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Archive 2001

NEWS FROM MONDAY 5TH TO MONDAY 12TH FEBRUARY 2001

MONDAY 5 FEBRUARY 2001

Danes launch interactive programme
Catalans, Romainians get CityTV
Canadian watching less television
Monitoba Telecom 4Q profits rise
US auction aids mobility
RTL-Bertelsman iTV deal
Vivendi chief quits BSkyB
Replay acquired by Sonicblue
Departure at Terra Lycos
Cablevision sells MGM stake
Soccer deal for Italian 3G Co

Danes launch interactive programme

Radio-TV DR, the Danish public service broadcaster, has announced what it claims is 'Âthe worldØs first digital interactive TV programme.' The programme, 'Rene ord for lommepengen, ('Clean Words for Pocket Money') was aired on DR1 earlier this week.

The programme is described as a 'consumer magazine for young people,' giving information about how to get more value for pocket money

Catalans, Romainians get CityTV

CHUMCity International has announced that it will be launching two new CityTV-like stations this spring, one in Barcelona, Spain and one in Bucharest, Romania. The Barcelona station is a licensing agreement with Grupo Gordo, which will see the Canadian TV format translated into Catalan, a minority language in Spain.

The Romanian deal has been made with Red Colombus. In both cases the deals franchise the CityTV format which could best be described as storefront television with a difference, where studios evaporate to real life situations and reporters carry their own recording equipment. The CityTV format is aimed at the hip or counterculture market and attempts successfully to bring television to the people or rather reflect street life in television. CityTV has already been successfully translated to South America, Scandinavia and South Africa.

Canadian watching less television

Average Canadian television viewing in 1999 plummeted to its lowest level in two decades, 21.6 hours per week, states Statistics Canada, the country's official record keeper.

Peak viewing reached 23.5 hours in 1988. StatsCan said the drop might be attributed to the fact that overall attendance at movies increased for the seventh year in a row, hitting a 38-year high. Other reasons for the drop in TV viewing include increasing Internet usage. At least 42 per cent of Canadian homes in 1999 include one enthusiastic web surfer, up from 36 per cent in 1998. Canadian Internet usage even surpasses American. As usual, the Canadian Association of Broadcasters described the situation as serious.

Monitoba Telecom 4Q profits rise

Fourth-quarter profits at Canadian Manitoba Telecom Services grew because of increasing performances in long distance, local phone services and the Internet sections.

Net income jumped to $16.2 million (C$24.3 million), compared to C$20.5 million, in the year-earlier period. Sales rose to C$228.3 million from C$186.9 million. The company expects revenue growth between 25 per cent and 30 per cent.

US auction aids mobility

US Verizon Wireless President and Chief Executive Officer Dennis Strigl said the airwaves the company won in the US Federal Communications Commission's auction last week are better for mobility because the technology is already developed.

The company last week won 113 licenses with total bids of $8.8 billion for personal communications service airwaves in the 1900 megahertz band.

"The 1900 Mhz spectrum, in my opinion, is much better for mobility and, furthermore, manufacturers have already developed systems (and) infrastructure for that spectrum," Strigl told reporters after speaking at the Comnet Convention and Expo.

The airwaves Strigl was less enthusiastic about, the 700 Mhz band occupied by television broadcasters, will be sold in September by the FCC, which agreed to delay the sale at the request of Verizon and others to give them more time to assess their needs.

"We've got to work through how we're going to get current users of the spectrum relocated," Stirgl said. "I think that (the delay) was exactly the right move." Still, some argued another delay of the auction could further hamper the roll-out of advanced telecommunications services, including high-speed wireless Internet services which companies are anxious to develop for consumers.

RTL-Bertelsman iTV deal

Bertelsmann and RTL Group plan to combine their interactive television and broadband businesses, in a deal where RTL will take over the Bertelsmann Broadband Group for E12.8 million and fold the unit into RTL NewMedia.

RTL's channels and Bertelsmann's 196 content providers, including its online bookshop, its BMG music library and Spiegel TV, will all contribute to the service.

Bertelsmann Broadband Group's president Werner Lauff said in November that the interactive services of both operations were likely to be launched together once the terms of the deal were agreed. According to his estimates, the first interactive services would be on offer in the fall of 2001.

The e-commerce team of Bertelsmann's Broadband Group will be taken over by the Bertelsmann eCommerce Group and integrated into a new unit, called BeBroadband, which will specialise in developing e-commerce services for broadband distribution on cable and satellite channels.

Vivendi chief quits BSkyB

Eric Licoys, chief operating officer of Vivendi Universal, has resigned from the BSkyB board as the French media giant prepares to sell its stake in the satellite broadcaster.

US Liberty Media Group is expected to take the £4.4 billion stake. Vivendi chairman Jean-Marie Messier is keen to find a buyer who will be able to work with News Corp owner Rupert Murdoch.

Vivendi is expected to spend its £4.4 billion windfall on a share buyback, which will boost its flagging share price.

A quick sale of the BSkyB stake could also boost Murdoch's plans to float his Sky Global Networks satellite TV company. BSkyB will form a core part of the company and a flotation would be hampered if there are doubts about the company's shareholder structure.

Replay acquired by Sonicblue

US digital device maker Sonicblue, best known for its Rio brand of MP3 players, is about to acquire ReplayTV, a pioneering start-up stock deal worth roughly $123 million. Under the terms of Sonicblue's proposed deal, ReplayTV will become a wholly owned subsidiary.

ReplayTV sold a digital 'personal video recorder' and ran into financial difficulties last autumn. In November 2000, the group said it would cut about half its staff of 260 employees and restructure to licence its technology to consumer electronics makers instead of selling devices to consumers. Kim LeMasters, ReplayTV's chairman and chief executive officer, resigned and company founder Anthony Wood replaced him as CEO.

For the year ended December 31, Sonicblue had net revenues of $536.7 million and net income of $312.8 million. For the fourth quarter of 2000, the company reported a net loss of $67.5 million.

Departure at Terra Lycos

Terra Lycos' chief executive and chief financial officer left the group on Thursday (February 1) after a power struggle.

Terra Lycos, the world's third largest Internet portal, was formed last October, when Terra Networks of Spain acquired Lycos. Davis, the former chairman and chief executive of Lycos, decided to quit when it became clear that Joaquim Agut, the Spanish chairman of the new company, wanted full control.

Terra Lycos shares fell 9.5 per cent on Thursday on news of Davis' departure.

Davis likes to remind people that he was Lycos' first and only employee in 1995, and remains the largest single shareholder in Terra Lycos, with a 1.5 per cent stake. He said, "I am an entrepreneur and it is best that I move on." He would continue his career at Highland Capital Partners, a venture capital firm based in his home town of Boston.

