One racing, have been put up for sale or are collateral for loans.

Thomas Middelhoff, Bertelsmann's chief executive, is reported to be interested in the KirchPayTV business, but RTL, its 89 per cent-owned TV subsidiary, opposes such a move.

The profitable broadcasting subsidiary Premiere - which has the rights to football's World Cup and the Lennox Lewis/Mike Tyson boxing match - will continue to broadcast for now as closure would destroy a valuable asset with a 2.4 million subscriber base.
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Thursday 9th May 2002

Kirch files for insolvency

German media firm Kirch Group's loss-making pay television unit KirchPayTV has filed for insolvency on Wednesday (8/5/02), as had been widely expected (see archive reports).

Now the German sports media venture and TV channel Deutsches SportFernsehen, DSF, is cutting jobs to prevent itself also having to file for insolvency.

Some 112 of the 400 jobs at the channel will go this year, the venture's Managing Director Stefan Ziffzer announced at an employer's meeting this Tuesday. Within the next couple of weeks 77 staff members will receive their pink slips directly, the remaining jobs will be lost by regular wastage. DSF is a subsidiary of Kirch Media AG, which itself filed for insolvency early in April.

In recent years the 10-year old channel repeatedly failed to reach break even, having previously announced that it would. This was one of the reasons why the name DSF was always mentioned when there was speculation on what ventures would have to be shut down to salvage Kirch Media's financial situation. However, DSF is not only a TV channel. It also, via its own subsidiary company, Plaza Media GmbH, a production service centre for all Kirch's sports assets. It produces the TV feeds for the first German soccer League for the Kirch channel Sat.1 and the digital platform Premiere World for which it also operates the digital sports channels.
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SES Global prepares for listing

The shareholders of SES Global SA approved the Company's year 2001 accounts at their Annual General Meeting (AGM) on May 6th, and the proposed dividend of E0.24 per A-Share will be paid to shareholders and holders of SES Global FDRs on May 27th, 2002.

A new Board of Directors has been elecected for SES Global SA whose members are now:

Charles Alexander
Wolfgang A Baertz
John F Connelly
Ernst Wilhelm Contzen
Jean-Claude Finck
Richard Goblet d'Alviella
Raymond Kirsch
Dr Joachim Kroske
Dr Raphael Kubler
Hadelin de Liedekerke Beaufort
Denis J Nayden
Gaston Reinesch
Victor Rod
Luis Sanchez-Merlo Ruiz
Christian Schaack
Georges Schmit
Gaston Schwertzer
Rene Steichen
Gerd Tenzer
Francois Tesch
Jean-Paul Zens

Rene Steichen was appointed Chairman of the board with John F Connelly, Gerd Tenzer and Jean-Paul Zens appointed Vice-Chairman. The Board then proceeded with preparations for a possible international public equity offering combined with a listing on the New York Stock Exchange, in addition to the Luxembourg and Frankfurt listings.

The company reports that no registration statement covering any securities of SES Global has been filed with the US Securities and Exchange Commission. A statement has been issued noting that should SES Global proceed with an offering, the offered securities may not be offered or sold, nor may offers to buy be accepted, in the United States prior to the time a registration statement becomes effective. If SES Global proceeds with an offering in the United States, it will file such a registration statement containing detailed information about the company and management, as well as financial statements, and any public offering of securities in the United States will be made by means of a prospectus that may be obtained from SES Global.
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Canal Plus OpenCable contribution

French based interactive television software solutions provider CanalPlus Technologies Inc has become an official contributor to the United States' OpenCable Application Platform (OCAP) specifications. These were recently issued by Cable Television Laboratories Inc (CableLabs), and a strategic relationship with CableLabs based on CanalPlus Technologies' open standards activities.

The two companies will explore opportunities such as open standards-based reference designs and application development platforms, intended to show the value of OCAP to US cable operators as well as to consumer electronics manufacturers building OpenCable products for the retail market.

CanalPlus Technologies plans to actively promote open standards and OCAP-compliant solutions to the US cable industry, and says it will participate in future technology demonstration and interoperability events sponsored by CableLabs.

CanalPlus Technologies will also use its current position as a leading contributor to the DVB-MHP interactive television specification, as major portions of the European MHP specification will be incorporated into OCAP.

"We are pleased to enter this important relationship with CableLabs, which is a premier sponsor of open systems technology for North America," said Jean-Marc Racine, Executive Vice President, Marketing, CanalPlus Technologies.

