NEWS Monday 11th - Monday 18th February 2002

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WEEKEND NEWS Friday 15th to Monday 18th February

TeleColumbus hitch for Liberty
UK cable merger options
NTL SE Asia MD appointed
OpenTV deployments up 70%
DoubleClick in Bertelsmann deal
Time Machine makes court appearance
Motorola BCS Digital Media Group
Vatican TV chief lover pregnant

TeleColumbus hitch for Liberty

Germany's Federal Cartel Office said Thursday (14/2/02) that it had sent a warning letter to Liberty Media concerning its proposed purchase of TeleColumbus's last mile connections, saying that in conjunction with Liberty's acquisition of the Deutsche Telekom networks, it could "strengthen market-dominating positions."

Liberty's acquisition of the TeleColumbus network from Deutsche Bank would complement a €56.3 billion deal to buy six regional cable TV networks from Deutsche Telekom, the former German phone monopoly.

The cartel office is not keen on allowing Liberty to be the dominant force in the German market with 60 per cent of the country's 18 million subscribers. However it is willing to allow the deal if in return Liberty could become a telecoms competitor to Deutsche Telekom. Liberty CEO John Malone has made clear that he does not wish to upgrade the network in the near term. Malone says he wants to wait for the availability of Internet-based phone service that uses cable-TV lines,

Liberty has until February 27 to reply to the concerns over its deal with TeleColumbus. The Cartel Office has until March 13 to issue a final ruling on the transaction.

In Liberty's favour is the contribution that the purchase would make to reducing DT debt. Just a couple of years ago there would have been several competitors, but many of the expansionists - such as UPC - are in financial difficulties. Malone is reported in the WSJ as saying, "People have got themselves in trouble, which presents us with opportunity." He adds, "These are not investments for wimps. These are long term, [require] deep pockets and are not without risk."
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UK cable merger options

The UK cable industry is undergoing a renewed bout of speculation on the likelihood of a merger between lead cableco NTL and number two Telewest, to create a national competitor to Rupert Murdoch's British Sky Broadcasting.

"We believe Liberty (Media) will bid for NTL and then for Telewest," Barclays Capital has told its clients. Liberty already holds a 25 per cent stake in Telewest, and Microsoft owns 22 per cent.

NTL bondholders are already pondering whether they might get control of more than 70 percent of NTL if the group goes ahead with a debt for equity swap to halve its €19.5 billion debt. However, until it is known how NTL's debt will be restructured, the position of bondholders in the event of a merger remains speculation.

Options for the two companies include creating a holding company in which NTL and Telewest remain separate companies or a full blown combination of the two entities which would require swapping NTL and Telewest bonds for debt in a new company - but that could have regulatory implications.

"It would be more likely if the two want to go ahead and not fall foul of the regulator that they form some sort of strategic alliance on an operational basis," said Bear Stearn's analyst Chavan Bhogaita, reported in the FT.

For Liberty to invest in NTL a merger would remove competition between its two investments.
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NTL SE Asia MD appointed

NTL Broadcast has appointed Patrick Duffy as managing director of its Asia Pacific operation based in Singapore, replacing Tim Sellens who is retiring.

Duffy will be responsible for developing NTL Broadcast's business in south east Asia, building on the successes of an established team.

Duffy joined NTL in 1989, and has worked in various roles from customer support and marketing, to commercial and project management. After completing an MBA from Southampton University, he returned to the company in 1999 initially as marketing manager.

As strategy director, Duffy played a key role in developing and implementing vital areas of NTL Broadcast's strategy including international development. NTL says his new appointment demonstrates NTL Broadcast's continuing commitment to the Asia Pacific region.

Duffy comments, "We've already been involved in a variety of major projects in this expanding market, and we're looking to focus on creating partner relationships with our customers that should result in long-term, stable revenues for the business.

"Having started with 'design & build' projects, we're now moving towards providing outsourced facilities management over the lifetime of a system or network, significantly reducing the total cost of ownership for our customers and enabling them to focus on their own core business."
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OpenTV deployments up 70%

Interactive TV software and content company OpenTV says recent figures show its middleware was installed in 2.8 million set-top boxes (STBs) during the fourth quarter of 2001, bringing its cumulative deployments to more than 23.5 million as of December 31, 2001.

OpenTV Chief Executive Officer James Ackerman said, "With our fifth consecutive quarter in excess of two million deployments, OpenTV continues to deploy more iTV core platform technology per quarter than many of our competitors have deployed in their entire history. We believe that our installed base of more than 23.5 million set-top boxes worldwide - including our US market-leading base of more than four million deployments - provides a significant opportunity to leverage our iTV content and applications solutions to develop both new and recurring revenue streams for the company."