Mr Agut, for his part, stressed that he had been appointed by Telefnica, Terra Lycos' biggest shareholder, as a full-time chairman and that he wanted to be in charge. He denied any rift between the Terra and Lycos teams. He intends to run Terra Lycos from Barcelona, said the US side of the business would 'grow organically and through acquisitions.'

Cablevision sells MGM stake

Cablevision, a New York-based cable and entertainment company, is to sell Metro-Goldwyn-Mayer a 20 per cent stake in its Rainbow programming arm for $825 million in cash.

Cablevision owns 74 per cent of Rainbow, while TV network NBC owns the remaining stake. However, the company recently delayed the tracking stock plan as it attempted to auction off the property, but failed to receive a bid it found satisfactory. Cablevision was said to be looking for up to $6 billion for the property.

Soccer deal for Italian 3G Co

Andala, the Italian third-generation mobile phone licence group, 51 per cent owned by Hong Kong-based Hutchison Whampoa and 25 per cent by internet service provider Tiscali, is poised to sign five of Italy's most popular football teams to offer near-live match highlights.

A deal for Andala would boost prospects for a share offering that could occur by year-end to help finance the estimated E5 billion ($4.7 billion) needed to set up a 3G network.

With the football clubs signed up, Andala shares would be more attractive to investors, since football is considered the 'killer content' for media offerings. Football matches are the cornerstone of the two pay-TV companies in Italy, and are key to the success of BSkyB in the UK.

Subscribers would receive a signal on their mobile phones alerting them that a goal has been scored within seconds of the ball hitting the back of the net. They would then be able to watch the highlight, generating revenue both for the club and the UMTS operator.

TUESDAY 6 FEBRUARY 2001

BSkyB's forecast
Microsoft to compete with AOL/Time Warner
GTS'4Q 2000 results
Nortel's agreement
EU ups copyright protection
RTL-Bertelsmann deal confirmed
News Corp in talks with Viacom
Japanese firms form video content venture
Kirch and EM.TV close to a green light
News Corp's share to drop 6%
E-Poll's report on broadband and interactive TV
$17bl spent in bids

BSkyB reports losses, but subs up

British Sky Broadcasting (BSkyB) first-half results are expected to show a first half pre-tax loss of between £66.5 and £94 million ($98 to 138 million), compared to £60 million a year ago - but continued to increase subscriber numbers.

BSkyB's core business is already performing well, with first-half operating profit set to rise to between £32 and £54 million from a previous £28 million. Direct-to-home subscribers, which excludes those reached via rival cable and digital TV operators, are forecast to have passed five million, with few customers subscribing to its old analogue service.

MSN takes onAOL/Time Warner

Microsoft Corp owned Microsoft Network (MSN), plans to compete with the newly merged AOL Time Warner Inc.

Microsoft Network plans to build up a digital music subscription service and better instant messaging to challenge AOL's dominant product.

As an Internet service provider, MSN, with four million subscribers, is dwarfed by AOL, which has 27 million subscribers to its flagship Internet service. And, after its merger, AOL Time Warner claims 130 million total subscribers from its combined Internet, magazine and cable operations.

MSN may be able to exploit its relationship with Microsoft further, depending on the outcome of Microsoft's appeal of a federal antitrust ruling against it last year. MSN has the financial flexibility to lose money while it gains market share.

MSN lead product manager Bob Visse said the company was doing away with the $400 rebate and replacing it with a year of MSN free with the purchase of a new personal computer.

As the US dial-up Internet market matures and a debate ensues about whether the cost of acquiring new subscribers outweighs the benefits, analysts have said MSN could edge away from the access business. MSN denies this.

"We are still actively growing that business and still think it's a long-term approach to building a subscriber base and are still keenly interested (in access)," said Bob Visse, MSN lead product manager. "Microsoft and MSN are focused clearly on using technology to make people's lives better and that's still our focus.

GTS'4Q 2000 results due

UK Global TeleSystems, a pan-European provider of broadband optical and IP network services, will announce its fourth quarter 2000 results on Wednesday, 28 March 2001.

GTS Chairman and CEO Robert J. Amman, Duncan Lewis, President and Chief Operating Officer, and Robert Schriesheim, Chief Financial Officer, are scheduled to discuss GTS's fourth quarter 2000 and full-year financial results and the strategy and prospects for Ebone, GTS's recently renamed broadband and optical IP division.

Nortel - Novell joint launch

Telecommunications equipment group Nortel Networks Inc and a new company called Volera will take minority stakes in US Novell Inc, which will spin off its existing caching and content networking division.

The agreements calls for the three firms to provide Volera with more than $80 million in cash and consulting services. Novell will retain a majority interest in Volera.

EU ups copyright protection

At the European parliament in Strasbourg, Euro-MPs are due to vote this week on the European Union's directive on copyright protection - which if passed, will, for the first time, allow companies to introduce technical means of limiting copies of films, discs and tapes.

The copyright directive is central to the EU's legislation governing electronic commerce, intended to extend the copyright protection currently given to musicians, artists and authors over the use of their material on the Internet and digital television.

To date the EU has sought to balance differences between EU governments about how copyright should be protected and how the law should be applied online - with France at the more protective end of the spectrum, levying blank videotapes and compact discs, recorders and players to compensate artists for unauthorised copying, and the UK offering a more liberal - or less protective legislation.

This balance could now be upset suggests Frits Bolkestein, the EU's single market commissioner, who recently commented, "Parliament's latest set of amendments strongly favours the interests of the rights-holders, over those of other interested groups."

At issue is how many copies individuals and institutions can make of a video, TV programme or CD, with the directive enabling companies to put out films and discs which carry a code that only lets one copy to be made.

Many exceptions to the copying restrictions have introduced - allowing libraries to make back-up copies and individuals to make several copies for private use, in the car and around the house. Parliament is now trying to tighten the restrictions. Amendments introduced by MEPs have been cut from 200 plus, down to about 40.

The European Digital Media Association, a group of digital media and technology companies, says many of parliament's amendments would grant control of the online environment to a few large right-holders. Record labels want to extend the current system of levies into the online environment so as to protect copyright holders while technical restrictions are still not widespread. Frances Moore, director of the International Federation of Phonographic Industries, the record labels' lobby group in Brussels insists that the E7.2bn (£4.6bn) EU record industry is at risk from massive piracy, hence needs levies to compensate.

