FROM MONDAY 16 TO MONDAY 23 OF JULY 2001

MONDAY 16th July

NTL in bid for ITV?
ITV News now a contest
Craig may take Lion's Gate
Fat's out of fire for Look
Johnstone VP at Cartoon Network
Irdeto Access joins CACC
NO porn please- we're Canadian
New VP at E!Network
Interpublic forms Magna Global
Murdoch launching financial news?
AT&T decision on Comcast

NTL in bid for ITV?

UK cableco NTL has denied it is bidding for ITV Digital, and co-owner Carlton Communications (with Granada) has said it is not seeking disposal - but the speculation fuelled by a Sunday Telegraph article persists because ITV Digital has been looking for a partner in the face of poor performance - and NTL was the rival bidder for the UK Digital Terrestrial licence and has long sought national TV distribution in the UK.

NTL Chief Executive Barclay Knapp responded to weekend press reports saying, "NTL has made no offer to acquire ITV Digital. ITV Digital's discussions with virtually everyone in the industry have been well documented as they have looked for a way to improve their situation. Although discussions such as these are regular in our industry, we at NTL remain completely focused on improving services, increasing revenues and reducing costs." According to press reports, Credit Suisse First Boston was said to be advising Knapp about the deal.

NTL works with the ITV companies through its transmission tower business which distributes the regional ITV Channel 3 signals in the UK. ITV Digital has losses of £800 million, expected to rise to £1.2 billion, and has been under pressure from shareholders of parents Carlton and Granada to stem the losses and shore up share prices. NTL is in a bigger longer term infrastructure play with debts of $15billion (£11 billion) and a falling stock price - but is believed to still have access to considerable credit - depite Knapp no longer being a darling of the stock market.

By combining operations savings could be made with dual use of NTL's call centre infrastructure, while NTL would gain a nationwide presence rather than being restricted to its franchise areas. It would then presumably market an offering of Cable for its franchise areas, and digital terrestrial for everywhere else - while actually delivering nationally to meet the terms of the digital terrestrial licence. This would put it on a more equal footing with BSkyB's single offering - especially given that NTL and Telewest have already agreed joint marketing for UK cable.

Weekend reports said that NTL had offered Stuart Prebble, the new chief executive of ITV, an all share deal that would give Granada and Carlton each a 10 per cent stake in NTL. Under the deal, Carlton and Granada would inject some £300 million into ITV Digital to reduce its debt before it was sold . It had been projected that some £1.2 billion investment would be needed before the company became profitable.

The move followed a £40 million deal in which NTL agreed to carry the new ITV channel ITV Sport on its cable network.

ITV News now a contest

Bidding for the £160 million four year UK ITV news contract has intensified with ITV companies' top shareholders (including Carlton and Granada) receiving a letter from Richard Huntingford, Chairman of Channel Three News, condemning speculation that the contract was about to be re-awarded to ITN without any 'fair and real' competition.

Channel Three News consortium, which comprises Bloomberg, BSkyB, CBS, Chrysalis and Ulster Television, is expected to undercut the costs of ITN in its bid, which must be submitted by the end of the month.

The 1990 broadcasting act gave ITN greater independence from ITV, but required the company, which is 40 per cent owned by the ITV firms, to open up its contract to competition. Consequently this is the first time that ITN has had to compete for the contract to supply news for ITV - and although it is expected to win, it would be a disaster both financially and in terms of credibility if it were to loose.

Carlton and Granada had sought to take control of ITN and then float the company.

Craig may take Lion's Gate

Calgary-based broadcaster and wireless cable company Craig Broadcasting is in informal talks with Canada's largest independent film producer and distributor Lion's Gate Entertainment. Often seen as a take-over target itself, Craig sees Lion's Gate as putting it on the road to vertical integration. Lion's Gate has been on the market for most of the year. Speculation is rife that a deal with Craig offers two alternatives. Craig buys the entire company or Craig buys only its Canadian production and distribution arm, allowing the remainder of the company to concentrate on its California-based assets which include VOD service CinemaNow and Trimark Pictures.

Fat's out of fire for Look

Canadian MMDS player Look Communications appears to be in the running to refinance its debt before an August 2, deadline to repay C$ 98.3 million in bank payments passes. Look, which has 300,000 Internet and digital TV customers has arranged for loan guarantees from the Quebec government for C$35 million and from Bell Canada Enterprises through its Teleglobe unit and from Telesystems for the remaining amount. A refinancing agreement should be made public soon. Look has C$80 million a year in recurring revenue. It is also rumoured that Vancouver based telco Telus, may be lining up an investment in Look in order to better compete against Bell Canada.

NO porn please- we're Canadian

Federal regulator The Canadian Radio-television and Telecommunications Commission has rejected applications from three US-based porn channels for inclusion in the list of foreign channels eligable for distribution in Canada. Canadian cable associations and MSOs including Rogers and Shaw sponsored the applications hoping that the potential of hot steamy nights spent with Spice Platinum Live and Spice Platinum 2 would help sell digital cable. Only 7 per cent of Canada's 7.4 million cable subscribers have taken the digital tier. The reason given for rejecting the applications was that because the porn channels are licenced in the United States the Federal Regulator would have no way to punish them if they transgressed community standards.

AT&T decision on Comcast

This week, as new bidders enter the fray, the AT&T board decides whether to pursue Comcast's proposed $40bn purchase of its cable TV networks.

Major shareholder and former AT&T directorJohn Malone suggested that he would support a Comcast offer in principle, though at a higher price. This view was echoed by AT&T's chairman Michael Armstrong who also 'might accept an improved offer' according to press reports. Comcast's proposal "recognises at least some of the value we've created in AT&T Broadband. "The question is, whether it recognises all the value," he comments.

Other possible biddgers are likely to include Cox, the biggest US cableco after Comcast, while Charter Communications, the cable company created by Microsoft co-founder Paul Allen, would be interested if there were a break-up of AT&T Broadband. Regulatory hurdles may be insurmountable for AOL Time Warner, though it would be interested if such a deal were possible.

Comcast's hostile approach added 25 per cent to AT&T's share, increasing its stock market value $15.5 billion therefore making investors that much more keen that a deal be done and the increase retained.

TUESDAY 17 th July

Murdoch clear for DirecTV win
ISPs not liable For Web Content
Japanese broadband market quickens
Online use hits TV viewing
Internet Digital Video Service launched
E-mail Spam Ban Opposed
Baroness Jay for BBC?
Ofcom looms
Kirch to get World Cup
Share slump for European cablecos
Napster settles case, still shut
Pace extends IPTV in US

Murdoch clear for DirecTV win

News Corp Chief Rupert Murdoch's plans to aquire US satellite broadcaster Hughes, to form his Sky Global international broadcasting network look more assured following news that potential rival bidder Echostar Communications Corp has dropped out of the race.

Echostar Chairman Charlie Ergen abandoned a plans to acquire Hughes Electronics after his preliminary offer was rejected by Hughes and its controlling shareholder General Motors due to fears of antitrust problems, according to the Wall Street Journal online edition.

Now News Corp could finalise a deal in the next few weeks. News Corp's offer would give Hughes shareholders more than 50 per cent of the combined entity and GM would get about $7 billion in cash and notes for its 30 per cent interest in Hughes.

Although Ergen managed to raise $3 billion in short-term financing for a Hughes deal, GM and Hughes executives were reported to believe that the deal wouldn't get past federal antitrust regulators.

EchoStar had proposed acquiring PanAmSat Corp, 81 percent owned by Hughes, regardless of the outcome of government antitrust reviews. This plan was intended to provide at least $5.5 billion in cash to GM even if the larger deal weren't completed.

ISPs not liable For Ewb Content

In a move that will be welcomed throughout the online content distribution industry, UK Internet service provider Demon Internet has won an appeal against an earlier UK court decision that it was liable for information posted to a Web site hosted on, or routed through, its servers.

A February court injunction against it was aimed at blocking publication of the location and 'new identities' of two Liverpool teenagers found guilty in 1993 of murdering a two year old, James Bulger.

The pair, now 18, were released and given new identities but, friends of James Bulger's family threatened to post details of Thompson and Venables' new identities and other information about them on the Internet.

