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[Belgium] [Denmark] [Eire] [Finland] [France] [Germany]
Part 2: [Italy] [Netherlands] [Norway] [Portugal] [Spain] [Sweden] [Switzerland]
| European legislation steming from the EC's Television Without
Frontiers directive of 10 years ago set out to protect national markets
but is now hampering the creation of strong players able to meet global media
conglomerates. The directive is due to be reviewed in 2000 but no doubt there
will be strong national pressures to maintain cultural diversity.
On a pan Europe basis, AOL Europe is in an even stronger position after its parent AOL acquired Time Warner in a $150bn deal. AOL Europe is a 50/50 venture with the German Bertelsmann but recently AOL is reported to desire buying out the German company. Rupert Murdoch, head of News International, the major owner of BSkyB, was reported to be most concerned over the AOL takeover and has been busy formulating its net strategy. One option is to float off all its digital satellite assets including BSkyB, Star TV, its Asian satellite service, Sky Latin America, Japan SkyB and various over related businesses to a separate company called PlatformCo. Yahoo! is an interested partner, along with Microsoft and Nokia. Analysts say it could be worth $40bn and would reach 66% of the worlds population, mostly outside the US where News International is weak. The stock market has embraced the ideas with the share price rising from around £5 a year ago to over £13 at the beginning of 2000. The belief is that satellite could distribute broadband internet services such as video links to sport events, as well as the opportunity to distribute News International's extensive content via Internet portals in return for cross promotion of BSkyB's TV channels. In the UK, BSkyB and the cable company NTL are fighting to negotiate a deal with the sports portal Sports Internet. In Februay 2000, BSkyB announced two Internet sports initiatives. It is to build its own online sports retail store and it has increased its stake in Sportal to 12.5%. Many old media companies, especially those in the newspaper business and their advertisers, will need to move quickly as they are highly vunerable to new media. Newspapers do however have valuable archive material that could be exploited and advertising companies do have creative skills and existing customer bases. |
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Belgacom has launched a digital TV and radio satellite platform.
Audiofina (owned by Groupe Bruxelles Lambert) at one time had a 30% stake in RTL, a major new European media group floated on the London Stock Exchange with a value in excess of £12bn. In Febraury 2001, the German Bertelsmann acquired Audiofina stake in return for 25% stake in Bertelsmann in a deal worth almost $4bn (£2.67m).
A 4 multiplex network is planned with test transmissions under way.
In March 2000, Spray, one of the top pan-European internet portals, announced it was acquiring the leading Danish portal Jubii.dk.
In 1997 two test transmitters were installed around Dublin. It plans 6 multiplexes with a launch date of September 2000. A new Broadcasting Act establishes a similar framework to the UK. BSkyB is marketing its digital services.
An unusual feature is that terrestrial viewers will be able to use interactive services by transmitting their requests via their normal television aerial. A new company called Digico has been set up for this service.
In May 1999 NTL acquired Cablelink, Irelands largest cable operator.
Plans for 3 digital networks by year 2000 to cover 50% of the population. At the beginning of 1999 the various multiplexes were auctioned with a requirement that the winners should also carry the free public services and use a common standard for interactive services, a single CA card standard, and a uniform Short Message Service (SMS). Analogue switch-off is planned for the end of 2006.
There is an experimental service in Brittany. Six multiplexes to give 80% coverage planned. There is a proposal for digital services to be run by the existing analogue providers.
Vivendi, a French conglomerate, is becoming a major player in European pay-TV (digital and non-digital). In July 1999 it spent £1.6bn acquiring 8% of BSkyB from Pearson and from Granada, and acquiring a 15% in Canal Plus, taking its shareholding to 49%. Canal Plus is active in many European countries. The stake in BSkyB gives it the right to nominate 2 members to the BSkyB board. Then in August 1999 it increased its BSkyB stake to nearly 25%. It is widely believed that Murdoch would like to merge (on its terms) BSkyB (in which it has a 40% stake) with Canal Plus but to do so it requires the co-operation of Vivendi who would expect more seats on the board of BSkyB. Just recently the Vivendi group has enhanced its entertainment portfolio by acquiring the UK Virgin Cinema chain of 300 screens.
However, by June 2000 sentiment with BSkyB was turning. Vivendi sold a 3% stake in order to help fund a bid for a mobile licence in France, and Pearson was also rumoured to be divesting of BSkyB. Next Vivendi announced that talks were taking place with Canal Plus and Canada's Seagram. The aim was to create a powerful alliance called Vivendi Universal having over $55bn sales and able to complete against Sony and Bertelsmann. The alliance would distribute Segram's content around the world. Seagram owns the Hollywood Universal studio, music labels and theme parks. Such a deal would appear to marginalise BSkyB, in which Vivendi has a 23% stake. The deal is a complex one involving the sale of Vivendi's non media operations, the selling of Canal Plus' terrestrial distribution (to avoid French rules concerning limits to broadcasting ownership), and the transfer of Seagram's media operations and Vivendi's mobile operations to Canal Plus. Segram is regarded as the weakest part and some commentators wonder whether the alliance will be successful. The EC Commission or the US anti-trust regulator could block the deal.
Vivendi, perhaps being over confident following the alliance with Canal Plus and Seagram, announced that it would dump its remaining 20% stake in BSkyB unless it was given a central role in Sky Global, Murdoch's planned umbrella company. Others dismissed the threat as simply a negotiating tactic. In fact in order to get EC approval for the merger with Seagram, Vivendi agreed to sell its BSkyB stake within 2 years of merging. The company also agreed to share 50% of cinematic rights of Seagrams Universal Studios with Canal Plus' competitors in those countries where the pay-TV business operates, and it agreed to give rival music internet portals access to Universal's online music for 5 years.