RTL-Bertelsmann deal confirmed

Bertelsmann AG of Germany is to gain control of RTL Group Plc, Europe's largest broadcaster, by buying Belgium's Group Bruxelles Lambert's 30 per cent stake in the company, according to a Wall Street Journal Europe report today.

Bertelsmann has 37 per cent of the RTL group and the Belgian GBL owns around 30 per cent. The UK's Pearson Plc owns 22 per cent and the remaining 11 per cent is traded.

RTL group confirmed its plans to merge its RTL New Media broadband interactive television activities with those of BertelsmannØs Broadband Group on Friday in a deal worth E12.8 million as the groups aim to combine television content, interactive services and electronic retailing.

"This agreement will strengthen the efforts of RTL Group in the area of interactive content and TV," RTL said in a statement.

RTL New Media would continue to develop the content and platforms for interactive television via broadband communications, while e-commerce would be developed by a new Bertelsmann eCommerce Group (BeCG) unit, BeBroadband.

News Corp in talks with Viacom

News Corp and Viacom Inc are in talks about swapping several of their television stations to take advantage of relaxed federal regulations.

The discussion is in the very early stages. News Corp hasn't yet closed its deal to acquire the Chris-Craft stations, and while it has received clearance from the Justice Deptartment, the FCC hasn't approved the deal. Station swaps could take advantage of Federal Communications Commission rules that let broadcasters own two TV stations in one market.

News Corp, which has agreed to buy 10 big-city stations from Chris-Craft Industries Inc for about $5.3 billion, is expected to trade some stations with other broadcasters to form 'duopolies' in different markets.

Japanese video content venture

Seven Japanese firms are about to set up a joint venture to distribute Web content via broadband transmission, led by Television Tokyo Channel 12 Ltd and a unit of telecoms giant Nippon Telegraph and Telephone Corp.

The venture will capitalised at 465 million yen ($4.02 million), and will be owned 34.4 per cent by TV Tokyo, 19.4 per cent by NTT East Corp, 13.1 per cent by Nihon Keizai Shimbun Ltd (Nikkei), and 12.9 per cent by Sharp Corporation. It will provide video content for Internet users through various channels such as portal sites, Internet service providers and search engine operators and will also supply video content such as animation for users of mobile phones and personal digital assistants.

The rest will be owned by NEC Interchannel Ltd, a unit of Japan's largest personal computer maker NEC Corp, 8.6 per cent by independent contents developer Contents Japan and 3.0 per cent by Nikkei's financial information services firm Quick.

Kirch and EM.TV close to deal

Talks between German media giant Kirch and media group EM.TV are closer to a deal. Kirch has offered to bail out its fellow German group but the talks have run into difficulties over details of the deal.

Under the original proposal announced in December, Kirch was to take a 16.74 per cent stake in EM.TV and almost half its 50 per cent stake in Formula One holding SLEC, in return for bailing out the company, whose debt analysts estimate at around E1.12 billion.

News Corp's share to drop 6%

Shares in Rupert Murdoch's News Corp dropped six per cent on Monday (February 5) after at least one large brokerage revised down its expected earnings for the stock.

News Corp's ordinary shares closed down A$1.06 on its day's low at A$16.51 on solid volume of almost 11 million shares, while its limited voting preferred scrip fell 5.9 percent or 93 cents to end at A$14.80.

US broker Merrill Lynch issued a report in the US on Friday in which it lowered its estimate of News Corp operating income for 2000/01 by US$37 million to $1.75 billion from $1.79 billion.

Murdoch said that an initial public offering of its Sky Global Networks satellite television unit would depend on its merger talks with American satellite broadcasters, which would remove the need for a float.

US broadband and iTV poll

In the US, cable modem usage is currently twice as prevalent as DSL subscription and another six per cent of respondents had other broadband, according to report on Broadband and Interactive TV by E-Poll.

Two-thirds of those surveyed who did not have broadband stated that it was important to receive access - and two-thirds said that they had broadband access available to them. Cost was cited as a factor across all income levels. High satisfaction levels with broadband services was noted among all subscribers - and DSL users were slightly more inclined to state they were "very satisfied."

The report showed that the breakdown of how a TV signal is received in homes was 68 per cent had cable, 17 per cent had satellite, and 13 per cent used an antenna.

Broadband use in the United States at work is set to more than double to 55 million by 2005, up from 24 million users in 2000. Dial-up connections from the office are expected to drop from 18.5 million in 1999 to 8.1 million in 2005.

European Internet Advertising Expected to Rise 2001 a 74 per cent increase in European spending on online advertising in 2001, with the amount spent reaching E1.2 billion.

In December 2000 online advertising spending across all of Europe's major markets totalled E38.8 million. Spending on online advertising in the UK fell to E17.3 million from E17.7 million in November, in Germany, spending fell to E12.6 million from E12.8 million, and in France, spending rose slightly to E8.6 million, up from E8.3 million in November.

A survey by Britain's Office of Telecommunications Oftel showed that monthly charges for residential broadband in the UK averaged around £40, compared to £37 in France, £31 in Germany and £32 in the USA.

$17 bn spent in bids

$17 billion has been spent on bidding for wireless telecommunications licences in the US, with three groups winning roughly 55 per cent of the 422 licences.

Cellco Partnership, a group backed by Verizon Wireless spent nearly $9 billion to win 113 licenses. Cellco won the highest bids in nine of the top 15 US markets, including two licences in New York City for which it paid more than $2 billion apiece.

Alaska Native Wireless, a company backed by AT&T Corp paid a total of nearly $3 billion for 44 licenses, including one in New York City for $1.5 billion, and another in Los Angles, for which it paid more than $430 million.

Salmon PCS, a partnership supported by SBC Communications, spent nearly $2.4 billion for 79 spectrum licenses, including $400 million for one in Los Angeles, and $200 million for another in Dallas.

The US telco regulator, the FCC, announced it would delay an auction for wireless airwaves in the 747-762 and 777-792 MHz band until September 12, 2001. The added time was expected to give companies more time to plan funding possibilities.

WEDNESDAY 7 FEBRUARY 2001

Murdoch $70bn DirectTV deal expected
AT&T introduces low-cost Internet
InfoSpace to cut stuff
Nortel pays $2.5bl for Swiss plan
Viatel's revenues forecast down
Electric Lightwave selects Unisphere
Global Crossing deals with Swift
CMGM chases Rainbow stake
DoCoMo to raise billions in new shares
Austar won't sell its assets
Cartoon Network, TMC and CNN reach Romania
Yahoo! invests on Ifilm

Murdoch $70bn DirectTV deal expected

Rupert Murdoch's News Corp is close to taking control of US DTH provider DirecTV according to a Financial Times report - a move which would hasten his creation of a $70 billion global satellite network, Sky Global Networks.