Demon was concerned that through no fault of its own it could be found guilty of breaching the earlier injunction not to publish photos. "The injunction as it stands covers all content on our servers which is generated on the Internet worldwide," commented a spokesperson for Demon parent Thus, saying that it was asking for a High Court clarification of what its liabilities were.

High Court judge Dame Elizabeth Butler-Sloss, agreed that ISPs could not be held responsible for all contemptuous material posted on their Web pages. "The president and counsel for the Attorney General agreed that the original order was inappropriate in relation to ISPs," said Thus. "Dame Butler-Sloss agreed that the order only applies to ISPs if they have actual knowledge and failed to take reasonable steps to prevent publication," the company added.

Japanese broadband market quickens

The Japanese market for broadband Internet access lags behind the United States and South Korea, but is fast catching up, with cable Internet the primary platform, while DSL (digital subscriber line) services are expected to overtake cable in the near future according to a recent Reuters report..

By 2005 fibre-optic services are expected to dominate says the report. Players such as Nippon Telegraph and Telephone Corp (NTT) Japan's dominant telecom carrier, begins its fibre-optic Net access services on August 1. It will enable access speeds of 100 megabit per second (Mbps) and cost 11,000 yen ($88.5) per month, while its 10 Mbps service costs 6,100 yen. NTT is also loaning its unused fibre-optic networks to competitors and plans to cut access charges to 5,231 yen from 7,898 yen per month.

Usen Corp, NTT' major rival in the fibre-optic services, began offering fibre-optic Net access services in Tokyo in March with video and music on demand, games and karaoke. It offers services at 100 Mbps at half the cost that NTT plans to offer. Some 3,500 households have signed up to Usen's fibre-optic service. C5.Com A start-up specialising in fibre-optics Net access services to office and apartment buildings plans to offer 100 Mbps services in Tokyo at a monthly charge of 3,000 yen from December.

NTT also plans to lower its monthly DSL services fixed charge of 1.5 Mbps to 3,800 yen from 4,050 yen from July 16 (yesturday). The company already has 62 percent of the market with 181,697 users and aims for 1.7 million subscribers by March 2002.

Japan Telecom Co Ltd Japan's number three telecoms firm offers DSL services at a monthly fee of 5,700 yen. It has about 12,700 subscribers with 4,700 awaiting full equipment to be installed.

KDDI Corp Japan' second-largest telecoms firm offers DSL services at a monthly fee of 5,700 yen, but it is switching its focus to mobile businesses and not particularly promoting broadband services.

Yahoo Japan which is 50.1 per cent owned by Internet investor Softbank, plans to start offering DSL services with download speeds of up to 8 Mbps in August for 2,280 yen a month excluding equipment rental fees. Its target is a million subscribers by December.

A startup called eAccess wholesales DSL networks to major Internet service providers (ISPs) such as Nifty Corp, which is wholly owned by Fujitsu Ltd, and So-net Corp, owned by Sony Corp. Nifty had 4.6 million users by March while So-net 1.66 million subscribers at the end of April.

Tokyo Metallic Communications has been offering DSL high-speed Internet services since February 2000. The company was bought by Softbank Corp in July. It has 25,000 users and has built DSL networks that could serve up to 500,000 users in the Tokyo metropolitan area.

Leading the list of cable companies is Jupiter Telecommunications Inc, an MSO with 19 cable companies nationwide. The company bought Titus Communications, a subsidiary of Microsoft Corp. By March it had a total 909,100 cable television subscribers and 183,400 subscribers for its Internet access services through cable modems.

Tokyu Cable Television Corp - which becomes Tokyu Communications Inc in August - is 80 per cent owned by Tokyu Corp and 15 per cent by Sony Corp. It operates in Tokyo and surrounding areas, and had 293,861 cable television subscribers and 46,515 cable Internet service users as of June.

Online use hits TV viewing

In a new study by Forrester Research/M2 Communications Limited 56,000 European consumers were interviewed and the unsurprising conclusion was that in markets with heavier TV-watching habits those with online access are watching between 10-15% less TV each week than offline users.

Global and national news provided the draw for only 16 to 17 per cent of those who have been online for less than six months, citing it as their primary source such information, while for those who have two or more years of experience on the web the figure was around 35 to 37 per cent.

Commenting on the results Forrester notes that it expects TV watching to fall further with growing consumer adoption of broadband online access.

Internet Digital Video Service launched

Streaming media services providers Streamway, and e-World Communications Company Teleglobe have launched a new 24/7 Internet Digital Video Service aimed at TV and Radio Broadcasters internationally.

The new service offers content providers an encoding platform, which works in conjunction with TeleglobeØs Inktomi - based intelligent Content Delivery Network (CDN) to provide delivery of media content to a global audience on the Internet both as broadband or narrowband content.

"The 24/7 encoding service is the first of a number of joint services to be launched over the next couple of months following Streamway and Teleglobe's recent strategic alliance to deliver Rich Media and Web-content to the global corporate marketplace," said Patrick Evans, Manager of TeleglobeØs European Digital Video Services. "The combination of TeleglobeØs intelligent global IP backbone network, hosting capabilities and content delivery platform with StreamwayØs expertise in the corporate streaming media environment, ensure consistent quality of the streaming content and higher performance for content providers.

"Dan Grapengiesser, StreamwayØs CEO, adds, "We believe that the new service will provide clients with the best of two worlds. Teleglobe's impressive content delivery network combined with Streamway's technical platform, results in a robust turnkey solution with full support. Combined with our webcasting, webTV design and consulting capabilities, we can now offer a comprehensive solution. By using the Internet as a distribution channel and by providing an on demand facility, users can access content independent of geographical or time constraints, ensuring maximum leverage of content.

" The service provides high levels of redundancy and support with a comprehensive Service Level Agreement (SLA) which includes an uptime guarantee of 99 per cent. Satellite connectivity for the service is delivered by Tele-Cine's London-based television broadcast facility.

E-mail Spam Ban Opposed

The European Parliament Citizens' Freedoms and Rights, Justice and Home Affairs Committee has just opposed a proposal supported by many European Union member states that would virtually ban unsolicited commercial e-mail - or 'spam.'

In a report in the journal Newsbites, Jory van den Broeke, a spokeswoman for the European Parliament, said that both issues now go to the full Parliament for debate in early September.

All EU member states oppose flooding of consumer e-mail inboxes with advertisements and other marketing material but vary in their view as to how this should be achieved.

At a June, 11 EU Telecoms Council meeting telecommunications ministers of the EU's 15 member states agreed to a proposal for an 'opt-in' system, which would ban direct marketers from sending unsolicited e-mails unless they are given explicit consent by potential recipients. The UK, France, Luxembourg and Ireland called for an 'opt-out' system, under which all e-mail box owners are targets for direct marketers unless they announce that they do not want unsolicited email. Now the European Parliament's Citizens' Rights Committee has voted for the opt-out system.

The committee is calling for a regulation that would require senders of direct marketing e-mail to supply a return address to enable recipients to request that they be removed from the mailing list.

"The (committee) is saying that sending electronic messages for the purpose of direct marketing while disguising or concealing the identity of the sender should be prohibited," she said.

Before an EU-wide e-mail regulation can take effect, the European Parliament must agree with the Telecoms Council, which is scheduled to take up the issue again in October. If the two sides cannot agree to a compromise solution, then e-mail will continue to be regulated in the EU by individual nations within their borders.

The European Commission, the executive body of the EU, strongly supports the opt-in spam proposal, which would effectively ban spam.

Per Haugaard, spokesman for the EU's top information technology official, Commissioner Erkki Liikanen, was reported in Newsbytes as saying, "We regret this development. We feel the opt-in solution is best." However, he said the Commission was pleased with the Citizens' Rights Committee stand on the issue of telecommunications data retention (the committee had also opposed a proposal that would require telecommunications companies to store all Internet traffic, telephone and other data records for law enforcement purposes).The committee believes data telecommunications data should stored only as long as needed for billing purposes.

Baroness Jay for BBC

chair BARONESS JAY, former Labour leader in the UK legislature The Lords, is reported to be a frontrunner in the bid to be the next Chairman of the BBC.

Among five known applicants for the now closed contest, are: Gavyn Davies, Vice-Chairman of the BBC and a Labour supporter with close links to the chancellor, Gordon Brown; Lord Burns, the former senior Treasury Civil Servant; Michael Grade, former Chief Executive of Channel 4; James Lee, Chairman of Scottish Screen. Grade, Chairman of Pinewood Studios, is the only one to have openly declared himself as a candidate.