"We are committed to proving the benefits of open standards-based interactive television and look forward to making OCAP a successful initiative that ultimately improves the viewing experience of the cable TV subscriber."
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SMS delivered via TV

Enhanced television open software platform developer Liberate Technologies has integrated its technologies with TVGate - the Interactive TV division of Comverse, part of Comverse Technology Inc, which produces software and systems enabling network-based multimedia enhanced communications services. The cooperative venture aims to enable new communication services on the Liberate TV Platform. The first result of this collaboration will be a two-way short message service (SMS) that enables TV subscribers to send and receive text messages on their television.

"SMS over cable is a perfect fit - providing for instant two-way communication across a range of devices," said David Limp, Chief Strategy Officer at Liberate Technologies. "We look forward to strengthening our relationship with Comverse, furthering the possibilities for developers, network operators and TV viewers."

Liberate and Comverse have integrated the Liberate TV Platform software, including the Liberate Message Platform with the Comverse TVGate iTV communications platform. Liberate's Message Platform gives developers infrastructure and development kits for the creation of a wide variety of client side messaging applications.

In addition to SMS messaging, the combined solution can also enable the delivery of other services including instant messaging, unified email and voice mail management, as well as initiating live customer service calls through the television.

"Our partnership with Liberate is the latest demonstration of Comverse-TVGate's leadership in providing iTV communication solutions. The Comverse/Liberate alliance is a powerful partnership that teams two industry leaders, and we look forward to deploying the combined end-to-end solutions," said Eran Drukman, VP Sales and Marketing at Comverse's TVGate division.

"Comverse TVGate and Liberate have recognised the benefits of collaboration for the iTV industry and this partnership demonstrates our commitment to creating two-way interactive communication solutions for TV subscribers," adds Drukman.

Comverse and Liberate will jointly market and aim to expanded the availability of revenue-generating iTV communications services and applications, for example, to CATV (Cable TV) operators.
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Wednesday 8th May 2002

Seachange in global VOD deal

VODcast, described by manufacturers SeaChange International Inc as a fully-automated, secure and rapid 'pitcher-catcher' distribution system for VOD content, has been launched at the NCTA Cable 2002 show.

SeaChange International Inc in cooperation with PanAmSat Corp are enabling movie studios and TV programmers to stock cable's VOD servers with movies and programming using SeaChange's SPOTcast satellite systems.

VODcast is now delivering Intertainer, Inc's movies and programming for Comcast VOD sites. VODcast is shuttling fresh Intertainer content into SeaChange's VOD Systems at Comcast which SeaChange cites as demonstrating its ability to simplify on-demand television.

VODcast combines SeaChange's video servers, MPEG-2 encoding tools and asset automation software with the global footprint of PanAmSat's worldwide satellite network. SeaChange says that VODcast enables film studios, television networks and content aggregators to streamline their VOD content delivery schemes with satellite transmission cost-efficiency and end-to-end fault-resilience. Content providers get full control of their asset libraries in cable headends and provide reports on content use and system performance. Use of 128-bit encryption algorithms ensures content protection throughout the distribution process. VODcast works with all CableLabs-compliant VOD systems.

"Cable operators and content providers are committed to filling the VOD pipeline. As the volume builds, it's imperative to move content rapidly and with end-to-end automation - minimising human involvement," says Bill Styslinger, President and CEO, SeaChange International. He adds, "VODcast makes content distribution simple, reliable and secure and gives the owners and originators of movies and television programming a cost-effective path to VOD."

How VODcast works

SeaChange's VODcast Management Suite is comprised of Distributors, Uplink Servers and Receivers, proven technologies from the SeaChange SPOTcast satellite ad delivery system. SPOTcast currently works in more than 600 cable headends for customers such as National Cable Communications and Cox Communications.

Located at content origination sites, the VODcast Management Suite encodes content and metadata into MPEG-2 format. Metadata can include a synopsis of the content, movie posters, pricing or rules for content use.

Content is stored and scheduled for transmission on VODcast Distributors. Open application programming interfaces allow VODcast to integrate seamlessly with any type of server system or asset management system used by video content originators and VOD service providers.