General Motors Corp, which controls DirecTV via its subsidiary Hughes Electronics Corporation, is reported to have reached a tentative agreement with News Corp over the terms of the deal, believed to value the GM subsidiary that contains DirecTV at about $45 billion.

A spokesman for General Motors said that no agreement had been reached and that the company remained in talks "with more than one interested party" over a sale of Hughes.

A regular GM board meeting convened Tuesday for an update on the Hughes talks, Toni Simonetti, general director of communications for the automaker told Reuters.

News Corp reported its quarterly earnings today adding to the speculation that some breakthrough in the long-running talks between the two sides was imminent.

Control of DirecTV would complete Murdoch's global satellite broadcasting empire by adding some 9.5 million US subscribers. The two sides have confirmed they are talking.

The acquisition is expected to bring in software giant Microsoft Corp and cable television dealmaker John Malone as investment partners, the Financial Times reported.

Microsoft is expected to invest $4 billion to $5 billion in the new business, a larger amount than previously reported and a stake that would represent a major bid by Microsoft for a larger share of the market for digital set-top boxes.

Microsoft spokesman Vivek Varma said that the company would not comment on "rumor and speculation."

The FT report said the deal would result in the merger of Sky Global Networks, Murdoch's collection of digital businesses, with Hughes, and Murdoch would become chairman of the combined company. Hughes shareholders would get 65 per cent of the combined business, which it said would be valued at $70 billion - and GM would get $8 billion cash.

Panamsat, the commercial satellite operation also owned by Los Angeles-based Hughes, would be spun off for between $6.5 billion to $7 billion.

Analysts previously valued Sky Global alone at $35 billion to $45 billion, before the addition of DirecTV, which is the third largest subscription TV service in the United States, behind cable operators AT&T and AOL Time Warner.

Richard Dore, director of corporate communications for Hughes, acknowledged to Reuters that GM and Hughes have been "exploring options on what to do with Hughes" since last year.

GM board members considered the deal in a meeting on Tuesday according to the FT.

AT&T introduces low-cost Internet

On Monday (February 5) AT&T Corp introduced a low-cost Internet and long-distance pricing plan in the US, 'AT&T 7/7 Offer,' which charges a $7 monthly fee for unlimited dial-up access to the Internet through AT&T WorldNet Service.

In this move to increase customer loyalty and slow the decline in its consumer revenues, consumers would pay about $10 to $27 a month to buy these services separately, reducing AT&T's customer turnover.

AT&T's sales have fallen sharply over the past two years as competition increased and long-distance calling prices have dropped to as low at 5 cents a minute.

AT&T plans to break into four major units, consumer, business, broadband, and wireless and reverses the strategy to become an 'all distance' communications company that sells packages of local, long-distance, wireless telephone and Internet access services.

InfoSpace to cut stuff

Washington-based InfoSpace Inc, a provider of services on wireless and broadband platforms in the US announced on Monday (February 5) that it would eliminate 250 jobs, about 20 per cent of its work force.

The group says it wants to focus on its high-growth areas and will provide revised financial guidance for 2001 and new guidance for 2002 in the next three weeks.

"The refocus of the company has led us to de-emphasise those parts of our business that are low growth and non-scalable and align our resources and costs along the strong growth areas," said InfoSpace's chief operating officer.

Nortel pays $2.5bl for Swiss plan

Nortel Networks, the US supplier of fibre-optic system equipment, is about to pay $2.5 billion in stock for the Swiss division of the US fibre-optics company JDS Uniphase Corp, as JDS has received approval from the US Justice Department for its $18 billion acquisition of rival SDL Inc.

The merger now remains subject only to the approval of JDS Uniphase and SDL stockholders.

JDS Uniphase, with headquarters in Ottawa and San Jose, California, designs, develops, makes and distributes products for the fibre-optic communications market. SDL, also based in San Jose, makes products that power the transmission of data, voice and Internet information over fibre-optic networks.

Viatel's revenue forecast down

US-based Viatel, fiber-optic networks and provider of advanced telecommunications products and services, yesterday (February 6) provided guidance on its 2001 and fourth quarter 2000 finacial results.

Revenue for 2001 is expected to be approximately $500 to $550 million, reflecting the company's decision to discontinue its consumer-oriented businesses in certain countries.

Earnings per share for the fourth quarter will be significantly impacted due to the questionable collectability of certain receivables and non-cash charges related to asset write-downs related to the Company's announced realignment plans.

Revenue will also be hit by the Company's expectation that future revenue derived from broadband sales will no longer meet sales type accounting treatment and therefore will be recognised over the life of the contract.

Electric Lightwave selects Unisphere

Electric Lightwave Inc, a US broadband integrated communications provider, selected Unisphere Networks, a provider of IP infrastructure, to enable broadband data and voice services, to help accelerate the convergence of voice/data over Electric Lightwave's network.

Electric Lightwave will install Unisphere's SMX-2100 service mediation switch within its backbone in multiple markets throughout the Western Union, beginning the first quarter of 2001.

Layering onto Electric Lightwave's existing Class 5 infrastructure, the SMX-2100 is expected to improve the flow between circuit and packet-based traffic and initially generate revenue for the company by providing Internet delivery and primary rate interface capabilities within the Electric Lightwave network.

"Along with its high-capacity port density, the SMX-2100 allows us to simply drop a new system into an existing central office location without incurring the costs associated with the more expensive traditional voice switches," said Randy Lis, senior vice president of engineering and operations at Electric Lightwave.

Tom Burkardt, EVP and COO, Unisphere Networks said, "Electric Lightwave is one of the premier communications providers in the US and we are excited to help Electric Lightwave build one of the most advanced next-generation voice and data networks in the country."

Global Crossing deals with Swift

US Telecommunications company Global Crossing Ltd will receive at least $300 million in revenues under an agreement to operate and manage the network of Swift, a provider of financial messaging services to banks, brokers, and investment managers.

Global Crossing will manage the development and operation of Swift's secure, Internet Protocol Network, which will operate as a virtual private network within Global Crossing's existing network infrastructure.

Swift, owned by the financial industry that supplies messaging services and software to 7,000 financial institutions in 190 countries, will be able to focus on messaging services, transaction processing, and standards setting, the companies said in a prepared statement.

"Under this unique partnership arrangement, Swift will co-design and co-manage the network with Global Crossing, but our customers will continue to have a single provider, a single network and a single point of contact," said Joe Eng, Swift's chief information officer.

MGM chases Rainbow stake

American MSO Cablevision has sold 20 per cent of four cable channels it owns, for $825 million to Metro-Goldwyn-Mayer.

