Marketing costs widened BSkyB 2nd-quarter loss to $199.4 million. Europe’s 2nd largest pay-TV company blamed loss on additional costs of marketing and programs to draw new customers and convert existing ones to digital service. Company said it wanted subscribers to change to SkyDigital so they would spend more on services such as shopping and banking through TVs. News Corp has 38% stake in BSkyB and Vivendi SA 23%. Company had 5.05 million direct customers at end of 2000.
FCC is seeking comment on petitions filed by entities that seek declaratory ruling under Sec. 310(b) of Communications Act that it would be in public interest to allow Deutsche Telekom (DT) to have indirect ownership interest of greater than 25%. Indirect ownership interest would be result of consummation of proposed merger of VoiceStream and DT that’s pending before Commission. Petitions include one filed by Cook Inlet/VoiceStream GSM ventures on giving DT indirect ownership of up to 49.9%. Cook Inlet/VS GSM IV PCS and Cook Inlet/VS GSM V filed petition last fall. Petition also was filed by various Cook Inlet and Omnipoint entities. Third petition, by Wireless Alliance, said it would be in public interest that DT have indirect ownership interest of up to 30%. Similar filing was made by Iowa Wireless Services Holding proposed indirect DT ownership interest of 38%. Final petition, by Eliska Wireless Ventures License Subsidiary, proposed 49.9% indirect equity interest. FCC said it already had granted petitions for declaratory ruling for 2 petitioners -- Cook Inlet/VoiceStream PCS and Eliska and wasn’t seeking comment on those cases. Comments are due Feb. 22, replies March 8.
Shaw Communications had net loss of $33.1 million (Canadian) in first quarter ended Nov. 30, vs. $39.9 million profit year earlier, despite big jump in revenue to $345.6 million. Canadian MSO blamed earnings decline on $70 million gain from sale of investments year ago and increase in amortization costs this year from its Cancom and cable acquisitions. Shaw said it signed up 17,000 more customers for digital cable service to end quarter with 148,000. It said it signed up 38,000 more cable modem subscribers and picked up another 26,000 from Rogers to reach total of 372,000. MSO also added 73,500 customers for its DBS service, Star Choice, boosting its total to 508,800. Shaw said it added another 15,705 high-speed data and 22,000 DBS subscribers in Dec.
Two Mo. state lawmakers called for legislature to oust Mo. PSC Chmn. Sheila Lumpe and Comrs. Connie Murray and Dianne Drainer, accusing regulators of incompetence and dereliction of duty for failing to protect utility ratepayers from “devastating” rate increases. Outcry was result of PSC’s 3-2 vote Wed. to approve 44% gas rate increase requested by state’s 2nd largest gas company, Mo. Gas Energy, for 492,000 customers in Kansas City area. State Rep. Dennis Bonner (D-Independence) and state Sen. Ronnie DePasco (D-Kansas City) said they expected PSC also would approve pending 38% gas boost for Laclede Energy, which could go into effect next week for 633,000 customers in St. Louis and southeastern Mo. State law allows legislature to remove PSC members from office on 2/3 vote in each chamber. Commissioners said they had little choice but to approve 44% increase because company had open-and-shut case that soaring wholesale gas prices justified significant retail boost and persuasive evidence supporting claim that it would lose $20 million each month without requested rate increase. PSC “can’t force the companies to sell gas to the consumer at less than they have to pay for the commodity,” and has no jurisdiction over wholesale gas prices, Murray said. Dissenting Comrs. Robert Schemenauer and Kelvin Simmons wanted more investigation of utility’s loss projections and phase-in of any rate increase over several months instead of single big jump. PSC majority also voted to review agency’s processes for handling cost-based energy rate increases because of predictions of even more volatility in wholesale energy markets.