VODcast Uplink Servers link scheduled content with PanAmSat's satellite and wide-area networks for simultaneous multicast delivery of content to any number of cable master control centers or headends. Through its global system of satellites, teleports and fibre links, PanAmSat reaches 98 per cent of the world's population.
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Datacasting licensing dropped

Regulators in Australia appear to have dropped the idea of issuing datacasting licences because they now believe there is no compelling business case for a licensing regime without major changes to the rules governing the industry.

That is likely to be the main finding of a four-month-long review of datacasting overseen by Communications Minister Richard Alston that started at the beginning of 2002. It was prompted by the failed attempt to auction spectrum for datacasting operations in June 2001 when just one nationwide bid was entered because other would-be players decided the content restrictions made it little more than a text service. These restrictions were strongly lobbied for by the free to air networks who were concerned that datacasters would operate 'back door' terrestrial services.

There is currently a dispute within the government about what to do with the spectrum that would have been used by datacasters. Alston is resisting the push for a fourth commercial free to air licence to be granted ahead of 2007 when the moratorium on new terrestrial players expires. However other sections of the government want it brought forward to reap the money that will be generated by the sale of a licence.

Income from the failed 2001 datacasting auction had already been factored into official revenues before the process was cancelled, and the treasury in particular wants to capitalise on the value of the spectrum.

A review of the submissions on datacasting put before the Australian cabinet "reveals no consensus on regulatory reform. Incumbent broadcasters, free to air and subscription, have recommended little or no change," according to leaked excerpts.
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Australian multichannelling u-turn

Australia's regulators have been considering allowing the country's free to air networks to broadcast additional channels - effectively signalling a U-turn in its policy of banning multichannelling.

Communications Minister Richard Alston has been trying to resolve the objections raised against the proposed merger of pay TV platforms Foxtel and Optus that was announced in February before officials make their decision sometime this month (May).

The three commercial networks, Seven, Nine and Ten, are currently not permitted to multicast until 2005 at the earliest, and the move by the government is meant to be a concession to the terrestrials who are concerned that the pay platform's merger will lead to an increase in their programming costs. This is because of a fear that Foxtel will be able to monopolise programming on the pay channels that in theory will be created by the terrestrials.

If the Alston proposal goes ahead, it will also mean that the free to airs will not have to transmit high definition TV (HDTV) using a standard mandated by the government in 1998. Although permissible since the start of 2001, only a handful of Australian consumers have paid to buy HDTV sets because of the high cost and the lack of programming formatted to take advantage of the technology.
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Tuesday 7th May 2002

According to sources this law suit is only the first step. In a second suit the group intends to get compensation from Breuer worth an E two digit million sum. When Breuer gave his interview, industry experts were astonished at this "more than unusual" behaviour from a high ranking bank executive and wondered about the reason. There appears to be no other example of such indiscreet talk in the history of the finance industry. Even then Kirch was considering legal action.
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Communications Bill expected

Tessa Jowell, UK Culture Secretary, is expected to present a new Communications Bill before Parliament this afternoon (Tuesday 7/5/02) which is forecast to reduce the restrictions on cross-media ownership, but still treat broadcasting and communications industry as a special case that should encourage diversity of ownership, rather than be open to total free competition.

Jowell said on BBC1 TV that the government recognised, "the importance of preserving diversity of view, a range of owners." In contrast the Culture Select committee had recommended sweeping away media ownership rules and leaving competition issues to the Office Of Fair Trading.

The bill will facilitate single ownership of ITV, the main commercial broadcaster, by lifting restrictions preventing ownership of weekend and weekday licences as well as the legal cap on audience share.

However, the limits set for ownership of TV broadcasting businesses are forecast to prevent Rupert Murdoch, whose interests range from national newspapers to BSkyB, from owning a free-to-air TV channel - with Channel 5 the obvious target - though it is emphasised that the bill has not been drawn up with Murcoch specifically in mind.

It is also expected that the bill will bring the BBC's regulation under the auspices of the planned new media and communication regulator Ofcom. Consolidation in the radio sector will also be allowed.
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Finnish DTT licences tendered

Three new national licences in the fledgling Finnish DTT system are now up for grabs, after the Ministry of Communications - Finland's highest TV technical authority - has formally announced three vacant licences open for tender, nationally and internationally. The Ministry is openly encouraging international operators to apply, "to boost necessary competition."

The Ministry of Communications and transport has put a clear focus on the three new services: most requested are "theme channels that could interest the Finnish viewers." The new licences will be open for tender as soon as the expected new media market laws have passed through the Finnish parliament, ie before the summer, and transmissions are expected to begin in the autumn of this year.