With cash in hand, Cablevision will now proceed to launch a tracking stock for Rainbow, pay down $700 million in Rainbow debt and finance expansion plans.

Until now, it has not had a financial interest in any cable channel and has only licenced its films on a short term basis. Under the terms of the agreement MGM will receive no decision-making abilities, board representation or guaranteed distribution for its films. However, both parties look forward to making an arrangement and MGM is hungry to own more of Rainbow.

DoCoMo to raise billions in new shares

Japanese cellphone company NTT DoCoMo raised $ 8.59 billion in new shares.

The group will be paying two companies, Goldman Sachs Group Inc and Nikko Salomon Smith Barney Ltd, 1.65 per cent to sell the shares, which haven't yet been priced.

Oracle Corp Japan instead paid three per cent to Nikko Salomon for a similar sized deal last year and AT&T Wireless paid 2.9 per cent when it sold its tracking stock to the public last year.

The cut rate deal reflects DoCoMo's market potential to become a leader in wireless internet and the strength supplied by its 17 million subscribers.

Austar won't sell its assets

Austar has strongly denied that it will have to sell some of its assets in order to ensure continued funding by its backers.

Australia's second-largest pay TV provider had been told to curb spending and sell some of its assets before bankers would extend nearly $100 million worth credit.

Among the suggested assets to be sold off was part of its stake in Telstra Saturn, the New Zealand telecoms company that also runs the country's second-largest pay TV service. This was described as, "absolutely not true," by spokesmnan Bruce Meagher, after a newspaper published the story.

It came after a troubled few days for Austar, which has around 420,000 subscribers. Dutch Internet provider Chello Broadband NV ended its partnership with Austar after their joint venture lost $23 million in just 10 months.

In a statement to the Australian Stock Exchange Austar said it had $104 million in cash at the end of last year - down from the $232 million figure it had at the end the third quarter of 2000. Austar spent $77 million buying microwave spectrum in major Australian cities in November.

The company admits that demand for broadband has been slower than hoped with reportedly only 1,000 customers for the service in the last quarter of 2000, compared to the 20,000 it had hoped for. It charges $33 a month for unlimited use of its broadband Internet service, compared with between $22 a month and $41 a month for Pay TV.

Cartoon Network, TMC and CNN reach Romania

UK Cartoon Network, TCM and CNN International are about to reach an additional 180,660 homes in Romania on the cable operator Astral Telecom SA systems.

Cartoon Network, TCM and CNN International have been available to more than 250,000 Astral Group subscribers in Bucharest, Galati, Suceava and Braila, since 1996.

Cartoon Network and TCM, which is already available throughout Europe, Africa and the Middle East, will now be available in 431,000 Astral homes and a total of 1.7 million homes in Romania with CNN International available in approximately 300,000 Astral homes and 1.4 million homes throughout the country.

Yahoo! invests in Ifilm

Online entertainment company Ifilm won has investment from Yahoo! Inc as part of a broader new relationship with the premier Web portal.

Ifilm of Los Angeles, announced $10 million in new funding from a group of investors, including Yahoo, Sony Corp's Sony Pictures Entertainment, Eastman Koda Co and Vulcan Ventures, the investment vehicle of Microsoft Corp co-founder Paul Allen.

THURSDAY 8 FEBRUARY 2001

Pace acquires Xcom Multimedia
Record profits for Norway's TV
Data streaming allowed in Australia
Mach 6 uses Harmonic IP system
Racecourse deal approval expected
MTG may bid for NTV
Cisco results below expectations
Murdoch $70bn DirectTV deal expected

Pace acquires Xcom Multimedia

Pace Micro Technology acquired French digital television technology company, Xcom Multimedia Communications SA for an initial payment of £18.1 million on Tuesday (February 6).

A further payment up to a maximum of £22 million may be payable in Pace shares dependent on the gross margin performance of Xcom in the period to 31 December 2002.

The Digital TV Adapter (DTVA) developed by Xcom, delivers free-to-air or encrypted digital television services into non-pay TV homes and to secondary televisions in multi-television households. Xcom has a long-standing manufacturing and distribution partner in China.

Commenting on the acquisition, Malcolm Miller, Chief Executive of Pace Micro Technology plc said, "Xcom fits well with Pace's strategy of strengthening its position as the world's largest dedicated developer of digital television gateways. It has developed a leading product for analogue switch off, and will further expand Pace's overseas revenues. The new products and customers, benefiting from Pace's technology portfolio, will provide further immediate revenue and profit opportunities for the Group."

Francis Brochon, who will remain as President of Xcom said, "We are delighted to become part of the Pace Group. In the last six years, we have developed a thriving business and are proud of the achievements of our engineering team. Within Pace we will now be able to develop these achievements even further as the digital revolution progresses throughout the world."

Record profits for Norway's TV

Kaare Valebrokk, MD of Norway's leading TV2, can certainly look back at his first year with a lot of satisfaction since being recruited a year ago from his post as editor of Norwegian business news daily Dagens Naeringsliv.

Norway's commercial channel TV2 announced its results for 2000 on February 6 , exceeding its initial estimates. During 1999 TV2 went NOK 15 million (£1 million) in the red. In 2000 Valebrokk can announce a record NOK 344 million (£25 million) pretax profit.

Although a main part of the profit comes from a successful sale of shares in Canal Digital (the joint DTH venture between CanalPlus and Norway's telco Telenor) back to Telenor, TV2 can look back at a truly successful financial year. Turnover increased by NOK 165 million to some 1.5 billion krona, thanks to a steadily increased market for television advertising.

Not every television operation in Norway is currently profitable: the state-controlled public service broadcaster NRK has been struggling with alarming budget deficits for quite some time, and at the same time as TV2 announced its results one of Norway's smaller commercial television operators, TVNorge, where SBS Broadcasting has a controlling interest, faces a deficit for 2000 of NOK 134 million.

Data streaming allowed in Australia

Australia's main opposition party has signalled that it may end the country's restrictions on Internet companies that want to datacast entertainment.

The country is due to fight a federal election by the end of the year, and the ruling Liberal coalition's broadcasting policies have angered the Australian Labour Party (ALP). However this undertaking is the most serious threat to dismantle the government's policies that were put into place last year.

Among the most contentious issues was communications minister Richard Alston's policy that would-be datacasters would have clear curbs on their output, virtually barring them from carrying news, sport and entertainment. Senator Alston explained that the restrictions were needed to protect Australia's free to air broadcasters from backdoor competition since no new terrestrials will be licensed to operate before 2007.