The influential post entails overseeing a £2 billion-a-year organisation whose television and radio channels are seen or heard throughout the country.

Ofcom looms

The UK Government has pushed through a mini bill to create a new super-regulator to be up and running in 2003 and combining the television, radio and telecommunications sectors. To be called Ofcom, the new regulator will replace the current five regulators - the Independent Television Commission, the Radio Authority, Oftel, the Broadcasting Standards Commission and the Radiocommunications Agency.

Broader regulatory measures covering media ownership have not been tackled, particularly the ruling whereby no TV company can own a newspaper, no radio company can exceed 15 per cent of the national audience and the London weekday ITV franchise cannot be merged with the weekend one.

Kirch to get World Cup

Sepp Blatter, President of the soccer world governing body FIFA expects a deal to be finalised this week completing the German Kirch Group's takeover of TV rights to the 2002 World Cup in Japan & South Korea.

Kirch exercised its option to acquire the rights, following the collapse of its previous partner, Swiss rights marketeer ISL/ISMM. Under the previous deal Kirch had the European rights, and ISL/ISMM controlled international sales.

A report in the Financial Times newspapers stated that the new deal may not include Kirch having an option on the worldwide rights to the 2006 event - to which it holds European rights - though will include it taking responsiblity for host broadcasts of other FIFA events, including the Women's World Cup & Confederation Cup.

Pace extends IPTV in US

In a move to develop video over IP (Internet Protocol) in the Americas, Pace Micro Technology Americas opened an IPTV Division at its US headquarters in Boca Raton, Florida. Philip Lonigro will head this new team as the Director of Product Management, with the division acting as an extension of Pace's existing IPTV Division, led by Managing Director Andrew Clifforth, based in Cambridge, UK.

"As the demand for high-speed, IP-based networks continues to increase, so will the demand for video over IP," said Andrew Clifforth, Managing Director of Pace's IPTV Division. "Pace's extension of its IPTV Division in the US demonstrates our commitment to this growing IP market."

As Director of Product Management for Pace's IPTV Division Americas, Lonigro will lead a staff of product management and technical support experts, working directly with Pace IPTV account managers, partners, resellers and customers in the U.S., Canada and South America. Lonigro brings more than 21 years of experience in managing innovative product launches in the satellite, cable, computer and communications industries. Prior to this new position, Lonigro was director of product management for Pace's satellite division for Latin and South America, where he provided product marketing and sales support for Pace's deployment of its satellite product 'WorldBox' for NetSat in Brazil and Sky Mexico.

According to industry analyst firm TeleChoice, the DSL (digital subscriber line) market is predicted to reach 17.4 million homes by 2004. Additional IP-based networks, such as fibre to the home, represent increased opportunities for service providers to deliver value-added services of interactive TV across these IP-based, high-speed networks.

WEDNESDAY 18 th of July

Canal+ Tech promotes digital TV

Canal+Technologies of France has signed a licensing contract with Digitenne, a consortium of Dutch broadcasters and telecom and broadcast network providers created to offer digital terrestrial TV services, to foster the development of interactive terrestrial TV in the Netherlands.

Canal+ Technologies will supply its interactive system Mediahighway and its conditional access system Mediaguard, which will be integrated into Digitenne's digital set-top boxes (DSTB). Digitenne is expected to receive a licence in a few weeks to operate DTT services in the Netherlands starting in the second quarter of 2002. The licence allows for five multiplexes which will enable Digitenne to offer 20 channels.

Canal+Technologies' middleware -Mediahighway - will be integrated with DVB-MHP-compliant digital set-top boxes manufactured by Thomson multimedia.

Canal+Technologies will also provide an initial interactive application suite which will include navigation tools such as a channel list and a EPG. Enhanced broadcast applications, games and a radio mosaic will follow, with interactive shopping channels (t-commerce) and Internet access to be offered later on.

Francois Carayol, Canal+Technologies' Chairman and Chief Executive Officer said "As pioneers of digital terrestrial technology - we started in 1998 with ONdigital (now ITV Digital) the United Kingdom - we are very pleased to have been selected by Digitenne. This agreement shows our commitment to offering our technologies to operators in diverse environments such as digital terrestrial, as well as our commitment to open standards such as DVB-MHP. We believe our technology will fully support Digitenne's plans to offer a broad range of digital services to viewers across the Netherlands."

Bauke Geersing, Digitenne's Chief Executing Officer adds, "The co-operation with Canal+Technologies is an important element for the success of Digitenne and its services in the Netherlands. Digitenne will offer to the Dutch public a broad basic package of TV and Radio Channels with additional and enhanced services of top quality for a competitive price. Consequently Digitenne will be the alternative to cable TV. It will give each consumer the opportunity to have a real choice between the old and the new way of watching and listening to television and radio and other programmes."

Chisholm chairs Foxtel

Pay TV legend Sam Chisholm has been appointed as the Chairman of Australia's market-leading platform, Foxtel, replacing current Chairman Paul Rizzo.

The announcement was made by the CEO of Australia's largest telco Telstra, Ziggy Switkowski. The company has a 50 per cent stake in Foxtel, with the remainder owned equally by Chisholm's former employer News Corp, and the remainder by Kerry Packer's Publishing & Broadcasting.

Under the terms of their agreement, the three partners take it in turns to name a Chairman. The fact that Telstra has named Chisholm, who as Chairman of BSkyB turned around the UK platform's fortunes in the 1990s, has been by some observers to indicate that the telco is taking more direct interest in Foxtel. Chisholm, who had returned to his native Australia after leaving BSkyB, was appointed to the Tesltra board earlier this year.

Senior News Corp staff have consistently criticised Telstra's attitude to Foxtel, charging that attempts to introduce interactivity, digital technology and other services to its 725,000 subscribers are being held up by Telstra's reluctance to upgrade the network.

Switkowski commented, "I don't want to raise any expectations, other than to say, yes, from a Telstra point of view, we're giving it [Foxtel] higher visibility, higher priority."

NRK considers ads and Pay-TV

An important change of guard at NRK, Norway's two channel public service broadcaster, occurred on Monday when John G Bernander took over as Director General from Einar Foerde.

Following his appointment in March Bernander hasrepeatedly, stuck his neck out, challenging the media and political establishment of the country. It is also worth noting that Foerde, an old hard-nosed veteran with deep roots in the governing Social democrat party, is succeeded by a representative of modern business life - a former Hoeyre (conservative) politician.

On the day he entered his new job Bernander allowed himself to be more specific. Even though he modestly claimed that. "Primarily it is important for me to understand all the challenges I am facing, and to go through them with my new colleagues," he was ready to challenge the ways that NRK is being and has been financed. "The present licence financing is simply not enough. We badly need new sources of income," Bernander claimed, and pointed at both advertising and various pay TV services as alternative sources of income saying, "They are simply a must."

In recent years NRK has tried to meet financial shortcomings through staff reductions and heavy cost-cutting measures. That is not something Bernander supports, saying, "You can't rationalise and save yourself through economy crises."

Bernander also saluted his predecessor by claiming that, "NRK is a Home Guard for Norwegian language and culture. I hope to be able to manage this heritage as well as you have done."

NRK currently claims the highest public support, both in television and radio, among all European public service broadcasters.

Hubert joins Cerillion

Convergent CRM, Billing and Carrier Management specialist, Cerillion Technologies, has appointed John Hubert as Non-Executive Chairman. John has held senior positions in several technology companies. These include Head of IT and Communications for Unilever world-wide, Managing Director of EDS (UK & South Africa) and Chairman of the IDS Group PLC. More recently John has had experience in helping privately held companies to evolve into public enterprises.

Louis Hall, Managing Director, Cerillion Technologies, commented, "John has the right combination of background, skills and experience to help us through the next stage of our evolution. He will help us to shape our company as it matures whilst supporting the entrepreneurial spirit that makes us so successful."

Hubert commented, "Cerillion Technologies is a company that is growing rapidly. It is not, however, merely a company that 'burns very brightly'. Cerillion Technologies is building long term, sustainable, value. It is doing this through a total quality approach that is clearly evident in the people, the product and the philosophy that drives the company. It is a company that I am proud to be associated with."