The 23.5 million total is a 70 per cent increase from 13.9 million STBs deployed as of December 31, 2000. Major network operator contributors to fourth quarter deployments included EchoStar in the United States, BskyB in the United Kingdom, Sky New Zealand, and DIRECTV Latin America.
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DoubleClick in Bertelsmann deal

Online advertising company DoubleClick has signed a three-year deal to license its technology to German media giant Bertelsmann AG.

"The partnership allows us to offer our advertisers the best possible implementation for their campaign on a large number of Web sites, while achieving considerable synergies throughout the group," said Tom Curran, Bertelsmann chief technology officer, in a statement reported by Reuters.

Bertelsmann will license DoubleClick's AdSERVER, DART for publishers and DARTmail products that help with advertising management. The German media company will also have access to DoubleClick's ad-serving and e-mail delivery technology.
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Time Machine makes court appearance

William Ballard, former manager of stations owned by Viacom's CBS in Miami and West Palm Beach, USA, says he lost his job because he complained about the use of a 'time machine' (see archive) to compress programming and jam in more advertising.

It is not illegal to add extra commercials, but doing so can breach contracts with programmers on advertising limits limits. Viacom denies the allegations.

A WSJ report says that Ballard is seeking €2.3 million in damages via the U.S. District Court in Miami where he filed a complaint saying that he lost his job in part because he spoke out against "unauthorised, unlawful and illegal business practices." If the allegations were true, they would be in violation of Florida's whistleblower law.

It was alleged that a Lexicon machine was used to compress programming and allow the insertion of more commercials.

In a statement, CBS said, "the plaintiff's allegations ... are utterly without merit. We are defending the case vigorously and expect to prevail."
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Motorola BCS Digital Media Group

Motorola's Broadband Communications Sector (BCS) has formed the Digital Media Group dedicated to focus on digital consumer gateways and digital systems.

The new group encompasses businesses and employees from Motorola's former Entertainment Media Group, including its DigiCable, Satellite Broadcast Network Systems (SBNS) and Worldwide Interactive Networks (WIN) organizations.

The new group aims to enhance Motorola's provision of hardware and software solutions for each of the global conditional access (CA) and set-top markets. The company says that the Digital Media Group will leverage the synergies across Motorola's digital product lines to provide better systems support for its customer base in varied markets, while improving time to market for new consumer gateway platforms.

Motorola Broadband's Matt Aden leads the Digital Media Group as senior Vice President and General Manager, will drive market development and deployment of Motorola's digital systems and entertainment solutions; Carl McGrath, Corporate Vice President and General Manager, leads the digital consumer gateways business, and Corporate Vice President and General Manager Denton Kanouff leads the digital media systems business.

"The formation of the Digital Media Group allows us to combine our digital products and expertise into one business, which is designed to focus on delivering the best solutions to our network operator and retail customers around the world," said Aden. "We will focus more resource on system development, system support, systems integration, and licensing of conditional access to increase revenue within the media systems business as well as addressing set-top opportunities outside of the Motorola footprint to maintain and enhance a leading position in each of the markets in which Motorola Broadband operates."
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Vatican TV chief lover pregnant

Father Ugo Moretto, a 45 year old Roman Catholic priest who runs the Vatican's CTV television department, is leaving the priesthood to marry his pregnant lover.

The woman, a 35-year-old journalist who worked on the Vatican service, is reported to have been separated from her husband for a year.

"We are not married but are living together and as soon as we can we will marry," said Moretto.
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Friday 15th February

Vivendi buys Stream
Free French Sat trials
Telewest shares down a quarter
Kirch manoeuvres continue
Viacom hit by ad slump
FCC to unleash networks?
McGrath joins ON Demand
Sigecom deploys WorldGate

Vivendi buys Stream

France's Vivendi Universal and Canal Plus Group have signed an agreement with Rupert Murdoch to buy News Corporation's share of Italian pay-television platform Stream. News Corp will buy out Telecom Italia's 50 per cent stake in Stream, then Vivendi, with Canal Plus, will buy 100 per cent of Stream from News Corp.

The deal is subject to approval by the Italian regulatory authorities which rejected an earlier permutation of the plan - thought to be overcome by the complete buy-out of Murdoch.

Vivendi plans to combine Stream with Telepiu, its existing service, with the hopes cutting the losses incurred by its Italian television operations. In an official statement the company said, "The acquisition would create a commercially viable digital television platform in Italy, enabling the acceleration of the development of pay-TV in the country and an enhanced program offering to existing and future subscribers."

Messier has previously said he would pay about €690 for each of Stream's 650,000 paying subscribers - giving a valuation of €448 million - but no official figure has been disclosed.

News Corp says that divestiture in Stream contributed to its second quarter charge of €930 million.
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Free French Sat trials

Canal Satellite and TPS have both begun offering similar (almost) risk free trials to their DTH platform. In the case of TPS, the offer is valid for subscriptions taken out before the end of March. The trial period is for two months, plus the start-up month.