The measures meant that several would-be datacasters, including News Ltd and leading Australian publisher John Fairfax, pulled out of the running for a licence.

"We have said all along the data casting rules were too much of a stranglehold, and there's one more chance of fixing up the data casting regime before selling off the spectrum," said Stephen Smith, ALP communications spokesman, quoted by the News Ltd-owned newspaper, The Australian.

Smith added that the government should suspend next month's planned datacasting licences auction while it considers the ALP's proposals.

Australia's Internet providers have also been critical of the policies on datacasting, arguing that it restricts their business growth. In 2000 they successfully lobbied for planned restrictions on video streaming to be dropped, but getting officials to roll back datacasting curbs is likely to be much more difficult.

Mach 6 uses Harmonic IP system

Harmonic Inc of the US has announced that Mach 6, an independent solution provider for IP and Video satellite services, has selected the CyberStream IP-over-satellite system, by Harmonic Data Systems.

Mach 6 is using CyberStream to establish its new commercial two-way VSAT and one-way services. CyberStream enables Mach 6 to offer multiple commercial satellite solutions. Solutions include high-speed data transfers, multimedia applications, television and radio broadcasting, and Intranet and Extranet connectivity for businesses. The integrated system was tested for several months before going operational on December 16, 2000. Full time links and bandwidth-to-order options are now being offered in Europe and the Middle East.

"We chose Harmonic Data after intensive research and testing. They understand our business and specific needs as an independent satellite service provider," said Patrick Visser, Network Operations Manager, Mach 6. "Harmonic Data has proven that they are more than a vendor, we look at them as a long term partner."

"We are looking forward to a long term relationship," said Stefan Meier, sales director, Harmonic Data. CyberStream products used by Mach 6 include the CyberStream VSAT hub with DVB outbound and TDMA Inbound communications, CyberStream VSAT Terminals, the CyberStream Integrated Management System, the Enterprise1 LAN router/receiver device and the SatBox USB receiver device.

Racecourse deal approval expected

UK racecourse operator Arena Leisure Plc shares rose 18 per cent higher by mid-session Monday, amid renewed interest in the Go Racing consortium, which is planning to launch an online betting website and a dedicated TV station.

The Racecourse Association was expected to shortly approve the broadcast deal, after an extraordinary meeting last week to discuss the terms, and was poised to issue a contract to members this week for final confirmation.

The RCA in November agreed to exclusively negotiate with Go, which includes Channel 4 racing and satellite TV group British Sky Broadcasting Plc.

The RCA had been expected to make its decision at the end of last year, but the delay had fuelled some fears that it might not secure the required 70 per cent approval from the course owners.

MTG may bid for NTV

Swedish Modern Times Group is bidding to buy a stake in Russia's sole national independent television network NTV.

"We are interested ... we are in talks with several people," said MTG's Chief Executive Officer Hans Holger Albrecht.

The media group's founder Vladimir Gusinsky remained under house arrest in Spain pending extradition proceedings in a fraud case which liberals see as an gauge of President Vladimir Putin's commitment to post-Soviet press freedom. Gusinsky is trying to sell billionaire financier George Soros and CNN founder Ted Turner a 25 per cent blocking stake in NTV, which would allow Gusinsky to clear debts to Gazprom and stave off a boardroom coup.

Albrecht declined to say what stake MTG wanted to buy in NTV or what its price offer was, "There are so many players involved that a lot of things are not clear yet," he said.

Asked when he expected a conclusion of the deal, Albrecht said, "I think this will take longer than people think. It is certainly not a matter of days, but also not a matter of years."

Cisco results below expectations

Cisco Systems Inc, the supplier of equipment for the Internet and other computer networks, missed Wall Street's earnings expectations for the first time in more than six years

"This quarter was even more challenging than we originally anticipated in light of the abrupt slowdown in the US and the dramatic slowing of capital spending," Cisco chief executive John Chambers said.

The Euro fell to one-week lows against the yen and dollar after worse than expected German unemployment figures. The yen, too, slipped after a Japanese business survey showed a sharp drop in confidence in the October-December quarter, dragging regional currencies in tow.

Despite the downbeat mood over Cisco's earnings and outlook, Tokyo stocks gained on the back of market heavyweight NTT DoCoMo's determined rise.

FRIDAY 9 FEBRUARY 2001

Turner outlines CNN's strategy
Walt Disney looks at Yahoo!
New nominees at CNBC
Optus still up for sale
BCE announced ComboBox
Powell believes in competition
Sweden's Com.hem to deal with ISPR
BSkB's £112m losses
BBC deals with NTL for sports channel
Granada's revenues down 5%

Turner outlines CNN's strategy

CNN founder Ted Turner, whom many industry insiders had considered cut out of the loop at AOL Time Warner, joined the US Steve Case & Gerald Levin Roadshow outlining the media giant's strategies with appearances on Monday both in Atlanta in front of thousands of Turner Broadcasting employees and Tuesday in front of America Online staffers.

Turner joined AOL Time Warner Chairman Case, CEO Levin, co-Chief Operating Officers Richard Parsons and Bob Pittman, and fellow Vice Chairman Ken Novack at AOL headquarters in Dulles, Va, USA, Tuesday (February 6).

Walt Disney looks at Yahoo!

Walt Disney Co's chairman, Michael Eisne, sees an opportunity to expand his media and content empire and admitted his fascination with Yahoo!

"We're not going to make an acquisition to give journalists headlines, to make bankers wealthy or for our egos," said Eisner.

Eisner said he would be willing pursue Yahoo! if the price was right. "Yahoo is a great company," he said. "The problem is it's just overvalued." The deal might be a means to compete with the merged Entertainment AOL Time Warner.

New nominees at CNBC

US CNBC president, Bill Bolster, has been nominated chairman and CEO of the financial network. He will continue to drive the expansion of the CNBC franchise, to focus on sales and business development.

Pamela Thomas-Graham, who was president and CEO of CNBC.com, has become president and chief operating officer. She will still be responsible for overseeing CNBC.com to brand synergy across 0CNBC's TV and Internet platforms.

Optus still up for sale

Vodaphone Pacific, Telecom Corp of New Zealand and Singapore Telecommunications have each submitted bids for future ownership of UK Cable & Wireless' Optus, up for sale since September.

All three had indicated they are still interested in taking all, or parts of Optus before this week's deadline to declare their broad interest in the company. They will now be permitted access to commercially sensitive information as part of the second stage of their bids.

The successful bidder will not be known until the end of March, or possibly later.

Coverage of the sale has focused on Optus' three million mobile phone users and it remains unclear what the future is for the pay TV arm that currently reaches 225,000 subscribers.