AOL results - forecasts

AOL Time Warner Inc's second-quarter results due out today (Wednesday 18th July, US Eastern time) are expected to meet analysts' despite a weak advertising market.

Earnings of 28 cents a share on revenue of $9.7 billion are forecast for the quarter ended June 30, according to analysts surveyed by Thomson Financial/First Call. This compares to a comparison of AOL plus Time Warner in the previous year earning 23 cents a share on $8.91 billion revenue.

AOL earnings before interest, taxes, depreciation and amortisation, have been forecast at $2.66 billion compared to $2.12 billion last year, which would put it on track to meet its goal of Ebitda $11 billion on $40 billion for the full year. Last year, on a pro-forma basis, the company had Ebitda of $8.4 billion on $36.2 billion in revenue.

These are ambitious targets, set before the advertising slump and dot com crash, and most analysts would not be unpleased with an Ebitda of over $10 billion. The company's Internet-service provider America Online has continued to perform well, surpassing 30 million subscribers, gaining market share.

Haffa retains EM.TV stake

German television and film rights dealer EM.TV & Merchandising AG has issued a statement that the 43 per cent stake held by Chairman and founder Thomas Haffa is not for sale.

However, it is known that former Supervisory Board Chairman Nickolaus Becker had tabled an offer for Haffa's stake.

EM.TV also announced that it had sold its 65 per cent stake in Junior-Toys - for an undisclosed sum - having originally paid DM2.7 million for the stake.

The company is divesting as part of a strategy of concentrating on its core activities and reducing debt. A buyer is sought for its Jim Henson Company, which produces The Muppets.

EM.TV shares, traded on the Neuer Markt, were listed at over E60 a year ago, and are now around E2.

US ownership regs debated

In the US, while the new look Republican appointed Federal Communications Commission (FCC) strives to 'free-up' legislative restrictions on the media industry, the new Democratic leader of the Senate Commerce Committee is reported to be preparing legislation aimed at slowing the pace of consolidation.

Committee Chairman Ernest F Hollings is putting forward legislation to limit the number of broadcast outlets a company may own. The current rules prohibit companies from owning stations that in aggregate reach more than 35 percent of the national television audience. Hollings' bill would prevent the FCC from eliminating any regulations that limit the size of media companies until it has conducted a thorough study of the marketplace.

The moves are in response to statements by FCC Chairman Michael K Powell, a Republican who has suggested that many media industry regulations are out of date and should be modified or eliminated.

Mergers affected could include Comcast Corp's bid for AT&T Corp's broadband unit and News Corp's bid for General Motors Corp's Hughes Electronics division and its subsidiary DirecTV.

AT&T considers options

The sale of AT&T's cable systems could achieve a higher price by selling them than spinning them off, say bankers, with valuations quoted at $3,000 to $3,200 per subscriber.

This follows moves by CEO Mike Armstrong's apparent decision to shop the assets around - despite the company's initial claim that the cable assets were not for sale.

In comparison, Comcast Corp's $44.5 billion unsolicited bid, launched on July 8, values the unit at $4,100 on a per subscriber basis.

In addition to serious consideration of Comcast's bid AT&T has been quietly considering other offers, known to include rival cable operator Cox Communications.

Speculative options also include AOL Time Warner to spinning off its cable unit into a new company that would include AT&T's cable assets.

Walt Disney Co Chairman Michael Eisner is reported to be looking for partners to put together a consortium to make an offer, while some comentators suggest such a move is unlikely.

Charter Communications, the cable company controlled by Paul Allen, French media giant Vivendi Universal and Barry Diller's USA Networks are among other companies cited as interested, while former AT&T's board member John Malone, said Liberty Media will not be bidding.

Majors review content copying

Sony Corp's Sony Pictures Entertainment and AOL Time Warner Inc's Warner Bros studio have concluded licensing agreements with the US Digital Transmission Licencing Administrator, an alliance of five big manufacturers that is widely referred to as the 5C group: Intel Corp, Matsushita Electric Industrial Co, Toshiba Corp, Sony and Hitachi Ltd.

These new agreements are designed to eventually allow consumers to make digital recordings of some content produced by the Sony and Warner Bros studios, using their computers or digital video recorders. Major entertainment giants such as Walt Disney Co and Vivendi Universal SA have not endorsed the standard. It is reported that the biggest problem is security of free broadcast programming received through conventional TV antennas.

Consumer-products makers want to sell digital devices which connect with each other in home networks, including digital video recorders. Understandably, entertainment companies are concerned at potential losses from consumers making perfect, unauthorised digital copies of their most valuable programs, and distributing them free of charge.
Most of the 50 plus companies to have licensed the security technology are hardware manufacturers, but Sony and Warner are the first major Hollywood studios to join.

Under the agreement certain instructions and restrictions could be embedded in digital content such as movies. Different classes of protection would include pay-per-view movies; pay-TV cable programming and over-the-air broadcasts. The security technology will allow broadcasts received via cable set-top boxes or satellite dishes to be copied, but blocked from retransmission over the Internet.

However, so far this security technology cannot stop consumers copying and retransmitting such broadcasts if they receive them via antenna.

Hughes results disappoint

Hughes Electronics Corp reports that its net loss has more than doubled during the second quarter, with 'significantly lower-than-expected net subscriber additions', a slowing US retail market, and losses from its satellite subsidiary. Cash flow from operations fell during the quarter and Hughes warned last month that its quarterly results would not meet expectations, plus it cut its estimates for the full year.

Jack Shaw, Hughes's chief executive, said, "My number one operational objective is to get the company back on track and meet or exceed (our) financial commitments (through a range of) specific operational and structural changes that will enable us to meet this objective."

Hughes warned that it expects to report third-quarter revenues of $2.1 billion and cut its full-year revenue outlook to about $8.3 billion from about $8.76 billion. It also cut its full-year cash flow projections to a range of $450 million to $500 million from a previous range of $575 million to $650 million. Cash flow is now put at between $250 million to $300 million - down from of $350 million to $425 million.

Full-year expectations for net subscriber additions at DirecTV US are down to about 1.1 million from 1.3 million, itself a cut on the earlier forecasts of 1.5 million to 1.7 million. The DirecTV U.S. unit added 745,000 total new subscribers and 175,000 net new subscribers, as expected, and reported revenues of $1.35 billion, up 19 per cent from $1.13 billion a year ago.

DirecTV Latin America generated revenues of $175 million compared with $122 million a year ago. The unit added 25,000 net new subscribers in the quarter. EBITDA narrowed to negative $35 million from negative $40 million in the year-ago period.

Sky's new box costs £300
Fox Kids ups Polish distribution
Telia invests in fibre deployment
Dish subsidyfor China
PrimaCom distributes Universal
50% UK TV digital by 2005
No cable TV for Chinese Telecos
Private funds but no sale at BBC
BBC spends £52m on web
ITV revenue forecast cut
Loral uses terrestrial broadcast
Group 3G signs DT deal
AOLTV box from Samsung
DirectTV launches ESPN Today

Sky's new box costs £300

UK satellite broadcaster BSkyB's new Sky+ digital set top box receiver, described by the company as the UK's first integrated Personal TV Recorder, (iPTR), is to go on sale for £300 as from September, the company announced yesterday (Wednesday July 18th).

In addition to the initial £300 cost the Sky+ service subscription will be £10 per month - effectively a 'software royalty' fee according to Sky. Sky's existing digital subscribers will pay £50 for standard installation of the equipment, and non-Sky customers will pay £100. Sky will also offer the hardware via a monthly payment plan option.Options for existing digital satellite viewers to purchase Sky+ but also retain their existing free receiving equipment are being considered.

The retail sale price breaks with the current policy of giving away the set tops. However the current cost of acquiring a customer by Sky is put at around £250 - combining box subsidy and marketing. Consequently, the new box production cost and marketing could be as much as £550 without increasing Sky expenditure and still recouping costs in year one of subscription - though part of the motivation is to move away from the subsidy model and BSkyB Chief Executive Tony Ball is reported as saying that the cost of the new devices will not be subsidised.

The extra £120 per year service revenue could significantly contribute to Sky's plan to push average revenue per user up from its current £289 to £400 within five years - but is only expected to apply to a subset of existing digital subscribers, as the cost is likely to prove a barrier to new subscribers who have not already chosen to subscribe to Pay-TV.