This is a result of the fact that three original licences, awarded years ago, were recently handed back by one of Finland's biggest media groups, Sanoma-WSOY (two licences) and also one licence given to French giant Canal Plus. As earlier reported in Advanced-Television the main reason for this unexpected defensive move was the poor interest in DTT from the Finnish public, initially mainly due to shortage of set top boxes. After almost a year in operation Finland's DTT operation, with three multiplexes available, has managed to attract a mere 20,000 subscribing households.

The Ministry of Communications and Transport is now confirming what had earlier been expected: a planned fourth DTT multiplex will not be opened for traditional television services, but instead focussed on future data and interactive services.

The Ministry has also repeated its conviction that state budget fianance should not be spent on subventions of the DTT project.
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Thai government TV intervention

The government of Thailand is being accused of pressuring the country's largest pay TV platform, United Broadcasting Corp. (UBC) into dropping a news channels allegedly for being over-critical of Prime Minister Thaksin Shinawatra's administration.

UBC was reportedly offered the incentive of being allowed to carry advertising on its platform, which it had been lobbying for over the last few years, saying it could not become profitable until it no longer had to strip out advertising.

The controversy surrounds Channel 8, a Thai news service operated by the National Multimedia Group and it was first made public in a senate hearing on the issue of UBC's ad carriage requests. Channel 8 editor Adisak Limprungpattanakij said he had been warned by a senior unnamed member of the ruling Thai Rak Thai Party that his channel's content stood between UBC and its request to carry advertising.

The National Multimedia Group had already stopped carrying political content on its TV and radio services, saying that the current political climate meant it could no longer report independently. It followed a ban on one of its political and news programmes carried on an FM station by the government and an announcement by the Defence Ministry that it would not let the group use one of its frequencies.

The National Multimedia Group decided that it would continue to operate a domestic and international news service for UBC subscribers on Channel 8, but without any Thai political news and commentary until the domestic climate changes. Despite the decision by Channel 8, it is not known if UBC's campaign to lift the advertising ban will now be approved by the Thai regulators.
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Australian TV regulation wrangle

The highly-fluid state of Australia's TV regulations has been highlighted with the Prime Minister John Howard apparently contradicting Communications Minister Richard Alston's written suggestions that the nation's free to air channels should be allowed to multicast extra services.

A cabinet submission by Alston last week suggested that he was planning to reverse a 1998 policy that outlined plans to operate a high definition TV regime using the digital spectrum allocated to the three commercial and two state-funded terrestrials. In exchange they would be allowed to broadcast multichannel TV.

But Howard said in interviews that any proposals to allow multichanneling would have to be done against the government's commitment not to grant any more free to air licences before 2007. "What that means is that if the view is taken that multichannelling violates that or runs against that commitment in relation to no expansion of free to air licensing, then you'd have to say that it ought not to occur," Howard said.

Two of the three commercial networks, Nine and Ten have lobbied against being allowed to multichannel because they say it will dilute programming schedules and reduce advertising revenue. However, Seven, which has operated the C7 sports channel since 1997 and has been fighting a three year battle to have it carried on pay TV leader Foxtel's network, has welcomed the proposals.

The comments by Howard come as the government considers a channel-sharing proposal by Foxtel and third-placed pay platform Optus that was announced in February. A separate proposal by Foxtel's 50 per cent owners Telstra is asking for Foxtel to become part of a bundled service offering by Australia's dominant pay TV platform.
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Monday 6th May 2002

Rescue scenarios for Kirch

Possible solutions for insolvency-hit media conglomerate Kirch Group are slowly taking shape. The majority of the 40 per cent stake in Axel Springer AG held by Kirch will be taken over by a consortium of Commerzbank AG (40 per cent), Dresdner Bank (30 per cent), Bayerische Landesbank (20 per cent) and Friede Springer, the widow of the Springer Group's founder (10 per cent), who will take it over for a price of about E1 billion.

While the publisher's widow is expected to keep half of her stake to expand her control over the group, most of the shares are meant to be brought to the stock exchange within the next three years. However, Springer did not confirm German media reports that this is what will happen. "We are not going to comment on anything before things are not definite," a speaker at the publishing group said. However, the E1 billion would take a lot of stress away from Kirch. Early last week rumours had spread that Rupert Murdoch and Silvio Berlusconi, minor co-shareholders in Kirch Media, the company that is directly affected by the German version of chapter 11, would be willing to invest up to E800 million in the business.