BCE announces ComboBox

Montreal-Canadian telco holding company Bell Canada Enterprises is developing technology with partner EchoStar.

Under the terms of the deal EchoStar will allow it to combine satellite TV, high speed internet access, personalised information and digital storage. The device dubbed the ComboBox is expected to undergo trials next autumn and roll out in the first quarter of 2002.

Powell believes in competition

Michael Powell, the new chairman of the US Federal Communications Commission announced that he believed in less regulation rather than more and gave the impression that he was definitely in favour of competition as a method of spurring innovation.

He admitted being sceptical of the need for open access requiring cable companies to open their pipelines to ISPs, that cable costs hadn't risen enough to create a need to regulate cable rates.

Sweden's Com.hem to deal with ISPR

Com.hem, the cable television arm of Sweden's Telia with 1.3 million subscribing households, has announced what they say is "The biggest programming deal in its five year history." A PPV contract has been signed with ISPR (an international sports rights organisation, controlled by German media giant Leo Kirch) for a total of 468 live-broadcast matches in the leading Swedish football tournament, All-Svenskan, the Swedish Premier League.

The contract, commencing on April 1, is for three years. No financial details about the deal have been disclosed, but the money involved is expected to be fairly substantial. During the last few years Canal Plus had the rights for the Swedish market and had invested heavily in domestic sports rights in the Nordic countries in its subscriber recruitment war against aggressive Swedish-controlled DTH operator Viasat.

The latter is presently involved, according to local rumours, in a bidding war against pubcaster SVT and Sweden's biggest commercial station, TV4, for the rights to the 2002 football world championships. Even the Swedish Prime minister Goeran Persson, has been involved in attempts by the free-to-air broadcasters to secure general availability to this major sports events.

Telia and Com.hem were early introducers of digital television in Sweden: by November 1997 a massive investment in digitisation was launched, targeting a 100,000 digital converters one year later. It has taken Telia, however, until very late last year to achieve this target.

Now the management of Com.hem has high hopes for a doubling of its subscriber numbers during 2001: soccer is, jointly with ice-hockey, the most popular sport in Sweden.

BSkB's posts £112m losses, expects profits

BSkyB, Britain's largest pay-TV operator, 37.5 per cent owned by Rupert Murdoch's News Corporation, reported losses for £112 million, less than analysts' forecasts.

Subscribers to its pay-television service now exceed five million and the company confidently predicted it could beat its target of seven million subscribers by the end of 2003.

"I think we're going to exceed that target and profitability will come sooner. WeØll have seven million subscribers in 2003 although at the rate we're running now, it could be earlier than that," said BSkyB chief executive Tony Ball.

BSkyB shares fell 31p to £10.69 due to nervousness concerning the future of Vivendi Universal's 23-per cent BSkyB stake, which it agreed to sell as a condition for European approval of its merger.

BBC launches PPV NTL sports channel

The BBC is about to launch a pay-per-view sports channel in partnership with commercial operator Premium TV, the sports arm of cable operator NTL.

BBC sport, under the new directorship of former BBC 1 controller Peter Salmon, has recently signed deals with boxers Audley Harrison and Lennox Lewis to broadcast certain fights, in a bid to claw back coverage of live sport events.

NTL has been trying to make its mark as a serious supplier of sports programming for some time. Its first big entrance into the sports arena was the doomed £328m deal to screen 40 UK Premier League matches on a pay-per-view basis - a contract it withdrew from last year.

NTL also has media deals with Premier League clubs Newcastle United, Aston Villa, Leicester City, as well as Scottish Premier League Clubs Celtic and Rangers. NTL also has the exclusive UK rights to screen US basketball with the National Basketball Association and UK horseracing rights through the Channel 4-led Go Consortium.

Granada's revenues down 5%

UK Granada Media announced yesterday (February 8) that revenues were down over five per cent, as the company had to face a slowdown in demand for TV advertising and had missed its targets by 5.1 per cent for the first four months of this year.

But Granada chairman Charles Allen claimed that ITV's peak-time viewing share had grown to 39 per cent in January, up half a percentage point from the final quarter of last year and its peaktime viewing share grew to 38.5 per cent, 10.6 share points ahead of BBC1.

He said, "It has been a period of rapid change and strategic development for Granada. We led the consolidation of ITV, expanded internationally, continued to create award-winning television programmes and became an independent media company. We look forward to the future with confidence."

WEEKEND NEWS FROM FRI 9 TO MON 12 FEBRUARY 2001

EMS to supply Russia
MTG expands further into Baltic television
Prestvik heads NRK Futurum
CNN beefs up its Australian coverage
Foxtel to reach 700,000 subscribers
Alcatel completes its Speed Touch
Channel two provides radio news
Dyke aims at more multi-channel homes
Berezovskyeyes Media Most
Canada Broadcasting Corp's increased funding
Polycom to dual list on Tel Aviv SE
Kinsella leaves Tiscali

EMS to supply Russia

A Canadian unit of EMS Technologies Inc will supply Russian satellite operator and builder Khrunichev State Research and Production Center of Moscow, with three flight satellite repeaters which will amplify and re-transmit communications signals in C & Ku-Band.

Under the terms of the $23 million contract, the satellite repeaters will provide fixed satellite service communications throughout Russia, Eastern Europe and Western Asia.

Don Osborne, senior vice-president and general manager, EMS' Space & Technology Group, said, "This is a fine example of EMS' ability to deliver complex spacecraft payload equipment to customers around the world, and is a significant step forward in our decade-long experience in working closely with Russian customers."

MTG expands further into Baltic television

Modern Times Group, the Swedish-based media group, announced on Thursday (February 8) that it signed a deal with the Latvian national TV council for expanded national distribution in Latvia, increasing its national penetration from 75 to 95 per cent and its presence in the Baltic area.

Now MTG can boast national coverage in all three Baltic countries, where the Swedish group has been represented since 1993, when terrestrial broadcasting operations were established both in Estonia and Lithuania by the pan-Nordic MTG. Today Baltic TV3 reaches 96 per cent of Estonian households and even 98 per cent of Lithuanian homes.

As in the four Nordic countries MTG is now also introducing digital television in the three Baltic countries through its expanding Viasat DTH platform.

Prestvik heads NRK Futurum

NRK, the Norwegian state-controlled public service broadcaster, has announced the appointment of Svein Prestvik as the new MD of NRK's increasingly important division of NRK Futurum, created last year to take NRK into the future of new channels, new media and new commercial opportunities.

Among NRK Futurum's many new projects are a handful of channels, created for the imminent introduction of DTT in Norway, several new digital radio services and a number of new Internet and web services.