If the subscriber decides to cancel the subscription up to two weeks before the end of the trial period, TPS refund the decoder rental and the subscriptions paid to date, but not the entry fee (€38.11) or any PPV events or options. Subscribers can keep the dish (described as 'free' in the promotional literature) for €15.

Canal Satellite is offering a similar scheme, although in this case the dish really is free. The options and PPV events are also refunded, but the non-subscriber still has to pay the €38.11 entry fee. The scheme runs until the end of May.

In both cases, cancellation of the subscription requires the use of a (costly) recorded delivery letter. TPS and Canal Satellite subscriptions run for a year, and are then renewed automatically for a year. This means that subscribers may only cancel on the anniversary date of their subscription, which has brought complaints in the past from some consumer associations.
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Kirch manoeuvres continue

The heavily indebted German media group, Kirch Gruppe, is reported to have given itself until the end of the week to decide on an offer from HypoVereinsbank to pay €1.1 billion ($960 million) for the 40 per cent stake in publisher Axel Springer.

The FT reports that the Dresdner Bank is expected to decide before the end of the week whether to join the bid.

Kirch would use the sale to facilitate renogotiation of its €5.6 billion of debt and €2.3 billion of contingent liabilities.

Bernd Fahrholz, chairman of Dresdner Bank, is reported to want to share the burden with other banks, possibly including Bayerische Landesbank.

Bavaria's big three financial institutions Dresdner, HVB and Bayern-LB, could potentially beat Deutsche Bank, which had been working on a competing solution involving a break-up and sale of Kirch's most valuable assets - five television stations belonging to broadcast subsidiary ProSiebenSat.1 and the KirchMedia film and TV rights business.

Bayern-LB has loaned €1.9 billion to Kirch, while Dresdner and HVB loaned €460m each.

The sale of non-core assets, such as a 25 per cent stake in Spanish broadcaster Telecinco, would be expected to follow the Springer sale - and talks are reported with Italian Prime Minister Silvio Berlusconi's Mediaset which already owns 40 per cent of Telecinco. However, Spanish law forbids foreigners from owning more than 49 per cent.

A report in the Handelsblatt newspaper said that Kirch is also in talks about Telecinco shares with the Spanish Correo Group, and put the value of the entire Kirch stake at between €400 million and €500 million ($350 million to $440 million).

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Viacom hit by ad slump

US media giant Viacom Inc reported a Q4 loss of €48.8 million, or 2 cents a share, in contrast to net income of €35 million, or 2 cents a share, in the quarter a year earlier.

The fall is attributed to the decline in advertising sales - Viacom gets half its revenue from ad sales - but the company says ad spending appears to be recovering.

Revenue fell five percent, to €7 billion, with Ad sales down at the company's local TV and radio stations - though CBS saw increased revenue - with ad sales up 15 per cent. Results included one-time charges of €183 million in the quarter, primarily severance payments and restructuring costs at Blockbuster, MTV Networks and the UPN broadcasting group.

Mel Karmazin, Viacom's president, said sales at the radio and billboard unit are improving and are expected to rise three to four per cent this year. Viacom's earlier projections were for double-digit growth in earnings before interest, taxes, depreciation and amortisation (ebidta) in 2002, although the comapny said this forecast could be too conservative if the economic climate improves 'materially.'

Viacom's cable networks, which include MTV and Nickelodeon, reported revenue of €1.32 billion, down three per cent from a year earlier due to lower advertising, but ebitda at the group rose 15 per cent to €607 million.

Broadcast television, which includes the CBS and UPN networks, posted a 5 per cent increase in revenue to €2.3 billion.

Earlier this week Viacom confirmed that it is paying Young Broadcasting Inc €747 million in cash to buy Los Angeles TV station KCAL-TV. Viacom, which owns CBS and its Los Angeles outlet KCBS-TV, says the new acquisition will boost earnings and enable the company to cut costs and increase ad sales. The acquisition is expected to close in mid-year 2002, and is subject to FCC review and the expiration of antitrust waiting periods.

Earlier rumours of a rift between Karmazin and chairman and chief executive officer Sumner Redstone were played down with Redstone telling analysts, "Mel and I are getting along great and you should feel great about your investment in Viacom."
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McGrath joins ON Demand

The UK based VOD company ON Demand Group appointed Simon McGrath as Director of Technology and an ON Demand Group executive board member (14/2/02).

McGrath will be responsible for the overall future technical direction of the company.

Prior to joining the ON Demand Group, McGrath was Chief Sales and Communication Officer and Executive Board Member for Lysis SA of Lausanne, Switzerland, a software company specialising in advanced content management solutions for digital television. Lysis customers include the cable companies NTL, Telewest, Mediakabel, Cablecom, Madritel and Ono. McGrath joined Lysis on the acquisition of Concision Limited, a company he founded, by Lysis in November 1999.