Software and hardware developers NDS and Pace have worked with Sky developing the XTV technology that drives Sky+ (see NDS interview, Pace interview).

Key user features have long been trailed before the release, and include:
Dual tuners, enabling viewers to watching one programme while being able to record another - something rival TiVo does not provide. A hard disk for recording from the original broadcast stream retains digital quality with an average of 20 hours worth of recording space (depending on complexity and resolution of recorded material).
Other features include automatic recording of favourite programmes; Pausing of live TV while recording the live action - the key attribute of PVR technology; Single button recording; Full VCR-type control on all recordings; Set Bookmarks in recordings for quick navigation; Parental Control on Recordings; Full integration with Sky Guide so changes in programme schedules are automatically updated.

Sky says that for the broadcaster the new box ensures a fully digital, secure, end to end personal TV system which can offer pay TV and VOD options directly from the hard disk. Broadcasters can download content when bandwidth is cheaper or more available eg overnight. The box facilitates encrypting of content and enabling new revenue generating features such as personalised advertising.

In echoes of the Home Choice VOD advertising, Richard Freudenstein, Sky's Chief Operating Officer, said, "Sky+ will transform television. It offers the ultimate in choice and control, giving viewers more power than ever before to choose what they want to watch, when and how they want to watch it.

The features are not in themselves as 'revolutionary' as Sky might claim as variants already exist, but with the kind of marketing push that Sky is able to offer to bring about adoption of the PVR, then the resulting shift in viewing habits could indeed be fundamental.

Despite the poor sales of TiVo by Sky the company says pre-registrations for the new Sky+ box are strong with more than 60,000 calls received since the end of June.

Telia invests in fibre deployment

Telia, Sweden's former monopoly, telecommunications player, is increasing its involvement in cable and broadband development. Telia announced this week that one of its most important affiliates, net wholsaler Skanova, is about to invest 1.25 billion krona (£84 million) in new fibre cable developments during the rest of 2001. Most of the money will be spent on new fibre optic cable installations, in and the three major cities of Stockholm, Gothenburg and Malmo. In total some 5000 kilometers of fibre optic cable is about to installed throughout Sweden.

Telia is also the market-leading cable television operator of Sweden through another affiliate, Com.hem, which has a 65 per cent market share comprising some 1.3 million households. Com.hem was also a pioneer in digital cable development, launching its services as early as 1997. Today Com.hem has some 100,000 digital customers.

"Demand from new operators in the broadband industry is the main reason for this investment," Lars-Gunnar Johansson, MD of Skanova, comments. According to Johansson the present investment is twice as high as the whole of last year. Increasing demand from business customers is the driving force behind this investment, but there is also growth in demand for broadband from individual households.

Skanova is operating and developing what Telia claims is Sweden's biggest network for telephony, Internet and broadband services. Skanova has no exclusive ties with its parent company. "The network, the services and our competence is available for all present and future external operators," Johansson says. Skanova currently has a staff of some 2700, and a turnover of almost 22 billion krona (£1.5 billion with approximately 150 external customers to date.

PrimaCom distributes Universal

Germany's PrimaCom Management GmbH, a subsidiary of PrimaCom AG, is reported to have agreed with Universal Studios International BV the company's first pay-per-view deal in the country.

In a non-exclusive agreement current and library titles from Universal, ranging from Gladiator to The Flintstones, will be made available throughout Germany.

Hans Wolfert, chief corporate development officer of PrimaCom emphasised how the deal with a Hollywood studio would ensure the quality of PPV services on offer. And at Holly Leff-Pressman, senior vice president of worldwide pay-per-view and video-on-demand, Universal Studios Television Distribution noted how the deal gave the company national distribution.

ITV revenue forecast cut

Neil Blackley, media analyst at Merrill Lynch, has cut his revenue forecast for Granada's by £40m and cut his pre-tax profits estimate for 2002 from £65m to £32.5m. Carlton's revenues are forecast to fall by £32m and 2002 pre-tax losses to widen by £28m to £120m.

Apart from an industry wide-fall in advertising revenues, Blackley cited continuing concerns about programming costs at ITV Sport and ITV Digital's churn rate (figures out this week).

Loral uses terrestrial broadcast

eMedia LLC, a US terrestrial broadcast network, is to be used by Loral Cyberstar, a unit of Loral Space and Communications, to deliver programming to areas without a satellite downlink.

Stamford, Conn.-based said its The eMedia terrestrial network already provides Internet streaming media services to users in remote and home office locations. Cyberstar will use this capability to expand its coverage of customers with business communications requirements outside Cyberstar's current reach.

In return, e-Media will now be able to offer satellite delivery of business programming over the Cyberstar system.

Group 3G signs DT deal

Group 3G, one of the six German third generation mobile telephone licence holders has agreed an interconnection deal with incumbent telco Deutsche Telekom. Under the terms of the deal Group 3G customers will be able to make and receive calls to and from all types of telephones using Deutsche Telekom's fixed-line network.

All the other German 3G operators, who also need to interface Deutsche Telekom's vast fixed-line network, will be hoping to replicate the deal.

Group 3G, a joint venture between Telefonica of Spain and Sonera of Finland, is also in talks with other 3G operators - including E-Plus, a unit of KPN of the Netherlands, with the possible participation of Mobilcom - on sharing network investment. could be announced within weeks.

To date T-Mobil, Deutsche Telekom's mobile arm, and Viag Interkom, a subsidiary of British Telecom, are the only German 3G operators to have signed a network-sharing contract.

AOLTV box from Samsung

AOL Time Warner plans to cooperate with Samsung Electronics on devlopment of a next generation AOLTV set-top box which includes recording capabilities through the TiVo service, (15 per cent AOL owned). Such a high spec box would allow users to access AOL features such as instant messaging, e-mail, and web browsing from their TV. Possible future digital convergence product cooperation could include wireless, Web terminal, and email printers.

Part of the deal includes various marketing and technology moves to promote the Samsung brand and products (eg DVDs, PDAs, HDTV) across many of AOL Time Warner's print, TV, and online brands.

"We're looking forward to collaborating with AOL Time Warner to provide consumers with total entertainment and communications solutions, as well as new digital experiences that will lead the digital convergence era," Eric Kim, Executive Vice President of the Korean-based Samsung Electronics is reported as saying.

Last year Samsung Electronics had sales of $27 billion

DirectTV launches ESPN Today

ESPN Today has been launched in the US to provide text and graphics with the latest sports-related information. This interactive channel is available through DirecTV's interactive TV service running on Wink Communications.

ESPN Today is the third channel in a set of dedicated interactive channels on the DirecTV Interactive service, available free to more than two million DirecTV customers.

FRIDAY 20 JULY 2001

ITN in Russian News first

Russia's first 24 hour news service, Euronews, is to be provided by UK independent news service ITN, becoming the first western media organisation to deliver news through Moscow's free to air terrestrial television network when it launches in September.

ITN-managed EuroNews has formed a partnership with RTR (Russian State TV & Radio Broadcasting Company), Russia's largest broadcaster, which was scheduled to be announced at yesterday's (Thursday 19th) G8 summit in Genoa, Italy.

Just this month the Russian parliament approved legislation banning majority foreign ownership of national television stations, hitting Ted Turner's attempt to acquire a stake in RTR rival NTV.

The new Russian language channel will be receivable by Moscow's 10 million viewers as well as several other Russian regions, available 24 hours a day on EuroNews' pan-European satellite and transmitting for approximately 12 hours a day on one of the main terrestrial channels. Eventually the channel will roll out across all of Russia on terrestrial television, as well as being distributed on Russian cable and satellite systems.

The Russian version of EuroNews will be produced at EuroNews headquarters in Lyon, France by a specially recruited team of 16 Russian journalists. Content will be under the editorial control of EuroNews, operated by ITN. At launch, the Russian version of EuroNews will be identical to the international version but content aimed specifically at Russia may be added at a later stage.

RTR became a shareholder in the SECEMIE consortium on 29th June 2001 and holds 1.8 per cent of the shares in SECEMIE. (SECEMIE is a consortium of 20 public service broadcasters which owns 51 per cent of EuroNews, the other 49 per cent is owned by ITN which is also responsible for the management of the channel.) RTR will pay an annual licence fee to EuroNews for the right to broadcast EuroNews. Commercial revenues generated in Russia will be shared between EuroNews and RTR.