Kirch Media had to file for insolvency because these shareholders holding less than two per cent each were not willing to line up with the banks for a bridging loan.

Kirch Media's cost cutting scheme is also reported to be making some progress. It seems as if Kirch is trying to reduce his payments for the German First Soccer League TV rights that had been soaring in the recent past. The majority of the next E100 million payment to the German Soccer League DFL is intended to be an advance for the new period. The administrators are trying to prevent the DFL from pursuing its plan to directly market the TV rights in the future.

In the meantime there is an ever lengthening queue of investors for the commercial TV holding ProSiebenSat.1 Media AG, 52 per cent owned by Kirch Media. Springer, who already holds 11 per cent and caused the Kirch insolvency by excercising an option to sell his stake to Kirch earlier this year, now intends to expand its involvement in ProSieben, possibly to over 50 per cent in the future.

However, the German publishing group Heinrich Bauer Verlag is also said to have an eye on this stake. The publisher is already a partner of the RTL Group in the German RTL 2 channel. Nonetheless, negotiations on the future of Kirch's digital platform Premiere World, which caused the German media conglomerate's financial troubles, goes on. "Insolvency still is an option", a source says.

Springer has confirmed that he is not willing to sue Kirch for not responding to the option that would have put a fixed payment of E767 million into the publishers books. "This should not be a surprise and is a logical step if we don't want to loose our claim after what has happened," a spokesperson said.

When Kirch Media filed for insolvency the insolvency its management had said what he thought of the threat. "In Germany we have the right to deal a valuable asset for another asset. But there is no way to change a worthless asset into a valuable one," said Wolfgang van Batteray, Managing Director of Kirch Media, at the insolvency press converence last month.
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Transmission loss from ITV Digital

The UK subsidiary of Crown Castle, which had a £225 million 12-year transmission with ITV Digital (signed in 1999), is now in discussions with banks over the terms of a £100 million loan agreement.

The company has lost £18.8 million a year earned by the ITV Digital deal, some 10 per cent of its UK revenues. Its chances of recovering any money from the contract are slim, even though the total contract value is some £70 million.

John Kelly, the chief executive of the US-based company, is now holding talks with potential bidders for ITV Digital's broadcast licences, which have been put up for sale by the independent television commission.

" We are optimistic that agreements can be reached with new licensees in our effort to replace the revenue and Ebitda [earnings before interest, tax, depreciation and amortisation] previously generated under the ITV contract," he said.

He added, "This will have no impact on our ability to successfully execute our obligations under our other broadcast contracts, most notably our agreements with the BBC."
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MTVhits and MTVjams launched

MTV Music Television, the leading music programmer on television is launching two new 24-hour digital music channels, MTVHits and MTVJams.

Launched May 1, the channels will increase the supply of Pop, R&B, Soul, Hip-Hop, and Rap music.

"Both MTVHits and MTVJams were developed in direct response to our audience's tastes and demands," said Van Toffler, President, MTV & MTV2. "These two new channels give music fans a destination 24-hours a day, seven days a week, to see and hear the music and artists they love. We now have the ability to offer greater choices of music to our audience in the areas of pop, hip-hop, rap, and R&B."


MTVHits will program what it says will be the best Pop music from some of the hottest artists including Britney Spears, Blink-182, *NSYNC, Destinyõs Child etc. The 24-hour digital music channel focuses on the younger end of MTVõs demographic, serving the 12 to 24 market.

MTVJams will non-stop Rap, R&B, Hip-Hop, and Soul music and artists. This new offering will include artists such as Alicia Keys, Jay-Z, India.Arie, DMX and D'Angelo, and emerging artists including Tweet, Blu Cantrell and Tweet. MTV Jams will replace MTV X across all digital cable services.
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MTV switch in Asia

In Indonesia MTV Networks Asia has broken with its free to air partner to launch a 24-hour distribution service into the country on a ultra high frequency (UHF) channel operated by a newcomer to the terrestrial sector.

MTV had been carried on Anteve using branded programming blocks, but this deal lapsed on April 1. In keeping with its policy of creating market-specific MTV channels, the Singapore-based operation had been working on the launch of MTV Indonesia.