Prestvik succeeds Tor Fuglevik, former head of NRK Radio, who recently announced his decision to step down. Fuglevik is now one of the candidates for a new high executive job at EBU Radio. Prestvik has recently been director of programming/ TV development at NRK Futurum.

CNN beefs up its Australian coverage

CNN has joined Bloomberg and CNBC in beefing up its Australian coverage with the opening this week of a new bureau in Sydney.

In keeping with its recent moves to integrate its TV and Internet functions, the new facility will incorporate both in the newsroom, mirroring the Hong Kong bureau that was re-opened last year.

The Sydney bureau is the 41st to open worldwide, but it is the first to completely mesh TV and Internet production in a custom-built facility, according to Bruce Dover, the head of CNN in the Asia Pacific.

In the last three months Bloomberg Australia launched dedicated programming for the national market and CNBC Australia opened a bureau with market-specific programming feeding into CNBC worldwide.

Opening the bureau, Dover accused Australian media businesses of 'sitting on their hands' when it came to the online market because of uncertainty over its next movements and because the government had over-regulated the sector. Australia had also been slow to roll out broadband networks, he added.

"When you see what is happening in Asia and how fast it is rolling out, it is no surprise that in terms of CNN the first integrated newsroom is in Hong Kong and not Atlanta or London. It is there, because the infrastructure is there and the telcos are unhindered."

Foxtel to reach 700,000 subscribers

Foxtel ended last year with 703,000 subscribers, up from 675,000 at the end of September 2000. Analysis of the figures shows that almost all of the growth came from areas that cannot access cable - suggesting that near-saturation point for demand has been reached.

Meanwhile Austar United Communications ended the last three months of 2000 with a net fall of 5,100 customers, leaving it with 421,165. The market took the news badly, dragging AustarØs share price to a record low of 84 cents mid-way through this week - a 41 per cent fall in the share price over a period of seven days. This compares to the $4.67 per cent per share price Austar earned in March 2000 during a share placement.

The developments have led some analysts to suggest that Australia's long pay TV penetration rate will reach a high of 35 per cent against the 40 per cent predicted earlier.

The longer term outlook for Foxtel appears to be brighter, despite its operating loss increasing from $5.5 million to $8.25 for the last quarter of 2000, compared to the previous one as it absorbed the cost of acquiring new customers. Revenues grew by 20 per cent to nearly $67 million and by winning the rights to Australian Football League matches Foxtel is expected to see a spike in demand for its service in the game's heartland, Melbourne.

Alcatel completes its Speed Touch

French Alcatel, Digital Subscriber Line and broadband solutions group, announced on Friday (February 9) the completion of interoperability testing of its Speed TouchTM Pro modem and Speed Touch Private Line Network Termination product to conform to Symmetric High-Speed DSL (SHDSL) specifications.

SHDSL, an industry-standard endorsed by the International Telecommunications Union, is capable of delivering symmetric service up to 2.3 Mbps when uploading and downloading data over a single-pair copper telephone line, or up to 4.6 Mbps on a dual-pair.

Marc Hermans, Alcatel Customer Premise DivisionØs president, said, "SHDSL will enable service providers to offer a new class of broadband service to the small-and-medium enterprise and SOHO markets. With Alcatel's SpeedTouch products supporting SHDSL, users will now be able to truly experience high-speed transmission when uploading and downloading critical data files, benefiting business and consumer alike."

Channel Two provides radio news

UK Channel Two news is to provide 18 news broadcasts a day for local radio stations. The broadcasts will replace the hourly news broadcasts currently transmitted from Israel Radio and Army Radio.

All the stations, except for BU 99, which does not broadcast news, and Radio Tel Aviv, which broadcasts news from Army Radio, transmit news from Israel Radio. However, these broadcasts adversely affect the local stations, because Israel Radio makes sure to mention itself as the source of the news, undermining the stations' independent identity.

Dyke aims at more multi-channel homes

Greg Dyke, BBC director, said that its group could help fund the take-up of digital television services and it was looking at ways to encourage more multi-channel homes. The BBC has committed £300 million over the next two years.

Chris Smith, culture secretary, has said that 98 per cent of homes must have access before the analogue signal can be switched off. The target for switch-off is between 2006 and 2010.

Berezovsky eyes Media Most

Russian magnate Boris Berezovsky has offered to lend $50 million to Media-Most, NTV's besieged parent, and to buy its $262 million debt to Credit Suisse First Boston.

Berezovsky said he wants to support NTV as a 'foundation in the construction of a democratic state' and to thwart PutinØs authoritarian tendencies. Igor Malashenko, a Media-Most director, said the media holding company would be open to Berezovsky's help on an unconditional basis.

Canada Broadcasting Corp's increased funding

The Canadian Broadcasting Corporation has been promised C$100 million funding increase over three years. The corporation runs English and French national TV and Radio networks on a budget of a billion, with C$250 million coming from advertising.

Polycom to dual list on Tel Aviv SE

California-based Polycom Inc, a maker of broadband communications products, is to become the first foreign company to dual list on the Tel Aviv Stock Exchange.

Polycom's market capitalisation of $2.3 billion would qualify it to enter the blue-chip Tel Aviv 25 index. But the share will not become part of the index at this stage because Israelis investing in shares of foreign companies must pay a 35 per cent capital gains tax.

The bourse said it has submitted a request to the Income Tax Authority that the tax policy be made the same for foreign and Israeli shares, which would boost the incentive for foreign companies to dual list in Tel Aviv.

A capital gains tax on Israeli shares was part of a sweeping tax reform proposed last year by outgoing Finance Minister Abraham Shohat. But Shohat withdrew the bill from parliament after failing to garner legislators' support for it.

Israel last year approved rules allowing companies to dual list in both Tel Aviv and the United States and to report earnings according to US standards only. This paved the way for several Israeli companies traded in the United States to dual list in Tel Aviv.

Kinsella leaves Tiscali

James Kinsella, acting CEO of Italian ISP Tiscali, resigned on Thursday (February 8), because of 'incompatibility' with company founder and Chairman Renato Soru.

"I'm resigning because we disagree on the scope of the role of the CEO," said Kinsella . "The job was to run the day-to-day management of the organisation, and I think we had different ideas of what that meant."

Kinsella, formerly the president and CEO of MSNBC.com and founding member of Time Warner's Pathfinder portal, was appointed in May as chairman of World Online. Kinsella was brought into the Pan-European ISP to inject some respectability.

Soru founded the company in 1998 and turned it from a backwoods telecommunications firm that sells prepaid phone cards into the second-largest ISP in Europe.