Oleg Dobredeyev, President of RTR said, "We are proud and excited to be bringing Russia's first 24 news channel to air. Through this strong partnership with Europe's premier news brand EuroNews and Britain's internationally respected news broadcaster ITN, we will offer Russian
viewers high quality international news."

Stewart Purvis, ITN's Chief Executive and President of EuroNews operating company, said, "This is the first time an international TV news organisation has been allowed to transmit in Russian to every Moscow home and across the country. Euronews will provide impartial news independent of the government."

Jose Vila Abello, President of SECEMIE, said, "EuroNews has proved an attractive proposition right across Europe, offering international news, but from a European perspective. We are delighted that RTR has become a member of the public service broadcaster consortium that owns 51 per cent of EuroNews. This collaboration with Russia's public broadcaster takes EuroNews into yet another important European market."

Russian president, Vladimir Putin, said, "This is an important step toward integrating Russia with the European and international information space."

The end result is that aggressive cost-cutting and pursuit of synergies between Time Warner (news/quote) and the old America Online has contributed to higher profit margins in crucial units and a lower overall loss than the company suffered a year ago, and while achieving higher that forecast earnings, it still looks unlikely to meet its own ambitious targets due to the weak advertising market. Analysts see the $11 billion cash flow target for the year as achievable, but cast doubt on the $40 billion revenue target.

QVC scores home run

In the US Major League Baseball, and QVC signed a multi-year agreement that grants QVC' Q Video the exclusive rights to distribute and market all MLB Productions' home video products.

Its the first deal under QVC's new Q Video home video label, spearheading the company's push into the home video industry. All titles under the partnership will be distributed to retail through WEA, the music and video distribution division of AOL Time Warner. The agreement includes all new VHS and DVD releases as well as MLB Productions' existing 100-plus title catalogue.

QVC will promote and sell some titles on air with sports stars appearing on camera as well as through live remote broadcasts at key events during the 2001 season, with further promotion on both organisations' websites.

Central European Media Enterprises Ltd (CME) has appointed Robert E Burke, 49, as Chief Operating Officer. Burke, has spent the bulk of his 20 year career at the Worldwide Television News (WTN) division of ABC Inc. He will oversee the day-to-day operations of CME' broadcasting group, which covers Romania, Slovenia, Slovakia and the Ukraine.

Fred T Klinkhammer, CME' President and Chief Executive Officer, said, "Robert Burke is a perfect fit for CME and he joins us at an optimal time. We have developed a highly efficient broadcasting group, with all of our stations posting positive cash flow results during the past year. With our leading market shares, there can no longer be any doubt that we are the leader in these emerging markets. Given our operational and financial progress, we believed it was time to strengthen our management team to capitalise on the strength of our stations. CME will benefit from Robert's unique leadership in managing profitable international TV operations in developing markets. We look forward to working with Robert, in finding ways to capitalise on the enormous value of our partner stations' news gathering capabilities, programming libraries and impressive production skills."

Burke commented, "CME (has a) a portfolio of assets that can not be duplicated easily. Management has succeeded in transitioning each of the company's stations to profitability during a difficult economic period across Central and Eastern Europe. As market leaders, CME's stations are positioned to benefit over the long-term as advertisers seek to penetrate these developing regions."

Burke served in various capacities at the Worldwide Television News Division of ABC, Inc., including President and CEO from 1995-1998, President and COO from 1992-1994, Executive Vice President from 1989-1992 and Vice President, News from 1985-1989. Until its sale in 1998, WTN was the leading and only profitable international television news group, serving customers in 125 countries.

VBrick Systems Inc, based in Wallingford CT, provides products that facilitate the delivery of TV-quality video and CD-quality audio for one-way streaming broadcast and two-way interactive television across IP (internet protocol) broadband networks. "Cabletel is pleased to have been recognised by VBrick for our technical sales, marketing and distribution expertise.The association with VBrick enables us to continue to offer our customers important and best of class technology solutions that utilise the World Wide Web infrastructure," said Greg Walling, President and Chief Executive Officer of Cabletel.

"Cabletel has an extensive and efficient operation. They have excellent relationships with their customers," said Richard Mavrogeanes, VBrick' President. "We believe our association with Cabletel will increase our ability to address the needs of our customers and increase our North American market share. The video networking market is growing at a tremendous rate. With the increasing deployment of high-bandwidth networks, VBrick is positioned to change the method in which people communicate. We're enthused that Cabletel is in a position to effectively provide this technology to the Canadian cable television operator."

Despite recent disputes between its shareholders, Stuart Prebble, head of UK indepenent terrestrial broadcaster ITV, said that the company's digital channel is expected to reach its breakeven target of 2004, by which time £1.1bn would have been invested.

ITV Digital added 48,000 subscribers between April and June, taking its customer base to 1.135 million. Churn remains relatively high - around 23 per cent.

Prebble said, "We are delivering against our targets. The rebranding is a major step in the evolution of this business and the decision to put the powerful ITV brand behind the platform is an indication of our shareholders' commitment to it."

Share prices fell when Prebble admitted ITV Digital would struggle to reach its original target of 2m subscribers by the end of 2002. In contrast, ITV Digital now expects to reach 1.7m customers by September 2004.

NTL debt - denies turn to France Telecom

As Pan-European cableco UPC struggles against junk bond status and UK number two cable operator Telewest sees a share slide, UK number one NTL has denied reports that it is in talks with its largest shareholder, France Telecom, about restructuring its £12.3 billion debt.

NTL's Nasdaq listed shares had suffered a sharp fall - down 6.7 per cent at $5.29 - following investor fears over the level of debt in relation to market cap. The share price is 38 per cent down on last Friday's close and 85 per cent below a recent high of $32.40, just 5 per cent of their $109.10 peak January last year.

Moves to calm anxiety included twice bringing forward its results announcement - with headline second-quarter figures rushed on Wednesday pm in the US. The figures showed an upward curve of income, with Ebitda of £115million compared with £59.2 million in the same period last year. Full year figures are expected to grow by £100 million to £485million, and the company says its Ebidta estimates of £825million in 2002 will rise.

Chief Executive, Barclay Knapp, said, "Our current operating results are very strong and we have always had great confidence in the future."

NTL's net debt is $17.4 billion, compared to £12.3 billion a year earlier - 31 times Ebitda, compared to a market capitalisation of $3.3 billion . The company says it is fully funded until the first quarter of 2003, however the company is not expected to have positive free cashflow until 2004.

Some analysts suggest NTL may require an additional $1 billion in 2003, which could be met by vendor financing. The company is not thought to be considering a debt-for-equity swap.

NTL's high-yield bonds traded on Wednesday at about 45 per cent of their face value, with Telewest, a rival UK cable operator, at about 66 per cent.

Telewest, whose shares fell 13 per cent to a three-year low of 62-3/4p, is fully financed until 2005 and is expected to be cashflow positive in 2003. Net debt is £4.5 billion .

One analyst was reported as saying that UK cable operators looked overvalued based on Comcast Corp's $40.5 billion bid for AT&T Broadband.

A Telegraph newspaper report suggested that a
debt-for-equity swap is inevitable with NTL's $15 billion of bonds yielding as much as 29 per cent.

AT&T - still open to offers

AT&T's board unanimously rejected Wednesday's $39.5billion bid by Comcast to takeover AT&T broadband, its cable division, but at the same board meeting AT&T directors put on hold plans for a separate tracking stock for the unit, which suggests they may be open to a higher offer.

AT&T is now looking at "financial and strategic alternatives" for the business, including previously announced restructuring plans, though it still intends to separate the cable business from the rest of its operations.

The response took 10 days from Comcast's initial unsolicited proposal to combine its own cable and television programming business with AT&T Broadband. AT&T shareholders would get 51 per cent of the combined company though Brian Roberts, Comcast's president, would assume management control.

AT&T is reported to value its cable business at more than $70 billion, compared to Comcast's offer valuing it at around $53 billion, including debt of $13.5 billion.

AT&T Broadband's profitability is lower than its rivals, which AT&T attributes to massive investment in the networks, 'about to pay off.'

A letter to Brian and Ralph Roberts of Comcast from AT&T Chairman Michael Armstrong said that the company's board had decided the proposal "does not reflect the full value of AT&T Broadband". The decision followed presentations from Goldman Sachs and Credit Suisse First Boston, the company's advisers, on their own assessments of the cable company's value.

