DemandVideo and Liberate Technologies announced deal to use Liberate’s interactive TV (ITV) software to deliver DemandVideo’s video-on-demand (VoD) service to cable overbuilders and their subscribers. Under agreement, DemandVideo will license Liberate’s software to offer range of VoD and other ITV services, including TV-based e-mail, Internet access and online content. DemandVideo plans to deploy its expanded service with Seren Innovations in St. Cloud, Minn., and Concord, Cal., as well as WideOpenWest in Denver area, among others.
Deutsche Telekom and France Telecom plan to sell their respective 10% stakes in Sprint in stock offering of up to 174 million shares. Transaction could be valued at $3.7 billion if overallotment of 22.8 million shares of Sprint FON stock is exercised along with 152.03 million in public offering, companies said in SEC filing. Move marks final unraveling of 3-way alliance of FT, DT and Sprint, process that began last year when FT took control of Global One venture that companies ran (CD Jan 26/2000 p1). FT bought both Sprint and DT out of their stakes in venture for combined price of $4 billion at time when Sprint still was planning to merge with WorldCom. FT and DT later that year divested their remaining stakes in each other. Plans of both to sell their investment in Sprint comes when Sprint shares are trading close to 52-week low of $19.62 per share. Sprint said it wouldn’t receive proceeds from offering, which will go directly to DT and FT. Timing of offering was somewhat surprising to some analysts, although action came in period when both FT and DT were scrambling to slim down their debt loads. FT said deal was part of its plans to dispose of “nonstrategic” assets to reduce debt. FT said it planned offering later in first quarter.
AstroVision delayed launch of first satellite to mid-2003 while it completes 2nd round of financing, 2nd time flight has been pushed back, CEO Michael Hewins said. Satellite was scheduled to fly in July. Last June, company had said launch would be in July 2001. This is first of 5 geosynchronous orbiting satellites company plans to fly to provide live video images of Earth.
Nortel and Motorola signed nonexclusive international agreement to jointly market wireless Internet solutions using Nortel equipment and Motorola handsets. Companies, announcing solution at GSM World Congress in Cannes, said they would work on interoperability, verification and integration testing of wireless infrastructure and handsets. Terms weren’t disclosed.
Globecast added Italian 102.5 Hit Channel to digital platform for foreign broadcasters on Telstar 5 satellite, CEO Robert Behar said.
Ameritech advised Ill. Commerce Commission (ICC) that it plans to petition for agency’s endorsement of Sec. 271 interLATA long distance bid by July. In letter to ICC Comr. Ruth Kretschmer, Ameritech said it had made many changes in its operation support systems (OSS) to facilitate processing CLEC service orders and had taken other steps that would bring it into full compliance with 14-point 271 open market checklist this year. Third-party testing of Ameritech OSS is to begin next month, with final report from KPMG Consulting not expected until spring 2002. In meantime, Ameritech wants ICC this summer to start looking at non-OSS-related checklist compliance issues. Ameritech parent SBC is providing long distance in Tex., and recently received FCC approval to begin offering long distance service in Kan. and Okla. starting next month. ICC Comr. Terry Harvill, frequent Ameritech critic, said he expected company would come “pretty close” to meeting Telecom Act requirements and he might endorse its entry if it could prove local customers could switch providers “easily.” Competitor-supported Ill. Coalition for Competitive Telecom said Ameritech shouldn’t be allowed into long distance until it proved it reliably could deliver retail and wholesale services it already sells.
Excite@Home said it divested its ownership of Enliven, rich media solutions company that high-speed cable data leader acquired 2 years ago. Enliven will operate as independent firm backed by Sage Hill Partners. But Excite@Home will retain minority stake in company, as well as board seat.
Financials: Viacom, as expected, completed its merger with Infinity Bcstg… News Corp. said it planned to raise $600-$700 million through issue of Liquid Yield Option Notes due 2021. Subsidiary News America also said it planned to redeem similar notes due 2013.
Major drop in in ad expenditures by major product categories (such as autos, down 25%, and telcos, down 17-22%) resulted in 13% decrease in national TV spot ads so far in first quarter 2001, TV Bureau of Advertising reported. When local ads are factored in, TV spot is down only 3.8% in quarter, Bureau said. Only categories in top 10 showing first-quarter growth are movies (30- 35%) and travel (3-8%).
U.S. Dist. Court, L.A., denied class action certification in antitrust suit against 13 cable operators by 2 customers. Suit alleges that subscribers to cable high-speed data services must buy content services of affiliated ISPs at artificially inflated prices. Arguing that exclusivity agreements between MSOs and Excite@Home and Road Runner forced cable companies to impose condition on customers, plaintiffs sought unspecified damages and injunctive relief that would have imposed open access obligations on cable operators. Court’s denial of class certification was without prejudice, so plaintiffs could file amended compliant. In suit, Arthur Simon and John Galley said exclusivity agreements were contracts, combinations or conspiracies in restraint of trade, and bundling of transmission services with interface/content services constituted illegal tying arrangements in violation of Sherman Antitrust Act. As result of “illegal” tie, cable modem subscribers have been forced to pay “supracompetitive” prices and/or pay for unwanted service, they said. AT&T, Adelphia, Cablevision, Comcast, Cox, MediaOne and Time Warner head list of MSOs cited. Plaintiffs said issues that lent themselves to classwide action were: (1) Whether bundle of high-speed Internet transport and content services was one or 2 services. (2) Whether cable operators actually coerced customers to accept tie between 2. (3) Whether cable companies had market power. They said “injury in fact” could be proved on classwide basis. Cable companies said principal arguments in case related to market power. which varied greatly by region, precluding common proof. They also contended that variations in prices and terms argued against common proof of “injury of fact.” In denying class action certification, court said relevant geographic market was local cable franchise area because, in analyzing legality of tying arrangement, focus was on deal between seller and buyer rather than contract between sellers of tying and tied product. Competition in these markets clearly was relevant to whether cable companies had requisite market power to restrain trade and force their purchasers to buy unwanted product, court said. Court agreed with defendants that to prove injury, plaintiffs must produce evidence that prices would have been lower without tie. It ruled that common questions didn’t predominate for class action certification.