Concision specialised in the development and installation of intellectual property rights management software for the entertainment industry, with clients including Paramount Television, Universal Television, Canal+, MNET, British Film Institute, Front Row Television and Telewest Communications.

McGrath holds a Masters degree in computer science from Cambridge University.

Tony Kelly, Chief Executive of the ON Demand Group commented, "I am delighted that Simon has decided to join us as our first Director of Technology. His understanding of technical aspects, specifically software issues associated with our business sector made him or number one choice to fill this newly developed role within the group. However, it is his entrepreneurial and project management skills as well as his all round understanding of the industry, which gives him a level of experience that will be invaluable to the company as a whole. I am delighted therefore that he has agreed to join the board as an executive member and I look forward to working closely alongside him in what, I predict, to be a very exciting time for the development of the group."

McGrath added that he had been particularly impressed with their (board members Tony Kelly and Andy Birchall) enthusiasm and drive to make the business a leading market force in the development of transactional TV facilities."
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Thursday 14th February

Swedish Teracom close to bankruptcy
Doubts over Liberty deal
Cox awards MetaTV first contract
Irdeto in Gansu agreement
Liberty driving Telewest/NTL deal?
Kirch crunch arriving
EchoStar's New Launch

Cox awards MetaTV first contract

Cox Communications, the fifth largest cableco in the US, has awarded MetaTV a contract to design, develop and manage the automation and optimisation of Cox's iTV services - powered by MetaTV's iTV applications platform - in the company's first major cable deal.

A custom branded Cox iTV service will be designed and developed by MetaTV usign the MetaTV Platform which will allow Cox to deploy iTV
services through its current generation of head-end and set-top technology as well as enabling it to quickly add new features and offerings.

Cox iTV services will complement existing digital cable and other advanced services to provide Cox subscribers with instant access to world, national and local news; financial and business news; sports, entertainment, weather and kids content; as well as TV-centric games, customised local and regional content, self help and customer service content. MetaTV will provide Cox with a complete end-to-end turnkey solution which includes hosting and management of the iTV service.

"We are excited to be partnering with MetaTV," said Dallas Clement, Senior Vice President of Strategy and Development for Cox Communications. "MetaTV's unique technology, coupled with its professionalism and expertise will form a foundation upon which we will be able to deliver new compelling iTV services to Cox subscribers now and into the future."

"Cox Communications is an industry leader in providing new services and choices to their subscribers," said Andrew Lev, President and CEO of MetaTV.

"We are delighted that Cox has selected our technology and professional services to power new iTV services. Through our close, collaborative working relationship with Cox and our adaptive technology, we look forward to rapidly deploying interactive offerings that are customised for Cox subscribers."

MetaTV says its technology is optimised for any middleware and set-top box combination and enables iTV applications, services and content to be delivered quickly and cost-effectively today. These offerings can then be scaled seamlessly in the future as new hardware and middleware platforms are released. The aim is to ensure the protection of investment and allow rapid customisation.
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Irdeto in Gansu agreement

Irdeto Access has concluded a license agreement with Gansu Provincial Radio & TV Network Centre in China to supply its conditional access product Irdeto M-Crypt to start a pay-TV operation using the cable TV network in Gansu, with an order for 10,000 smart cards now placed.

Gansu is a large province in the Northwest of China with a population of 25 million. Gansu Provincial Radio & TV Network Centre has 170,000 subscribers, which are mainly based in Gansu's capital city - Lanshou. Gansu Provincial Radio & TV Network Center is planning to unify cable networks in 12 cities and expects to reach two million subscribers.

The province of Gansu plans to launch its pay-TV service in the second quarter of this year, which will provide pay-TV (movies) and data broadcasting services (stock information), based on DVB transmission protected by the Irdeto M-crypt system.

Irdeto Access, a subsidiary of MIH Limited, the Subscriber Platforms and Supporting Technologies group, developed Irdeto M-Crypt for the small to medium-size operator or for new start-up operations. Irdeto M-Crypt, a compact conditional access (CA) system, runs on a Windows NT platform and can be installed on a standard PC. Irdeto M-Crypt is described by the company as a modular, user- friendly and cost-effective CA system that allows the operator to grow according to his business needs. As the subscriber base grows Irdeto M-Crypt can be upgraded smoothly to Irdeto Access' large-scale CA system: Irdeto psys (Pisys) without the need to change smart cards or STBs in the field.

Irdeto Access has worked together with system integrator Wuhan Dongtai Information Industry Co, Ltd in Gansu; Wuhan Dongtai is a key enterprise in the Photoelectron Valley of China as well as a member of the China Data Broadcast Alliance.