There were also concerns that the current proposal gave Brian Roberts effective control of a merged cable business with just one per cent of the equity.

Comcast had said it would issue 1.0525 billion shares of stock with a value of $44.5 billion in an effort to acquire the AT&T Broadband assets. Comcast also said it would assume $13.5 billion in debt for AT&T's cable business, which has 13.5 million subscribers.

In a separate US report it was suggested that one eventual winner, whoever buys AT&T, is John Malone, Chairman of Liberty Media. That's because he will retain some control over content and vast distribution.

A newly independent Liberty Media woul be able to win content deals with Comcast-AT&T and AOL Time Warner.

Through a Comcast-AT&T combination, Malone would become one of the largest shareholders in the merged entity. Comcast would initially take over AT&T's 25.5 per cent stake in Time Warner Entertainment's cable operations, but Comcast President Brian Roberts has said he would ultimately spin off the stake- with Liberty Media seen as a potential buyer.

There's a lot of ifs, but if a Malone friendly Comcast-AT&T management was in place, and if last month's $4 billion deal to buy Deutsche Telekom's stake in six regional cable companies closes, Malone's Liberty Media have 25 million homes worldwide, with favoured access to 50 million.

With federal cable ownership limits being removed down by a federal appeals court, Comcasts' timing gels with the new regulatory liberalisation.

In the US, Comcast-AT&T Broadband* would entail:

Homes passed: 40.4 million (41 per cent)

Total cable television subscribers: 23.6 million (35 percent)

Digital cable TV subscribers: 4.7 million (44 percent)

Cable modem subscribers: 1.8 million (39 percent)

Cable telephone subscribers: 700,000 (64 percent)

Video-on-demand: 2 million subscribers (market share not available)

Largest cable provider in eight of the 10 largest U.S. markets

Substantial presence in 18 of the 20 largest U.S. markets.

Source: The Yankee Group

Microsoft/Murdoch cooperation

Microsoft has signed an agreement to build an upgraded version of its UltimateTV interactive-television technology with Rupert Murdoch's international satellite-broadcasting network according to a WSJ report. UltimateTV currently is delivered only through the DirectTV unit of Hughes Electronics Corp, and analysts estimate fewer than 30,000 US subscribers have signed up since the service was launched five months ago. The deal is concurrent with Murdoch's plans to control Hughes, and merge its 10 million domestic subscribers into his own global satellite network.

FRIDAY 20 JULY 2001

ITN in Russian News first

Russia's first 24 hour news service, Euronews, is to be provided by UK independent news service ITN, becoming the first western media organisation to deliver news through Moscow's free to air terrestrial television network when it launches in September.

ITN-managed EuroNews has formed a partnership with RTR (Russian State TV & Radio Broadcasting Company), Russia's largest broadcaster, which was scheduled to be announced at yesterday's (Thursday 19th) G8 summit in Genoa, Italy.

Just this month the Russian parliament approved legislation banning majority foreign ownership of national television stations, hitting Ted Turner's attempt to acquire a stake in RTR rival NTV.

The new Russian language channel will be receivable by Moscow's 10 million viewers as well as several other Russian regions, available 24 hours a day on EuroNews' pan-European satellite and transmitting for approximately 12 hours a day on one of the main terrestrial channels. Eventually the channel will roll out across all of Russia on terrestrial television, as well as being distributed on Russian cable and satellite systems.

The Russian version of EuroNews will be produced at EuroNews headquarters in Lyon, France by a specially recruited team of 16 Russian journalists. Content will be under the editorial control of EuroNews, operated by ITN. At launch, the Russian version of EuroNews will be identical to the international version but content aimed specifically at Russia may be added at a later stage.

RTR became a shareholder in the SECEMIE consortium on 29th June 2001 and holds 1.8 per cent of the shares in SECEMIE. (SECEMIE is a consortium of 20 public service broadcasters which owns 51 per cent of EuroNews, the other 49 per cent is owned by ITN which is also responsible for the management of the channel.) RTR will pay an annual licence fee to EuroNews for the right to broadcast EuroNews. Commercial revenues generated in Russia will be shared between EuroNews and RTR.

Oleg Dobredeyev, President of RTR said, "We are proud and excited to be bringing Russia's first 24 news channel to air. Through this strong partnership with Europe's premier news brand EuroNews and Britain's internationally respected news broadcaster ITN, we will offer Russian
viewers high quality international news."

Stewart Purvis, ITN's Chief Executive and President of EuroNews operating company, said, "This is the first time an international TV news organisation has been allowed to transmit in Russian to every Moscow home and across the country. Euronews will provide impartial news independent of the government."

Jose Vila Abello, President of SECEMIE, said, "EuroNews has proved an attractive proposition right across Europe, offering international news, but from a European perspective. We are delighted that RTR has become a member of the public service broadcaster consortium that owns 51 per cent of EuroNews. This collaboration with Russia's public broadcaster takes EuroNews into yet another important European market."

Russian president, Vladimir Putin, said, "This is an important step toward integrating Russia with the European and international information space."

The end result is that aggressive cost-cutting and pursuit of synergies between Time Warner (news/quote) and the old America Online has contributed to higher profit margins in crucial units and a lower overall loss than the company suffered a year ago, and while achieving higher that forecast earnings, it still looks unlikely to meet its own ambitious targets due to the weak advertising market. Analysts see the $11 billion cash flow target for the year as achievable, but cast doubt on the $40 billion revenue target.

QVC scores home run

In the US Major League Baseball, and QVC signed a multi-year agreement that grants QVC' Q Video the exclusive rights to distribute and market all MLB Productions' home video products.

Its the first deal under QVC's new Q Video home video label, spearheading the company's push into the home video industry. All titles under the partnership will be distributed to retail through WEA, the music and video distribution division of AOL Time Warner. The agreement includes all new VHS and DVD releases as well as MLB Productions' existing 100-plus title catalogue.

QVC will promote and sell some titles on air with sports stars appearing on camera as well as through live remote broadcasts at key events during the 2001 season, with further promotion on both organisations' websites.

Central European Media Enterprises Ltd (CME) has appointed Robert E Burke, 49, as Chief Operating Officer. Burke, has spent the bulk of his 20 year career at the Worldwide Television News (WTN) division of ABC Inc. He will oversee the day-to-day operations of CME' broadcasting group, which covers Romania, Slovenia, Slovakia and the Ukraine.

Fred T Klinkhammer, CME' President and Chief Executive Officer, said, "Robert Burke is a perfect fit for CME and he joins us at an optimal time. We have developed a highly efficient broadcasting group, with all of our stations posting positive cash flow results during the past year. With our leading market shares, there can no longer be any doubt that we are the leader in these emerging markets. Given our operational and financial progress, we believed it was time to strengthen our management team to capitalise on the strength of our stations. CME will benefit from Robert's unique leadership in managing profitable international TV operations in developing markets. We look forward to working with Robert, in finding ways to capitalise on the enormous value of our partner stations' news gathering capabilities, programming libraries and impressive production skills."

Burke commented, "CME (has a) a portfolio of assets that can not be duplicated easily. Management has succeeded in transitioning each of the company's stations to profitability during a difficult economic period across Central and Eastern Europe. As market leaders, CME's stations are positioned to benefit over the long-term as advertisers seek to penetrate these developing regions."

Burke served in various capacities at the Worldwide Television News Division of ABC, Inc., including President and CEO from 1995-1998, President and COO from 1992-1994, Executive Vice President from 1989-1992 and Vice President, News from 1985-1989. Until its sale in 1998, WTN was the leading and only profitable international television news group, serving customers in 125 countries.

VBrick Systems Inc, based in Wallingford CT, provides products that facilitate the delivery of TV-quality video and CD-quality audio for one-way streaming broadcast and two-way interactive television across IP (internet protocol) broadband networks. "Cabletel is pleased to have been recognised by VBrick for our technical sales, marketing and distribution expertise.The association with VBrick enables us to continue to offer our customers important and best of class technology solutions that utilise the World Wide Web infrastructure," said Greg Walling, President and Chief Executive Officer of Cabletel.

