Business

Changes to business digitisation brings

Virgin Mobile Fishing For Extra Cash – Vodafone and FT Interest
Both Vodafone and France Telecom are now considering a rival bid for Virgin Mobile, following a “unanimous” decision by the Virgin board to reject the starting offer from NTL. Financial sources say both companies have asked to look at the Virgin Mobile books.
This means that if NTL wants to buy the brand and put it on all NTL products, it will have to come up with a bigger offer. NTL, waiting for the Stock Exchange to open before making any announcement, is going to have trouble finding the money after its big takeover offer for Telewest, say finance analysts.
It also means a nasty gap in the future of T-Mobile, which provides the network for Virgin as a virtual network; neither France Telecom nor Vodafone would renew that contract, and the loss could be crushing, following T-Mobile’s defeat in the contest to buy O2.
Virgin founder Sir Richard Branson has told reporters he is sure the deal will go ahead.
From Australia, Forbes quotes Branson as saying that the new company will be formed and will be called Virgin TV – all it will take, he added, is a small increase in the offer. He said the current offer under-valued the company in the eyes of his fellow directors, but that “the difference between what they’ve asked for and what NTL has offered is not considerable in financial terms.”
According to the Times, the difference is between the current offer of £817 million and a hoped-for bid of £891m – increasing the bid to 345 per share while the Guardian thinks the extra needed is rather less at 340 pence.
Guy Kewney write extensively, and quite brilliantly, in lots of places, including NewsWireless.net
8 December, 2005
iTunes Video: NBC Universal Deal Struck
NBC Universal and Apple have struck a deal to make NBC-owned television shows, such as “The Office” and “Law & Order,” available on the iTunes music store.
The shows, trawled from NBC, the USA Network and the SciFi Channel, will include new and old programming, including “Late Night With Conan O’Brien,” “The Tonight Show With Jay Leno” and “Surface.”
There’ll also be some cable shows such as “Monk” and “Battlestar Galactica” on offer, along with golden oldies like “Alfred Hitchcock Presents,” “Dragnet” and “Knight Rider” dredged up for sale.
The announcement of this deal brings into focus the story we covered over a week ago, NBC Take First Pop At TivoToGo Enhancement, where NBC clearly saw TiVo plans to make these programmes available for zero cost not in their commercial interest.
The shows will be available from next week, downloadable from the iTunes Music Store the day after they air for $1.99 (£1.15, €1.70) per episode
The deal reflects the growing interest from TV networks in opening up lucrative additional revenue streams outside the traditional TV market.
Spurred on by the release of Apple’s first video-capable iPod in October last year, industry bods are predicting fat profits from video downloads.
The success of the iTunes store – shifting more than 3 million videos since launching two months ago – has got media moguls clamouring to catch a slice of the downloading action.
Disney-owned ESPN announced that they are looking into distributing some of its TV programming on the iTunes service, as have News Corp’s Fox Filmed Entertainment network.
iTunes
7 December, 2005
ITV Buy Friends Reunited: Why?
The Digital-Lifestyles office is in a state of total confusion over major UK broadcaster, ITV, buying the Web Site, Friends Reunited (FR).
Our reaction when we initially heard of the deal was – What? Why? How much!?
It’s been widely reported that ITV is paying £120m + £55m in bonuses for FR. The site that has been running for four years, currently has 12m members and is expected to make revenues of £12.4m this year.
It’s not that we don’t think that businesses should appear to diversify. We’ve been clear that we think eBay’s purchase of Skype was genius. The major difference, beyond the value to the transaction, is that Skype is still growing.
What?
We think that FR has done an amazing sales job on ITV. It’s a site that would appear to be in decline rather than its ascendancy. Their expansion into Genes Reunited, Dating and Jobs Reunited would appear to point to them thinking the same.
If you look at why FR worked, we think it’s because there were generations of school leavers going their separate ways prior to the Internet, leading them a very limited means of contacting their previous peers.