Thierry Raymaekers, General Manager of Irdeto Access North Asia comments, "We are very happy to welcome Gansu Provincial Radio & TV Network Centre as a new customer covering an entire province in China. Moreover, our agreement with Gansu Provincial Radio & TV Network Centre shows that working with partners is the key to satisfying client requirements."

Yu Dianjun, the Vice-Director of Gansu Provincial Radio & TV Network Centre adds, "Irdeto M-Crypt is the most suitable product to launch our pay-TV operation. Its compactness and flexibility gives us the feeling it is specially customised for us without attracting the costs normally associated with customisation."

"The Northwest of China is a market with great potential. The advantage in the market will always be with the first mover," commented Professor Xu Chongyang, the General Manager of Wuhan Dongtai.
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EchoStar's New Launch

EchoStar's next satellite, the spot-beam EchoStar 7 spacecraft, is expected to launch sometime next week from Cape Canaveral in Florida.
according to Sky report.

Quoting the Futron monthly launch forecast report, it is suggested that the new spacecraft could lift off February 21 in a launch window that opens at 7:13 a.m. Eastern Time.

An International Launch Services' Atlas 3 rocket will carry EchoStar 7, expected to become an integral piece of the company's ability to deliver local TV channels.
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Wednesday 13th February

Bank makes €1.1bn Kirch offer
ITV Digital subs up jobs cut
Asian broadband uptake faster
Microsoft takes cable losses
Vivendi 2001 revenues up
The B+ Young Talent Awards
iTV Odeon ticket ordering
iMusic on MTV UK
Recording encrypted programmes

ITV Digital subs up jobs cut

UK digital terrestrial broadcaster ITV Digital reports a 3.8 per cent increase in subscribers during Q4 but says a quarter of customers churn, and the company is cutting 600 jobs from its call centre in Plymouth, using new technology to reduce costs. Some 46,000 new subscribers signed up in the three months to December 31, compared to 82,000 the comparable quarter a year earlier, making a total of 1.26 million.

But churn rate - those not renewing their subscriptions - reached 24.9 per cent (around 300,000 over the year) and could climb to 30 per cent this year - which compares to 10.4 per cent at BSkyB. However, the company says it is still on track to reach its breakeven target of 1.7m customers by September 2004.

It also claims a 20 per cent share of the pubs and clubs market, with more than a million customers.

Average revenue per user (arpu) was €368 pa - compared to arpu of €541 at BSkyB. Price rises due this year are forecast to raise arpu by around €41 a year.

ITV Digital is jointly owned by UK media groups Carlton Communications and Granada who are expected to have invested €1.8 billion in the venture before breakeven. Granada shares rose 1.9 per cent to 120p (€1.96) after the results on Tuesday (12/2/02) but Carlton remained flat at 206.5p. As both parents are suffering from the advertising slump, and find it difficult to invest further, the organisation is expecting a major restructure, with the possible addition of a third investor.

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Vivendi 2001 revenues up

French media and utility conglomerate Vivendi Universal just missed its revenues growth target of 10 per cent, with a 9.7 per cent rise in 2001 via growth in its telecoms and environment services.

Revenues were €57.36 billion ($50 billion) in 2001, compared with €53.05 billion ($46.3 billion) on a comparable basis in 2000.

Acquisition of Seagram's media businesses in late 2000 impacted these figures. Actual reported revenue rose to €57.36 billion ($50 billion) from €41.58 billion ($36.29 billion) in 2000.

The group's media division accounted for 50 per cent of the company's business, with revenues up 9.2 percent to €28.94 billion ($25.26 billion) from €26.50 billion ($23.12 billion)

Vivendi Universal expects revenue to increase by at least 10 percent this year, with the focus on internal growth this year.
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Tuesday 12th February

Eutelsat plans and perspectives
Liberty's Telecolumbus deal in trouble
Russian TV bids underway
Discovery gets Essent distribution
Conax protects Ukrainian access
Import excess at BBC
Ransom CTO at Alcatel

Eutelsat plans and perspectives
By Sotires Eleftheriou

At the end of January, just seven months after it was privatised on July 2 last year, Paris-based Eutelsat presented its forecasts to the press. Eutelsat now has a total fleet of 18 satellites. Five of these are in an inclined orbit, and totally amortised hence contributing positive revenue.

Eutelsat plans to launch three or four satellites this year: Hot Bird 6 and 7, E-Bird and possibly one other, not disclosed, increasing total capacity by a third. Eutelsat has also upped its stake in Hispasat to 27.5 per cent.

"This makes us number four satellite operator in the world, and the number one totally European satellite operator," said Giuliano Berretta, Eutelsat CEO. Launches for next year include W3A at seven degrees east and Express AM1 at 40 degrees east.