"Cabletel has an extensive and efficient operation. They have excellent relationships with their customers," said Richard Mavrogeanes, VBrick' President. "We believe our association with Cabletel will increase our ability to address the needs of our customers and increase our North American market share. The video networking market is growing at a tremendous rate. With the increasing deployment of high-bandwidth networks, VBrick is positioned to change the method in which people communicate. We're enthused that Cabletel is in a position to effectively provide this technology to the Canadian cable television operator."

Despite recent disputes between its shareholders, Stuart Prebble, head of UK indepenent terrestrial broadcaster ITV, said that the company's digital channel is expected to reach its breakeven target of 2004, by which time £1.1bn would have been invested.

ITV Digital added 48,000 subscribers between April and June, taking its customer base to 1.135 million. Churn remains relatively high - around 23 per cent.

Prebble said, "We are delivering against our targets. The rebranding is a major step in the evolution of this business and the decision to put the powerful ITV brand behind the platform is an indication of our shareholders' commitment to it."

Share prices fell when Prebble admitted ITV Digital would struggle to reach its original target of 2m subscribers by the end of 2002. In contrast, ITV Digital now expects to reach 1.7m customers by September 2004.

NTL debt - denies turn to France Telecom

As Pan-European cableco UPC struggles against junk bond status and UK number two cable operator Telewest sees a share slide, UK number one NTL has denied reports that it is in talks with its largest shareholder, France Telecom, about restructuring its £12.3 billion debt.

NTL's Nasdaq listed shares had suffered a sharp fall - down 6.7 per cent at $5.29 - following investor fears over the level of debt in relation to market cap. The share price is 38 per cent down on last Friday's close and 85 per cent below a recent high of $32.40, just 5 per cent of their $109.10 peak January last year.

Moves to calm anxiety included twice bringing forward its results announcement - with headline second-quarter figures rushed on Wednesday pm in the US. The figures showed an upward curve of income, with Ebitda of £115million compared with £59.2 million in the same period last year. Full year figures are expected to grow by £100 million to £485million, and the company says its Ebidta estimates of £825million in 2002 will rise.

Chief Executive, Barclay Knapp, said, "Our current operating results are very strong and we have always had great confidence in the future."

NTL's net debt is $17.4 billion, compared to £12.3 billion a year earlier - 31 times Ebitda, compared to a market capitalisation of $3.3 billion . The company says it is fully funded until the first quarter of 2003, however the company is not expected to have positive free cashflow until 2004.

Some analysts suggest NTL may require an additional $1 billion in 2003, which could be met by vendor financing. The company is not thought to be considering a debt-for-equity swap.

NTL's high-yield bonds traded on Wednesday at about 45 per cent of their face value, with Telewest, a rival UK cable operator, at about 66 per cent.

Telewest, whose shares fell 13 per cent to a three-year low of 62-3/4p, is fully financed until 2005 and is expected to be cashflow positive in 2003. Net debt is £4.5 billion .

One analyst was reported as saying that UK cable operators looked overvalued based on Comcast Corp's $40.5 billion bid for AT&T Broadband.

A Telegraph newspaper report suggested that a
debt-for-equity swap is inevitable with NTL's $15 billion of bonds yielding as much as 29 per cent.

AT&T - still open to offers

AT&T's board unanimously rejected Wednesday's $39.5billion bid by Comcast to takeover AT&T broadband, its cable division, but at the same board meeting AT&T directors put on hold plans for a separate tracking stock for the unit, which suggests they may be open to a higher offer.

AT&T is now looking at "financial and strategic alternatives" for the business, including previously announced restructuring plans, though it still intends to separate the cable business from the rest of its operations.

The response took 10 days from Comcast's initial unsolicited proposal to combine its own cable and television programming business with AT&T Broadband. AT&T shareholders would get 51 per cent of the combined company though Brian Roberts, Comcast's president, would assume management control.

AT&T is reported to value its cable business at more than $70 billion, compared to Comcast's offer valuing it at around $53 billion, including debt of $13.5 billion.

AT&T Broadband's profitability is lower than its rivals, which AT&T attributes to massive investment in the networks, 'about to pay off.'

A letter to Brian and Ralph Roberts of Comcast from AT&T Chairman Michael Armstrong said that the company's board had decided the proposal "does not reflect the full value of AT&T Broadband". The decision followed presentations from Goldman Sachs and Credit Suisse First Boston, the company's advisers, on their own assessments of the cable company's value.

There were also concerns that the current proposal gave Brian Roberts effective control of a merged cable business with just one per cent of the equity.

Comcast had said it would issue 1.0525 billion shares of stock with a value of $44.5 billion in an effort to acquire the AT&T Broadband assets. Comcast also said it would assume $13.5 billion in debt for AT&T's cable business, which has 13.5 million subscribers.

In a separate US report it was suggested that one eventual winner, whoever buys AT&T, is John Malone, Chairman of Liberty Media. That's because he will retain some control over content and vast distribution.

A newly independent Liberty Media woul be able to win content deals with Comcast-AT&T and AOL Time Warner.

Through a Comcast-AT&T combination, Malone would become one of the largest shareholders in the merged entity. Comcast would initially take over AT&T's 25.5 per cent stake in Time Warner Entertainment's cable operations, but Comcast President Brian Roberts has said he would ultimately spin off the stake- with Liberty Media seen as a potential buyer.

There's a lot of ifs, but if a Malone friendly Comcast-AT&T management was in place, and if last month's $4 billion deal to buy Deutsche Telekom's stake in six regional cable companies closes, Malone's Liberty Media have 25 million homes worldwide, with favoured access to 50 million.

With federal cable ownership limits being removed down by a federal appeals court, Comcasts' timing gels with the new regulatory liberalisation.

In the US, Comcast-AT&T Broadband* would entail:

Homes passed: 40.4 million (41 per cent)

Total cable television subscribers: 23.6 million (35 percent)

Digital cable TV subscribers: 4.7 million (44 percent)

Cable modem subscribers: 1.8 million (39 percent)

Cable telephone subscribers: 700,000 (64 percent)

Video-on-demand: 2 million subscribers (market share not available)

Largest cable provider in eight of the 10 largest U.S. markets

Substantial presence in 18 of the 20 largest U.S. markets.

Source: The Yankee Group

Microsoft/Murdoch cooperation

Microsoft has signed an agreement to build an upgraded version of its UltimateTV interactive-television technology with Rupert Murdoch's international satellite-broadcasting network according to a WSJ report. UltimateTV currently is delivered only through the DirectTV unit of Hughes Electronics Corp, and analysts estimate fewer than 30,000 US subscribers have signed up since the service was launched five months ago. The deal is concurrent with Murdoch's plans to control Hughes, and merge its 10 million domestic subscribers into his own global satellite network.

WEEKEND NEWS FROM SAT 21 TO MON 23 OF JULY 2001

Fox Kids in Italy Terrestrial
E-Plus uses Alcatel LMDS in 3G
Intelsat privatised
Yes Television VPL's VOD partner
WorldCall - Zee TV partnership
PLDT 'must approve cable merger'
Echostar records first profit
Fox/Chris Craft waiver expected
UK 'pornographer' enters TV
Deutsche Telekom expands network

Fox Kids in Italy Terrestrial

Fox Kids Europe NV has agreed a syndication agreement with 13 regional terrestrial TV stations across Italy to launch a daily free-to-air service of programming from the Fox Kids Italy channel.

The 13 regional TV stations achieve 80 per cent national coverage and will transmit the Fox Kids channel for seven hours a week via free-to-air terrestrial frequencies, reaching 14 million Italian households. The terrestrial programming block will launch on September 1, 2001, and will broadcast daily from 6 to 7pm. The launch will be supported by a wide-ranging advertising campaign.

Programming to be featured includes live-action series with local appeal such as Power Rangers and Goosebumps, the Marvel cartoon series Fantastic Four, and the premiere of Xyber-9.

Fox Kids Italy TV began broadcasting via Stream DTH on April 1, 2000. The full service, transmitted daily from 6am to 7pm, will continue to be broadcast as part of the Stream basic programming tier, reaching 650,000 subscribers.

Maurizio Giunco, Managing Director of Antennatre and the key co-ordinator of this initiative on behalf of the regional TV stations, says, "We are very excited to be working with Fox Kids Italy and look forward to providing our viewers with top-quality programming from one of the leading childrenØs libraries in the world."