The school leavers departing since the wide use of the Internet, will not have to resort to third-party services – the majority of them will have an online presence, allowing direct contact, if desired.
Why?
ITV are suffering. The business that, when it was launched fifty years ago, was described as a ‘license to print money’ has gradually slipped to a low grade, trashy set of channels. It’s widely thought of as a bit of a joke with appalling programming.
70% of ITV’s revenues come from Ad sales on its flagship channel, ITV1. The word in media circles is that ITV1 is now struggling to sell ads, as the audience generally drops off (the exception to this being their recent reality show, ‘I’m a celebrity, get me out of here’), and goes down market.
ITV do have a huge advertising sales department that has been merged across all of its regions. Bringing FR into this sales force will give better economies for ITV, letting them squeeze additional profits from FR. It will also give ITV the chance of selling adverts across TV and the Web – extracting additional cash from the advertiser.
Another benefit will be letting ITV have access to the 12m members of FR, allowing them to expose the online FR audience to promotion of ITV’s programming, if they’re UK based. Later this can be expanded to on-demand sales.
When we sat around at Digital-Lifestyles to come up with other reasons, one that came up was the possible creation of a programming strand or, heaven forbid, whole channel covering the now-various services of FR. eg reality programming following a group of FR subscribers going through the steps to ‘reunited’, with the trial, tribulations and toe-curingly moments that it would entail.
The question we keep on coming back to is, Is this this really worth £10-£14.50 per FR member?
Even after ITV boss Charles Allen has tried to explain the deals advantages, we’re still not convinced.
This deal brings to mind ITV’s disastrous, misguided huge, £788m investment into ITV Digital – their attempt to take on BSkyB in the UK. The service collapsed in 2002, later to reborn as Freeview.
7 December, 2005
Uniting ITV’s New Friends
Friends Reunited and ITV have decided to make it legal; after a short romance, a deal’s been agreed. Rumours they’d been seeing other suitors that included BT, News Corp and that bastion of middle England the Daily Mail & General Trust, did little to cool the ardour of an excited ITV.
The ITV deal values Friends Reunited at £120m (€178m) and there’s a potential further pay off in 2009, designed to keep the project on target of up £55m (€81m).
A gushing Friends Website summed it up:
“When ITV approached us we immediately clicked; they share our values, they’re a national institution that is trusted and well loved, and by joining with them, Friends Reunited will become the UK ‘s 8th most visited site giving us access to a vast audience so we can connect even more of you even more of the time.”
An equally emotional ITV press release went all lovey-dovey about,
“A powerful consolidated online advertising sales proposition. 53% of Friends Reunited users are in the ABC1 demographic and 40% are in the 16-34 age range – both key audiences for advertisers. It will contribute additional advertising synergies as ITV Internet sales will have increased scale, becoming a one-stop-shop for media agencies in the online space.”
To some of us, there’s a distinct whiff of Déjà vu. The former commercial ITV giants Carlton and Granada lost a tidy sum on the former Internet lovely, Jeeves, but ultimately there was little chemistry and even less synergy, some city analysts are more positive about this deal seeing strategic and financial benefits to come.
But is ITV Plc paying heavily for an attractive database or will the two remain friends for many happy years?
7 December, 2005
Vodafone Launches Global Mobile TV
Vodafone has started to roll out its global Mobile TV channels, serving up a feast of “world-class TV brands, pan-European sports coverage and leading entertainment and documentary programmes”.
The global Mobile TV channels will be widely available across Vodafone markets from this month and will include big hitting series like HBO’s “Sex and the City”, “Six Feet Under” and special mobile editions of the old favourite, ’24’ from Fox.
Sports fans will be kept amused on the move with Eurosport, UEFA Champions League and, err, Chilli TV (who?) channels, with the Vodafone service also carrying popular channels like MTV and Discovery.
“With a wide range of ‘good for TV’ handsets, an intuitive, easy to use service and a portfolio of instantly recognisable television brands and programming, the launch of global Mobile TV is a compelling proposition for our customers”, purred Peter Bamford, Chief Marketing Officer at Vodafone.