In June 2001, Vivendi purchased the US textbook publisher Houghton Miffin for $1.7bn.
Canal Plus announced in 1999 that it had made larger than expected losses, mainly due to the cost of switching to digital technology, integrating Telepiu, the Italian acquisition, and developing the next generation of high speed set-top boxes. Further it was in a legal dispute with Cojyp over use of its encryption technology. Nether-the-less, with extensive sports broadcasting rights and as a major film producer, Canal Plus is seen to have a good future. It has a 25% stake in MAP, the internet access service being set up with Vodafone Airtouch and Vivendi. In March 2000, Canal Plus' chairman said a deal with BSkyB was definitively off though he didn't rule out joint ventures. One such venure was in Italy.
In August 1999, France Telecom acquired a £8bn stake in the UK cable company NTL. Then a year later NTL completed a joint 49.9% purchase of Noos, a French cable company. France Telecom is the world's most indebted company with net debts of $51bn.
In December 99, Carlton Communications was negotiating a joint deal with TF1, France's biggest commercial TV company, to set up a pan European internet business. To be called @lliance it will acquire and develop sports, entertainment, e-commerce and other interactive services.
In early 2001, Vivendi made a £100m bid for Scoot.com, the UK online directory service, an offer Scoot felt completely under-valued the company.
France's second largest terrestial network, M6, is owned by RTL (see Germany below).
In early 1999 a large scale field trial was underway in northern Germany. The aim is to reach 6m subscribers by the end of 1999. There are two channels, one for public and the other for commercial services. Each carries 3 TV and 4 or 5 radio programmes.
In 2000 the Kirch Group, Germany's second biggest media group, merged its own Sat1 TV network with the ProSieben network that was own by the Leo Kirch's son. The new company, ProSiebenSat1 Media is how a major euro 2bn company able to complete with Germany's other major player Bertelsmann and the less powerful Axel Springer Verlag. Co-incidentally, Springer owns 41% of Sat1 that it will trade for 11.5% of ProSiebenSat1 Media.
KirchPayTV is the Kirch Group's loss making pay-television venture. It is a merger of DF1 and Premiere World. Premiere World is estimated to have spent £1bn ($1.7bn) on digital TV alone. $6bn has also been spent on World Cup football rights and Hollywood film rights. KirchPayTV, with its 2m subscribers (6% market share), has 22 television channels and 2 pay-per-view packages. As at 30 June 2000, it had 2.2m subscribers. Profitability is forecast for 2003.
In December 1999, to avoid bankruptcy, BSkyB acquired a 24%, $1520m stake in KirchPayTV ($520 cash and $1b in new shares giving the company a 3.1% stake in BSkyB) - the deal was finalised in March 2000 after approval by the European Commission. In late August, the Kirch Group sold its 3.1% stake in BSkyB to raise £594m (about $850m).
BSkyB has also acquired tm3, a women's channel being transformed into a sports channel, BSkyB having acquired the rights to the German Champions League Football. BSkyB also acknowledges it would like to buy into Deutsche Telekom's nine regional cable franchises, the world's 2nd biggest cable network. Deutsche Telekom does want to sell them but has delayed the sale until 1 January 2001 when capital gains tax is abolished. Analysts estimate a value of DM30bn.
The music industry is branching out into video and TV. Bertelsmann, number 2 in music sales after Segram, is a non-listed privately owned company, owning 50% of AOL Europe. In April 2000, the German media giant joined forces with the UK's Pearson, publisher of the Financial Times, and Audiofina of Belgium (owned by Groupe Bruxelles Lambert) announced their intention to make RTL a major new European media group. Programme material from one media, e.g. print, would be re-packaged to the others, e.g. television, radio and the internet. Similarly, successful programmes in one country would be shown in others. It is hoped to float on the London Stock Exchange with a value in excess of £12bn but there has been disagreements between Bertelsmann and Pearson. Bertelsmann's stake was 27%, Audiofina 30% and Pearson 22%. Bertelsmann and Audiofina jointly own CTL-UFA.
RTL is Germany's biggest TV channel with 65 channels and it also owns France's second largest terrestial network, M6. The merged group will own 65% of the UK's TV Channel 5. Other interests include radio and internet companies. In late 2000, Bertelsmann sign an agreement with Napster that angered many within the industry as they thought it gave a form of respectability to an organisation that was encouraging the flouting of copyright. Turnover in 1999 was 3.51bn euros and pretax profits 569m euros. In Febraury 2001, Bertelsmann acquired Audiofina's stakes in return for giving them a 25% stake in Bertelsmann in a deal worth almost $4bn (£2.67m).
After the Time-Warner - EMI merger was called off (see Controversy) a £10bn EMI - Bertelsmann merger became a possibility though it faced a very similar regulatory hurdle to the Time-Warner - EMI merger. With growing competition from online music sites and services (like Napster) music companies need to embrace these new channels, and for that they need to form alliances or to merge with companies strong in new media. However, the EC regulatory authorities are concerned with the concentration of power in just a few companies. So it was no surprise that on 1 May 2001, the parties abandoned the merger idea. The EC had demanded the disposal of Virgin Music and a number of other famous labels. EMI said that it would not pursue the development of new platforms but would seek alliances. For example, it would launch a subscription based MusicNet together with Bertelsmann and AOL-Time Warner.
Meanwhile Bertelsmann announced that it was closing its BOL.com internet book store operations in Germany, the Netherlands, Finland and Britain and integrating them into its existing book club operations. The branches in Denmark and Norway would close.
In June 2001, Liberty Media purchased 6 cable television stations from Deutsche Telekom in a $4.7bn deal. The stations have 10m subscribers between them. The purchase needs US and EC regulatory approval. The cable systems are considered underdeveloped with no broadband and little programme choice.
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