Biz Briefs

Sep 15, 2003  •  Post A Comment

Liberty Media’s Starz Encore Group unit will likely see its profits fall, due to programming costs that could surge up to $225 million in 2004, Liberty warned last week. Starz blamed the rising programming costs on the expected box office performance of movies that pay-TV service will be buying next year as well as the service’s plan to buy more movies as part of its programming strategy. The company expects programming costs to increase between $175 million and $225 million in 2004, and by the same amount in 2005. Complicating matters further is the ongoing legal battle Starz is in with cable giant Comcast. Their legal tussle centers on whether former AT&T Broadband cable systems, which Comcast now owns, should pay the lower rates that Comcast pays or the higher rates that AT&T Broadband negotiated with Starz before Comcast acquired the cable systems. The uncertainty over how the litigation will turn out means Starz cannot pass on the higher programming costs to Comcast.
Cable Penetration Hits Seven-Year Low
Cable penetration has slipped to a seven-year low and is continuing to erode while direct broadcast satellite grows, according to a study by the Television Bureau of Advertising. The results could mean that some local advertisers are missing out on getting their messages to a growing number of audiences, the TVB said. The research, based on an analysis of cable and satellite penetration by Nielsen Media Research, showed that cable penetration slipped to 67.9 percent in July from 70.3 percent a year earlier, the lowest level since April 1996. Meanwhile, satellite rose to 15.8 percent from a year-earlier 13.8 percent. The TVB warns that local advertisers must begin stripping out satellite subs from cable subs to accurately judge the effectiveness of their advertising efforts. They will get some help from Nielsen, when later this year the television ratings service begins distinguishing between wired and satellite customers in its broader cable category, but software that does the stripping out automatically is at least a year away, the TVB warned.
Vivendi Sells Nordic Canal Plus Unit
Vivendi Universal is continuing its sale of assets to help pay down its lumbering debt load. The company said last week it has signed an agreement to sell for 70 million euros ($78.4 million) its Nordic pay-TV property Canal Plus Television AB to an investment team made up of private equity firms Baker Capital and Nordic Capital. Canal Plus Television operates a pay-TV channel in the four Nordic countries of Denmark, Finland, Norway and Sweden two pan-Nordic channels and a pay-per-view service called Kiosk. The transaction, expected to close by the fourth quarter of 2003, comes on the heels of a 290 million-euro sale in June 2002 of Canal Plus’ 50 percent stake in the Nordic satellite platform Nordic Digital. Vivendi said this most recent sale will trim 54 million euros ($60.5 million) of the company’s debt.