“Attracting world class content providers, such as Twentieth Century Fox Television and HBO, ensures the premium quality of this product and underpins our confidence in its widespread adoption,” he continued.
Vodafone say that their research into the market revealed that Mobile TV complemented television viewing habits at home and thus demonstrated a hearty appetite for the product amongst consumers.
Their study found that consumers want well-known TV brands and channels and like to “dip” in and out of television as a way of filling up free time (or skiving from work).
Sourced globally, the TV content will work with any 3G enabled handset and will complement existing domestic Mobile TV offerings in eight of Vodafone’s operating countries (namely, Germany, Greece, Italy, Netherlands, New Zealand, Portugal, Spain and the UK) as well as associate and partner networks in Belgium, France, Switzerland and Austria.
Vodafone
6 December, 2005
NTL Bids For Virgin Mobile: 1st Mobile Quad Play?
NTL is currently in talks to merge with Virgin Mobile in a deal that would create a potential rival to the now broadband-enabled BSkyB.
Virgin Mobile’s official word?
The Board of Virgin Mobile Holdings plc confirms that it has received an approach from NTL Incorporated that may or may not lead to a formal offer being made for the Company.
Shares of Virgin Mobile immediately climbed to a record high after NTL/Telewest announced its £835m ($1.44 billion) takeover bid.
If the bid is successful, it will create the first media group to serve up mobile and fixed-line telephony, broadband Internet access and pay-TV.
(Ed: It has a similar resonance as the deal between 3 Italia and Canale 7)
We’ve found that getting straight numbers of subscribers for each separate business is difficult. The figures that the Guardian are quoting for the merged Virgin/NTL/Telewest uber-company are impressive too, accounting for 10m customers, 3.3m television customers, over 5m mobile phone users, 2.5m broadband Internet customers and 4.4m fixed-line telephone accounts.
NTL/Telewest do have to do something pretty radical as they feel the pressure from other previously unrelated business getting in on their main business areas.
The new company will go under the Virgin brand, and would become the biggest Virgin-branded business in the world, outstripping the music retail business which launched Branson’s career and the Virgin Atlantic airline business.
In a fiercely competitive market, cable companies on both sides of the Atlantic are looking to outflank their satellite and phone company rivals by adding mobile phone services to their portfolio of voice, Internet and TV services.
NTL is the UK’s number two pay-TV operator after BSkyB’s Sky and is also the second-largest residential telephony provider after BT Group.
Long seen as a juicy takeover candidate, Virgin Mobile is the fifth-largest UK mobile phone carrier. The company operates on rented capacity on T-Mobile’s UK network.
Virgin Mobile current 4 million users (source Virgin Mobile) in the UK, puts them at less than a third of the UK market leader, o2’s, who have 15 million users.
NTL and Telewest have notched up around 5 million subscribers combined, next to BSkyB’s 7.8 million digital television viewers.
If the deal goes through, it won’t be the first time the two companies have worked together – in 1996 they launched the Internet service provider Virgin Net, which had an original owner ship of NTL with 49% and Virgin, 51%. The enterprise was fully taken over by NTL in 2000 but still trades under the powerful Virgin brand name.
Virgin Mobile
NTL
5 December, 2005
Eutelsat IPO At 14:30 In ParisToday
Today will see the share IPO of Eutelsat, the third largest satellite operator.
Shares are due to start trading in Paris at 14:30 at €12, following its cancelled flotation last month. A total of €860m should be raised.
Some are wondering if, in the year that marks the 60th Anniversary of Arthur C Clarke’s famous Wireless World treatise on ‘Extra Terrestrial Relays’, a shadow may have fallen on Satellite’s hegemony of trans-global communications.
Only yesterday, the great and the good of the satellite business gave their views on the future of the industry at the Arthur C. Clarke event at the IEE in London.There was much talk of uncertainty in the industry, with many small Niche audience’s becoming the expected targets of the future.