Its biggest single customer is Canal Plus. Berretta was delighted to point out that the merged DTH platform in Poland has opted for Eutelsat.

The Eutelsat fleet coverage extends from South America and the Eastern part of North America, to India. Hotbird 3 is to be moved to an undisclosed new location and its steerable beam will be oriented towards Africa, for an undisclosed pay TV client. Hot Bird 7 will replace it at its current position (13 degrees east).

Eutelsat is currently testing Ka band return path, in preparation for Hot Bird 6 which will feature Ka band and Skyplex technology, enabling uplinking from anywhere in Europe. The current line up of channels on Eutelsat satellites comprises 50 analogue TV channels and just over 1000 digital channels. 35 per cent of the channels are free to air, "So there is plenty of TV for people who don't want to pay."

Eutelsat is currently beta-testing broadband IP content distribution with around 5,000 beta testers around Europe (including this reporter who will be reporting back results in a few weeks). The service uses an improved protocol, which will hopefully overcome some of the problems encountered by previous satellite Internet systems. The system will begin commercial operation in May, said Berretta.

The Eutelsat satellite IP portal features some 50 streaming video channels, which can be received directly from the satellite without needing a modem return path. These are all free during the test period, but Eutelsat leaves it up to the service operators to charge for them once commercial service begins. "We will not compete with our customers," explained Berretta.

Berretta sees broadband as the next revolution for the satellite operator. The first was the move into TV from its original telecom services activity; the second was the digitalisation.
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Liberty's Telecolumbus deal in trouble

On Saturday (9/2/02) the German cartel office voiced concern about Liberty Media's plans to buy cable assets from Deutsche Bank. A report in the local Frankfurter Allgemeine Zeitung cited competition watchdog officials as saying US media group Liberty's plans to buy the assets of number three cable operator TeleColumbus from Deutsche Bank would not be approved without concessions.

The move followed last month's statement by the cartel office that it had serious objections to US media group Liberty's planned €5.5 billion deal to buy cable assets from Deutsche Telekom.

The planned purchase of Telekom and Deutsche Bank cable assets would make Liberty Germany's dominant cableco and combine with shares in UPC of the Netherlands and NTL in the UK (see 11/2/02) to bolster Liberty CEO John Malone's pan-European plans.

Liberty has until February 15 to respond to the regulator's concerns, which focus on its control of both programme content and the reported reluctance of Liberty to upgrade the cable network for Internet and telephony.

The cartel office will rule on the TeleColumbus deal on March 13, the Frankfurter Allgemeine Zeitung said.
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Russian TV bids underway

St Petersburg Governor Vladimir Yakovlev is promoting and supporting a bid by his hometown television station, TRK-Petersburg, in a March 27 tender for broadcast rights on the frequency formerly held by TV6.

Yakovlev discussed the station's bid with President Vladimir Putin during a visit to the capital earlier in the week, his spokesman Alexander Afanasyev was reported as saying in a Moscow Times report.

"I spoke to the President about the injustice that took place several years ago when St Petersburg lost access to a nationwide audience," Yakovlev was quoted by the Strana.ru web site as telling reporters in St Petersburg on Thursday.

In 1997 the Petersburg station, controlled by Yakovlev's office and the government of the Leningrad region, lost its nationwide VHF frequency spot on channel 5. The frequency - one of six serving the whole country - was taken over by the state-run Kultura channel. The forerunner of the Petersburg-5th Channel was reduced to St Petersburg and the surrounding region and it is now described as being on the brink of bankruptcy.

Although TRK-Petersburg has not officially stated its intention to take part in the tender, the Moscow Times reports Afanasyev, speaking by telephone from St Petersburg, saying Yakovlev's conversation about the station's bid with Putin did not mean the station would get a license without a tender.

Next month Boris Berezovsky's TV6 frequency is available, following the station's parent company being declared bankrupt in moves widely seen as politically motivated.

The ousted team of TV6 journalists is among some eight bidders for the licence, along with the privately owned ATV production studios; two minor stations, Mir and Klass!; the 7TV sports station linked to the Interior Ministry and Presidential envoy Georgy Poltavchenko which broadcasts on a UHF frequency; the Russian Olympic Committee; and the oil giant LUKoil, which controlled 15 per cent of TV6 and won the station's liquidation in court. In addition TV6 television personality Viktor Merezhko's TV-VI is also bidding for the frequency.
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Discovery gets Essent distribution

Discovery Networks Europe (DNE), the provider of factual entertainment programming, has announced a carriage deal with Essent Kabelcom, The Netherlands' second biggest cable operator, for the Animal Planet Channel.

The deal will increase Animal Planet's subscriber base in The Netherlands by 1.5 million, and carriage of the Discovery Channel was also renewed as part of the agreement.