That service is set to be launched this month on Global TV, Indonesia's newest free to air entrant. MTV Indonesia will be available from launch to a potential distribution area incorporating five cities, the capital Jakarta, Bandung, Semarang, Surabaya and Medan and offering a potential 15 million households.

MTV and Anteve said that the parting was amicable. Programming from MTV Network's Nickelodeon channel remains on Anteve, part of what the Indonesians are calling a realignment of the service towards a more family-orientated audience.

MTV Networks Asia President Frank Brown has long maintained a strategy of maximising viewership through distribution agreements with free to airs to maximise revenue from both subscriptions and advertising.
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AT&T in subscription VOD trial

Moving on from Pay per View, AT&T Broadband is now launchng a market trial of subscription video-on-demand (SVOD) services, featuring content from premium networks Showtime and Starz!, in the US on cable systems of Westchester and Culver City, California.

This is AT&T Broadband's first premium subscription VOD service, and is the first deployment of Showtime on Demand and Starz on Demand in the Los Angeles metropolitan area.

The trial is expected to last up to six months, and is intended to help the companies better understand consumer interest and demand for subscription 'on-demand' services, and understand the added value of SVOD as an enhancement to a video-on-demand offering. The new SVOD offerings from Starz! and Showtime will be available free for 90 days to Starz! and Showtime customers with VOD services now available.

AT&T Broadband launched video-on-demand service in these communities last summer, enabling customers to select from hundreds of video titles, start their selections at whatever time is convenient for them, as well as be able to pause, rewind, or fast forward, all through their current digital set-top boxes and remote control. This VCR-like functionality will extend to the SVOD offering.

"AT&T Broadband is constantly looking to provide our customers with more choices and greater value, and we believe that adding on-demand functionality to our digital cable offering gives customers more of the great programming that they want, with more control over when they'd like to view it," said Steve Bouchard, Vice President of Video Marketing for AT&T Broadband.

"Starz Encore is delighted to join AT&T Broadband as it introduces SVOD on its VOD platform in this marketplace," said Mike Hale, Executive Vice President, Chief Marketing Officer for Starz Encore. "We are anticipating a strong consumer response from Southern California digital cable subscribers to our unmatched collection of hit movie programming from Hollywood, and we look forward to assisting AT&T Broadband with their VOD efforts."

"Showtime is pleased to launch Showtime On Demand with AT&T Broadband (..to..) combine in a powerful Showtime On Demand offering that we believe will be convenient to our customers and integral to AT&T's Premiums On Demand service," said Showtime Executive Vice President of Corporate Strategy Mark Greenberg.

AT&T Broadband expects to introduce additional content providers later this summer.

Starz On Demand is described as an enhancement to the Starz Super Pak, which provides impulse viewing of Starz Super Pak movies with full 'VCR-like' functionality for a flat monthly charge and no fee per view. Showtime On Demand provides over 150 Showtime programs each month with new content coming each week.
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Digital Terrestrial replacement

The BBC and Channel 5 are working on plans for a new digital terrestrial television service which would offer 16 free channels in return for a one-off payment of around £60 with ITV and Channel 4 pursued as participants.

Buyers of the low cost set-top box would get the five main terrestrial channels plus ITV2 and a variety of niche BBC channels including BBC News 24, BBC Choice, BBC4, and two BBC children's channels.

Backing of set-top box manufacturers, including Pace, are to be sought over the next few weeks. It is not clear if the service would also include a pay-TV option. Up to eight million UK households are forecast to be interested in such a proposition.

Currently only three per cent of UK analogue homes plan to switch to digital in the next year, and 13.8 million people are adamant that they will not switch according to the latest Digital Audience Research Tracking survey from Ipsos-RSL.

Gerald Kaufman, committee chairman on the Commons media select committee stressed he was not suggesting taxpayers should fund any giveaway of decoders when calling on players to cooperate. Though he said that the government had to ensure the availability of at least a free service on the digital terrestrial television platform.

Carlton and Granada are now seen as more attractive acquisition targets following the removal of ITV Digital - notwithstanding a £500 million legal case with the Football League. German media giant Bertelsmann is seen as favourite, expected to pounce after any Carlton Granada merger, reducing the consolidation needed to dominate the UK independent terrestrial market.
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UK cable restructures

UK cableco NTL is expected to file a pre-arranged Chapter 11 by the end of the UK bank holiday (6/5/02) after winning banks' support for its $10.6 billion bond-debt swap plan to slash its $17 billion (£11.8 billion) debt.