Eutelsat is positioned behind Intelsat and SES, the giants of global satellite business. It has 23 satellites of its own, transmiting around 1,700 television channels. It has its main markets in the super-served regions of Europe and the Middle East.
Eutelsat
2 December, 2005
BT Cashes In To Goverment Money
BT have been enjoying government payouts to maintain their networks.
Interesting news for all those that thought it was many years since BT was an ailing monopoly to be propped up by a Labour government.
It was revealed in an answer to a parliamentary question (text below), that around £7 million has been paid to BT in England and Wales, and a contract for work in Scotland, that is not yet complete, should benefit the Telco goliath to the tune of a further £16.5 million. BT has also received undisclosed sums from the East Midlands Development Agency to extend broadband availability in the region.
Now this might come as a surprise to those who’ve got the impression that BT was doing this along with its investment in the so-called 21C network, as some sort of “Noblesse Oblige”.
Looking back over our archives for January of this year, it put a smile on our faces to see BT, when defending itself against smears of improper financial assistance related to the UK property rating system, responded to criticism leveled by those terrible bureaucrats in Brussels with…
“BT is surprised that the European Commission is to investigate the UK government over the property rates that BT has been paying. In BT’s view, any allegation of state aid would be groundless as BT has received no benefit from the UK government. BT is confident that the UK government will demonstrate the fairness of the UK ratings system.”
Expect smaller UK operators to cry foul – with some justification – as they see the dominant player’s position reinforced by government money, and BT’s competitive edge further strengthened in areas that include upgrading their network for TV delivery.
(Ed: Looking at this information, it feels wrong that BT are being given public money to maintain their network, one which they are directly gaining income from. This benefit isn’t passed back to the general public who are funding it, but instead to BT’s shareholders.
—-Fully text of the questions and answer.
Stephen Crabb (Preseli Pembrokeshire, Con)
To ask the Secretary of State for Trade and Industry what the total amount of financial subsidies and grants received by BT has been since 1997 for the purpose of extending broadband availability in the UK.
Alun Michael (Minister of State (State (Industry and the Regions)), Department of Trade and Industry)
Since 1997 BT has received the following financial sums to enable exchanges to extend broadband availability in the UK:East of England Development Agency paid BT approximately £500,000, to enable most of their remaining exchanges in BED A areas. This was awarded through the Broadband Aggregation programme.
Following a competitive tender South West Regional Development Agency awarded BT approximately £3900,000 to enable some exchanges in the Cornwall area.
Following a competitive tender, BT in Wales was awarded £3.6 million of European Structural Funding to upgrade over 40 BT telephone exchanges from UXD5, making ISDB2 services available to 99 per cent. of BT lines. The investment was also used to enable Digital Subscriber Lines, ahead of the commercial roll-out programme for the UK, in BT exchanges in market towns across Wales. It is estimated that the total project value was around £6 million.
Following a full EU Procurement Process to extend broadband availability in the North East region, BT was paid £1,830,345. This sum is subject to a downward adjustment, in accordance with a reverse contribution scheme, which operates to repay money to the Agency if broadband take up in the region exceeds a prescribed level.
£364k was awarded to Vale Royal Local Authority acting on behalf of the Cheshire Digital Development Agency who, following a competitive tender through the North West Regional Aggregation Body, awarded BT a contract to enable of a series of remote rural exchanges in Cheshire.
In Cumbria, Your Communications was awarded a large infrastructure project (Project Access) contract for approximately £17 million following a negotiated, state aid approved OJEU competitive tender. Your Communications sub contracted part of the contract with a value of around £1 million to BT for the early enablement of all the exchanges in Cumbria and specifically for the enablement of 14 exchanges in the remotest areas of the sub region.
In Scotland £16.5 million was awarded to BT following competitive tender. The roll-out has not yet been completed so not all the money has been paid as yet. The European Commission was notified under State Aid rules.East Midlands Development Agency has worked with BT on a number of sub- regional strategic partnerships, to extend broadband availability. As part of the contractual arrangements confidentiality agreements were signed by the sub- regional partnerships to protect information as commercial in confidence. Accordingly, this information is not be available for disclosure.
