New York -- Hoping to drive pay-per-view revenue by
offering interactive-television elements in PPV telecasts, ACTV Inc., Viewer's Choice and
Liberty Digital hammered out a joint-venture deal last week.
The companies signed a long-term agreement to license and
produce marquee PPV events and distribute them to digital-cable systems using ACTV's
"Individualized Television" software. The deal is a logical extension of already
close ties betwwen ACTV, an interactive-TV pioneer, and backer Liberty Mutual.
Liberty Digital already owns 12 percent of ACTV, and it has
warrants that would allow it to increase its stake to 25 percent.
ACTV's share price rose 7 percent to $17 last Wednesday
from $15.94 at Tuesday's close, the day before the news was disclosed. Last Thursday, the
share price rose as high as $18.44 early on, but it settled back to $17 just before the
close. Liberty Digital's share price rose 9 percent Wednesday, to $32.13 from $29.50.
Executives said the companies plan to offer interactive
elements in PPV events ranging from concerts to National Association for Stock Car Auto
Racing races, giving viewers access to isolated camera angles, statistics, instant replay
and other features by using a remote control.
The companies are pursuing two different programming models
with the venture.
First, they'll look to offer a separate interactive feed to
digital subscribers for traditional PPV events such as boxing, possibly charging a higher
rate for subscribers who select the ACTV-enhanced version of an event, Viewer's Choice
senior vice president of distribution and production development Rob Jacobson said.
In the second model, the companies will look to acquire PPV
rights for major sporting events, including the National Basketball Association Finals,
the World Series and the
Super Bowl, Jacobson said. The events would be available
free-of-charge on over-the-air networks, and Jacobson said he may be able to craft deals
in which digital-cable subscribers would pay $10 for an interactive version.
"If people tell us they like this, we'll try to go out
and do as many of these as [cable operators] can accommodate,"
Jacobson said. "I am convinced that people will enjoy
this experience and will find this a better way to watch television."
Jacobson said he hasn't had talks with ABC Inc., which has
the rights to the upcoming
Super Bowl, noting that the venture with ACTV and Liberty
Digital was just signed last week.
"We're open to everything and anything. It's just a
matter of what works," ABC Sports spokesman Mark Mandel said.
The companies plan to offer at least four events annually,
beginning early next year.
Traditional PPV-revenue splits, in which the cable operator
receives about 50 percent of event revenue, will be offered by the new venture, ACTV
president David Reese said, adding, "We're not trying to change the traditional
Viewer's Choice, ACTV and Liberty Digital will share the
PPV revenue that doesn't go to operators, Reese said, declining to specify exactly what
percentage of the revenue each company will receive.
In the traditional PPV model, revenue is divided between
studios, cable operators and PPV vendors such as Viewer's Choice. While the companies
expect the interactive PPV events to boost revenue, by sharing revenue with ACTV, each
company will receive a smaller piece of the PPV pie.
"We need to find a way to make the economics
Jacobson said. "It's going to call for a certain
creativity in trying to put these deals together."
Liberty Digital -- a unit of AT&T Corp.'s Liberty Media
Group programming subsidiary -- also owns stakes in several Internet-related firms,
including Priceline.com Inc., Drugstore.com Inc., iVillage Inc. and MTV Interactive.