NTL UK and Ireland is then planned to come out of Chapter 11 by late August or September with $5.8 billion of debt, but a cash generating business of three million customers.

Bondholders are swapping bonds for 100 per cent of the company's equity, and shareholders get a very small rights package which looses most of the value of their shares. An enterprise value of $10.5 billion is put on the company, which will seek a future listing in either New York or London.

Barclay Knapp remains as chief executive 'at least until August', and is reported by the FT newspaper as saying the company will have a "pretty conservative" balance sheet and gearing - estimated at about 51—2 times its £700 million of annual ebitda.

JP Morgan Chase and Morgan Stanley on behalf of a syndicate of NTL lenders, agreed to unlock bank credit lines for a year at Cablecom, NTL's Swiss network which had breached its covenants and was unable to draw down any cash from banks.

Cablecom and NTL's other mainland European assets will grouped into a new unit, Euroco, and it is expected that these will be sold. Liberty Media, the investment vehicle of John Malone is reported by the FT as being interested in Cablecom as is former owner Swisscom.

NTL's main bondholder group has put $500 million of short-term funding into the restructured NTL UK and Ireland but would not fund Cablecom.

Interactive Beauty channel launched

This week (starting 6/5/02) sees the launch of Elle Beauty channel, dedicated to bringing women advice and information about beauty, health and fitness.

Delivered via satellite operator DirecTV Latin America, the channel is developed jointly with interactive TV company Lagardere Active iTV (Elle is one of Lagardere's most successful editorial products) and interactive software provider OpenTV, the service will be available to DirecTV Latin America subscribers in Argentina, Brazil, Mexico, Puerto Rico and Venezuela via DirecTV Interactive. Information will be updated every two weeks by experts through four different entries, 'Tricks and Tips', 'Our Selection', 'Studies and Quiz' and 'Fitness.'

ELLE Beauty is the latest in a series of interactive channels broadcast by
DirecTV Interactive and available in Spanish and Portuguese. The services
were produced by Lagardere Active iTV, which provides the branding, the
content and the look and feel, in collaboration with OpenTV, which developed the technical infrastructure.

"We are excited to offer this new option to our customers and to be the
first company in the world to bring Elle Beauty to its clients," said
Consuelo Sanchez-Octavio, Executive Vice president of North Region and
Interactive Services/New Products. "The other three Elle applications are
already very popular among our customers and I'm convinced this one will be added to their list of favourites."

"Our partnership with Lagardere Active and DIRECTV Latin America has
produced some of the finest examples of what interactive television can
bring to consumers," said Michael Collette, Senior Vice President of
marketing and business development for OpenTV. "This project is particularly
exciting in that world renowned brands, such as Elle and others, are now
leveraging iTV to reach audiences with new interactive content and
services."
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Channel of the Year

The Guardian Edinburgh International Television Festival (GEITF) in the UK has announced the launch of a Channel of the Year Award initiative. Both terrestrial and non-terrestrial offerings will be recognised at the high profile Edinburgh event.

The judging panel for the awards includes PR 'guru' Matthew Freud; presenter Dermot O'Leary; financial analyst Anthony Fry; former head of channel 5, David Elstein, Guardian Unlimited editor-in-chief Emily Bell and advertising sponsorship expert Tess Alps. The panel will be chaired by Advisory Chair Charles Brand. In addition, the Programme Controllers and Channel Editors of every channel broadcast in the UK, are being asked to vote anonymously on their selection for best terrestrial and non-terrestrial Channel of the Year, other than their own. These nominations will form a shortlist - of five non-terrestrials, alongside the five terrestrials that will be judged by the panel.


The Channel of the Year panel will be asked to judge channels on their programming, ratings success, channel direction, innovation, ideas, promotion, marketing and business models. The awards ceremony will be a specially produced session at the Edinburgh International Conference Centre on Saturday afternoon at the 2002 Festival (23-25 August).

Commenting on Channel of the Year, Charles Brand GEITF 2002 Advisory Chair and Joint Managing Director of Tiger Aspect said, "At a time when terrestrial channels are under huge pressures to perform and the cable and satellite channels have to adapt to changing platforms and financial cut-backs, the Festival wants to give some encouragement to them all, by launching the first awards to channels."

Festival registration opens at the end of May including via the Festival website at www.geitf.co.uk.
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