Hansard reference
1 December, 2005
TiVo Announces Advertising Search For Television
TiVo has announced that it plans to offer the first TV-based advertising “search solution” early next year.
Starting in Spring 2006, TiVo’s new television search capabilities will, apparently, “enhance the TV viewing experience” by delivering targeted advertising to subscribers interested in viewing particular advertising categories.
Hotshot media and advertising agencies like Interpublic Media, OMD, Starcom Mediavest Group, The Richards Group and Comcast Spotlight have teamed up with TiVo to develop the product and help determine relevant categories of interest (cars, travel, telecommunications, and consumer packaged goods etc) as well as work out pricing models.
TiVo claim their new technology will allow companies to shunt on-demand, consumer targeted TV advertising to viewers without the limitations of traditional television media placement.
With punters able to search for products by category or associated keywords, TiVo sees big benefits for advertisers (obviously) and punters looking for information on products or services.
The (ahem) “heightened viewer experience” offered by the new service is claimed to deliver “non-intrusive, relevant, interactive advertising, on an opt-in basis.”
TiVo subscribers electing to use the search service will be able to retain control over their “viewing experience” by creating a “viewer contributed profile” via the set-top box that will enable them to receive advertisements based on their interests (we wonder if there’s a “begone hideous advertisers forever” profile available?)
“TiVo is once again introducing to the TV landscape a new and innovative advertising solution that is intended to deliver an even better viewing experience for subscribers,” purred Tom Rogers, President and CEO of TiVo.
Supping deeply on a morning brew of Buzzword Coffee, Tracey Scheppach, VP, Video Innovations Director at Starcom, enthused “The new TiVo application will provide both a needed platform for consumers to seek out relevant, searchable commercial content and an environment for advertisers to engage highly desirable and motivated consumers…it’s the first of its kind in the industry, and a platform that is clearly needed in this challenging advertising marketplace.”
The new service follows a successful interactive direct response advertising program on TiVo in August, where subscribers were able to respond to customised “calls to action” in select commercial spots.
Funnily enough, when we’re bombarded with advertising, the only “call to action” we get is to turn the ruddy thing off.
30 November, 2005
3 Italia Buys TV Broadcaster: Now First Euro Hybrid Mobile TV Co
In a sure sign that TV to the mobile is the new European media battleground, 3G mobile operator 3 Italia have announced its plans to purchase the Italian national broadcaster, Canale 7. Reports have put the price of the acquisition at between €30-35m.
The addition of Canale 7, Italy’s fourth largest broadcaster, gives the company access to the country’s existing home TV business. Canale 7 currently broadcasts in analogue to around 40% of Italy, predominantly its north. More interestingly, it also has a terrestrial digital TV nationwide network operator’s license. This should provide coverage for over 70% of the country.
It is expected that 3 Italia will work to develop a Pay-TV and interactive services proposition for handhelds. We also understand their intention would be for Canale 7’s nationwide digital project to be integrated with 3 Italia’s UMTS mobile network to create a DVB-H network.
The company intends to offer a DVB-H mobile TV service from the second half of 2006. Indications are that there will be a minimum of 20 channels, although no line up has yet been decided. 3 Italia already carries Playboy adult entertainment and football via existing technology, and has worked with Mediaset and News Corp’s Sky Italia pay-TV operator.
Italy is already one of Europe’s leaders in mobile consumption and is considered to be a prime market for such services. Reports we’ve seen rather puzzlingly mention a “standard of video quality comparable to DVD” perhaps somewhat unlikely on the small screens that will be deployed for this sector – but we’re sure the picture will be absolutely bella.
3 Italia, which is owned by Hong Kong-based Hutchison Whampoa, has so far invested €9bn in its 3G network since obtaining a license from the Italian government in 2000. It currently has around 4.8 million Italian subscribers. Hutchison Whampoa also own 3G licenses in other countries including the UK.
3 Italia
Canale 7
29 November, 2005