Kurt Pauwels, Discovery's Director of Affiliate Sales, Benelux said, "We are delighted to announce this deal; gaining carriage for Animal Planet on Essent is an important step forward for the continuing growth of Discovery's business in The Netherlands. We look forward to working closely with Essent on this enhanced line up."

'Animal Planet has long been a priority brand for us', said Jan Mensinga, Manager of Cable Television at Essent Kablecom.
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Conax protects Ukrainian access

Norwegian digital-TV conditional access technology provider Conax AS has signed a contract with Volia Cable to provide conditional access to Volia's cable network in Kiev, Ukraine.

Volia Cable will be one of the first cable operators in Eastern Europe to roll out a digital TV platform under the product brand name Volia Premium TV. The company has a dominant share of the market in Kiev with 750,000 homes passed. The first stage of the project implementation is close to being finalised and Volia Cable plans to launch the digital services in March 2002. Volia Cable will offer their subscribers in Kiev a number of high quality digital TV channels and in the near future Pay-Per-View services will also be integrated in the offering.

To secure the content offered in their cable network, Volia Cable has selected Conax-CAS3 scalable and well proven encryption technology, based on open standards.

"Eastern Europe represents an important market for Conax, and we see Volia as a key innovative operator within the Pay-TV segment in this region", says Shahzad Abid, Vice President Sales & Marketing, Conax AS, "And we are of course delighted to be chosen as the conditional access supplier for the largest digital cable network in Ukraine."

"Enabled by Conax, Volia Cable will be one of the first operators in Eastern Europe to provide its subscribers with new advanced interactive services, event ordering and e-payment solutions", says Abid.

"Volia Cable has chosen Conax as its partner because we have high confidence in the security of Conax' CAS3, which is paramount in a country like Ukraine where the unlawful connection to cable networks is a serious threat to operators. The Conax team's responsiveness in meeting our technical needs in a quick time frame, really set them apart from other providers," says Richard Caproni, President, Volia Cable.
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Import excess at BBC

The €73 million launch of children's digital channels CBBC, for the six-to-13 age group, and CBeebies, for preschool children, are already being criticised for exceeding a planned 25 per cent imports limit, with CBBC claimed to have 40 per cent imported cartoons at launch.

Ministererial approval for the channels included a BBC promise of at least 75 per cent domestic output and now UK programmemakers are calling on the UK Department of Culture, Media and Sport to act.

A BBC spokesman quoted in the local press (11/2/02) said, "We are launching the channels in halfterm, so there are more cartoons than normal. In weeks to come we will be offering more homegrown drama and entertainment."
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Ransom CTO at Alcatel

Niel Ransom has been appointed Chief Technology Officer (CTO) of Alcatel, replacing Martin De Prycker.

In his new position Ransom will report to the Executive Committee. He will be responsible for the company's technology choices, the network strategy and the maximisation of Alcatel's intellectual property.

In charge of the corporate research program, his role will be to guide the development of all in-house or acquired technologies from the start-up phase to a mature business.

Niel Ramsom has been Vice President and Chief Technology Officer of Alcatel Americas since June 2000. He joined Alcatel in 1997 as General Manager of the local networks business unit. Before that, Niel Ransom worked for Bell South as Senior Director of Advanced Technology. Ransom holds a Ph D in Electrical Engineering from the University of Notre Dame, USA and an MBA.
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Monday 11th February

Kirch in €1bn Springer disposal
NTL tyres kicked by Liberty
Thai soccer rights dispute
iCable irate at 'civil' pirates
Saint's TV now on air

Kirch in €1bn Springer disposal

Endebted German media group Kirch is fighting to avoid takeover by disposing of more than €1 billion ($870 million) worth of assets this week, and has found a financial buyer for its 40 per cent stake in the Axel Springer publishing group according to press reports today (11/2/02).

The move is aimed at easing the pressure of €5.6 billion debt and a further €2.3 billion in liabilities, with many major payments falling due this year. These include the now expected demands of Rupert Murdoch's News Corp which could exercise a €1.7 billion put option in October. Murdoch is reported to be keen to 'get his money back' - despite Kirch being unable to pay - and is reported to believe that the German banks will eventually come up with a deal.

There are some grounds for this, with the German Chancellor, Gerhard Schroder discussing the implications of a Kirch collapse with senior German media figures and the lending banks - despite an official policy of non-intervention. Rolf Breuer, the Deutsche Bank chief executive, is reported by the FT to have flown to Munich over the weekend to talk to Leo Kirch. Deutsche Bank is said to be working on a framework solution involving several German banks.

Kirch is trying to avoid resorting to the proposed solutions of German politicians, bankers and rival groups. Discussions on the Springer sale were believed to be at an "advanced stage" on Sunday night though no contracts had been signed according to the FT. Also, Kirch has just completed acquisition of EMTV including a 50 per cent stake in SLEC.