Ruling in cable’s favor on DTV must-carry again, FCC rejected effort by Paxson Communications to obtain mandatory cable carriage of its 6 digital multiplexed programming streams in Chicago area. In little-noticed 5-page ruling late Tues., Cable Bureau denied Paxson’s petition to force AT&T Broadband, Charter, Mediacom and 9 other cable operators and overbuilders to carry broadcaster’s 6 channels on its digital signal (Ch. 46) instead of its WCPX (Ch. 38) analog station. Paxson argued that its 6 digital channels were entitled to must-carry because company was seeking to replace its analog signal with its digital signal, not gain dual cable carriage of its analog and digital signals. Paxson also contended that 1992 Cable Act required cable carriage of all TV signals, including digital. Its plan called for cable operators to replace WCPX analog signal with downconverted analog version of WCPX-DT primary digital signal and put 5 other digital channels on their digital programming tiers. But cable operators and overbuilders said FCC hadn’t issued DTV must-carry rules, and carriage of Paxson’s digital signal was unnecessary because they already were carrying its analog signal. Cable interests also asserted that there was no statutory right for mandatory carriage of digital signal downconverted to analog and Cable Act required systems to carry only single video service. FCC Cable Bureau, noting Commission’s earlier order tentatively concluding that broadcasters weren’t entitled to dual carriage of their analog and digital signals (CD Jan 24 p3), said it found Paxson’s requests to be “inconsistent” with that order. While DTV-only stations “may immediately assert their digital cable carriage rights,” agency said, TV stations broadcasting in both analog and digital modes can’t assert such rights until broader DTV must-carry issue is resolved. “In this instance, although Paxson has requested its digital signal to be substituted for its analog signal, it still holds 12 MHz of spectrum and has given no indication that it intends to return its analog spectrum,” Commission said.
FCC’s latest report on long distance industry -- Statistics of the Long Distance Telecommunications Industry -- includes variety of data for 1999: (1) Long distance industry had $108 billion in revenue in 1999, up from $105 billion in 1998. (2) International revenue has grown fivefold since 1984 to more than $20 billion in 1999. (3) AT&T’s share of long distance market had fallen to 40% in 1999 from 90% in 1984. WorldCom’s share in 1999 was 25%, Sprint’s 10% and more than 700 other long distance carriers had remaining 25%. (4) Average household spent $64 per month on telecom services, $21 for services provided by long distance carriers, $34 for local exchange, rest for wireless carriers. (5) Residential phone bills showed 38% of toll calls in 1999 were interstate and accounted for 50% of toll min.; 33% of residential long distance min. were accrued on weekdays, 30% on weekday evenings, 37% on weekends.
NorthPoint Communications filed for Chapter 11 protection in U.S. Bankruptcy Court, San Francisco, and said it planned to sell “substantially all” of its business and assets. NorthPoint CEO Liz Fetter said company would look for “financially sound strategic partner who is interested in our network, our skilled and dedicated employees and our attractive customer base.” Spokesman said NorthPoint would to go forward with suit it filed against Verizon for pulling out of planned merger (CD Dec 11 p6). Fetter said that when Verizon “unexpectedly pulled out of the merger… it created a funding shortfall” for NorthPoint. Company said it secured commitment for up to $38 million of debtor-in- possession financing from its existing lenders to continue day-to- day operations.
Minority ownership of commercial TV and radio stations increased 0.9% overall over last 2 years, but minorities’ share of TV market actually declined in 2000, NTIA said in report released by Commerce Secy. Norman Mineta Tues. “Unfortunately,” this was increase “that we must attribute mostly to an industrywide economic boom and an improved reporting methodology,” Mineta said, and “clearly there is reason for concern.” NTIA survey showed that consolidation in industry threatened survival of minority and single-station owners, he said.
AT&T said it would buy out Comcast and Cox minority stakes in Excite@Home, trading $2.9 billion of its own stock for its cable partners’ highly priced shares in Excite@Home. AT&T, which agreed last March to buy 60 million Excite@Home shares held by Cox and Comcast to consolidate its control of Excite@Home, reportedly sought to avoid large stock payout by offering some of its cable systems to 2 MSOs. But Comcast and Cox showed little interest in those properties, preferring to get AT&T stock at its currently deflated price. With transaction, AT&T said it would boost its economic interest in Excite@Home to 38% from current 23% and its voting interest to 79% from 74%. In return, Comcast and Cox will receive new, attractively priced stock warrants in Excite@Home and will continue to offer its high-speed data service through June 2006, including exclusively until June 2002. But 2 MSOs will retain right to end exclusive deals as well as entire distribution arrangement starting in Dec., as long as they're willing to forfeit warrants.
Financial problems of Globalstar accelerated Tues. with its announcement that it had “indefinitely suspended” principal and interest payments on all of its debt to give it enough cash to fund its operations into 2002. Globalstar, whose “shaky position” in industry may have been hurt by re-entry of Iridium into market, according to analysts, said it would save $400 million cash this year by withholding payments on its bank, debt, senior notes, vendor financing agreements and dividend payments on its preferred stock. Analyst suggested move “pushed the company one step closer to bankruptcy.” Decision will enable Globalstar to preserve “sufficient cash” to fund operations into next year. Earlier, it had said it had enough money to last until 4th quarter 2001. Company said move would give its partners additional time to implement new marketing strategy. Some analysts have predicted Globalstar would end up in bankruptcy within 6 months.