Kirch's 40 per cent stake in Axel Springer, publisher of the Bild tabloid newspaper, is not expected to go to Germany's WAZ Group, Holtzbrinck or Bertelsmann, and a financial investor is now thought most likely. This could enable the proposed merger of Kirch Media and ProSiebenSat1, avoiding the Muroch put option becoming operative.

Kirch's €5.6 billion debt was built up as the company sought to expand rapidly, both overseas and into new programming rights - such as Formula One motor racing and the soccer world cup. It was hit by the slump in advertising sales and the limited impact of its financial restructuring.

In addition to Murdoch, US-based Liberty Media is also a possible buyer, though it previously failed in its bid to buy News Corporation's stake in Kirch, and is expected to be opposed by regulators if it tried again due to its purchase of extensive cable distribution systems in the country.
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NTL tyres kicked by Liberty

"Strategic and recapitalisation" restructing at Barclay Knapp's €20 billion endebted UK cableco NTL has attracted the attention of US cable guru John Malone's investment group Liberty Media. An investment by Liberty Media could provide the cash injection sought by the UK's largest cable operator, while further extending Liberty's power in the European cable industry by giving it strategic control over NTL.

In addition to any cash injection NTL's restructure will entail swapping much of the company's €9.1 billion ($8 billion) of bond debt into equity.

Liberty's involvement in NTL could range from preferred stock to a cash injection secured on some of NTL's assets according to an FT report today (11/2/02).

The restructuring is considered essential, but existing shareholders - such as France Telecom and Microsoft - would see their shareholdings heavily diluted. NTL's bank lenders have already said that they will not write down their €6.8 billion exposure to the company in any restructure. This could cause a problem as any Liberty deal would need approval of NTL's secured and unsecured creditors.

Alternative potential investors include US media giant AOL Time Warner which is seeking international cable expansion, but Malone has long eyed NTL as a key part in its pan-European broadband media group.
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Thai soccer rights dispute

Thailand's soccer fans remain unclear about how they will watch the World Cup later this year after talks between the rights holders and would be broadcasters broke down.

The relatively unknown Tospak Communication Agency paid worldwide rights holders Kirch Media a reported €8.5 million - twice as much as the 1998 figure - for the 2002 World Cup - the first to be held in Asia. They beat off the TV Pool of Thailand, a cartel of free to airs that had been the unchallenged bidders for major sports events.

The TV Pool then opened talks with Tospak, or DhoSpaak, as it is also known, but these broke down because the broadcasters could not come to an agreement about issues like cost and the running advertising during the games rather than natural breaks like half time.

If no agreement can be reached, one alternative is that Tospak will buy airtime from the pool and manage ad sales by itself after agreeing sponsorship deals with Chang Beer and Sang Som.
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iCable irate at 'civil' pirates

The Hong Kong government is expected to decide that TV signal pirates will face civil, rather than criminal penalties in a move that has angered sole pay TV operator, i-Cable.

Last year i-Cable started a €68 million investment to create a digital platform that would also increase its security against pirates who sell illegal smart cards for set top boxes. It is estimated that around 100,000 homes access the platform illegally, compared to the total of 560,000 subscribers, representing an annual loss of €4.6 million.

Chairman Stephen Ng says his company will continue to lobby to make signal piracy a criminal offence, with piracy likely to rise on the back of demand for access to World Cup 2002 games since the Hong Kong broadcasters will not, for the first time, show all the matches in the tournament.

One brighter note for i-Cable is that commercial enterprises who use illegal smart cards and decoders to make money will still be liable to face criminal charges.
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Saint's TV now on air

Padre Pio, a miracle performing monk in line for canonisation this year, now has his own TV station - Tele Padre Pio - launched at the weekend by Capuchin monks at San Giovanni Rotondo, Italy.

From an initial reception area around San Giovanni Rotondo, southern Italy, the monks plan to extend to international distribution once they've raised the €350,000 needed for a satellite deal. "We are evaluating the cost and we hope to make it happen before the canonisation," Friar Francesco Colacelli is reported as saying in today's Guardian newspaper (11/2/02).

The channel will also broadcast on the Internet on www.teleradiopadrepio.it

Some seven million pilgrims visit Padre Pio's hill town each year and the TV station will broadcast the people praying at his crypt, recollections of those who knew him and the completion of a half-built basilica next to the crypt.

"We will definitely never transmit adverts," a monastery spokesman said.

The recovery of seven-year-old boy who dreamed of Padre Pio while in a coma from meningitis is expected to be the second miracle attributed to Padre Pio and clinch the Vatican's decision to make him a saint. During his life the Vatican appears to have doubted his reported supernatural powers and gift for healing, and his stigmata marks representing the crucifixion wounds of Jesus Christ. There were also unproven allegations of sexual impropriety.
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