Discovery, Liberty Table Your Choice TV

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Once heralded as the future of interactive television, Your
Choice TV will indefinitely suspend its service Aug. 31 -- unable to withstand the slow
rollout of digital boxes and its inability to acquire major broadcast network programming,

But while YCTV failed to prove the viability of
video-on-demand, time-shifted programming, industry observers and operators are still
bullish on the future of VOD and the concept of offering popular shows at more convenient
times for viewers.

Six years after introducing itself with great fanfare, YCTV
will stop transmitting its near VOD offering of time-shifted broadcast and cable
programming after losing a reported $25 million.

The Discovery Channel and Liberty Media Corp.-owned
service, which had 50,000 homes, was mired in red ink as it attempted to prove the value
of consumers paying about 99 cents to watch popular shows at more convenient times.

But the industry's continual slow rollout of digital boxes
and the future investment costs that the service would have incurred led to its demise,
said sources close to the situation. Another major problem was its lack of popular
broadcast content: The Hollywood studios refused to cooperate.

"While the concept of Your Choice TV is extremely
powerful, the time is probably not right for its commercial exploitation," said Nancy
Stover, CEO and president of YCTV, in a prepared statement.

"Our experience to date proves that time-shift TV is
something that multichannel viewers really want and appreciate ... however, in the current
environment, the level of program acquisition and other costs associated with this product
require a much higher investment than what its current revenue potential can
support," she added.

Ironically, the decision comes as several top operators had
placed YCTV at the top of their wish lists as part of their planned digital box rollout.

"We thought enough of it to include it in our digital
plans," said David Intrator, vice president of programming and marketing for Marcus
Cable.

"It was something we certainly had under
consideration," said one top 10 MSO executive who wished to remain anonymous. "I
thought they had a good product, and I really liked the concept."

But several operators who were offering the service said it
was generating lower than expected buy-rates, although it was unclear just how many buys
the service was averaging.

Operators pointed to the network's inability to offer
popular programming from both broadcast and cable networks.

Indeed, while the service offered select programming from
broadcast network ABC, Home Box Office, ESPN, Comedy Central, Courtroom Television
Network, National Geographic, Public Broadcasting Service and the Discovery Channel, it
lacked the major primetime shows and soap operas from the broadcast networks that viewers
would most likely choose for time-shifted viewing.

Although ABC did offer some daytime programming, news shows
and primetime programming produced by parent company Touchstone Television, Your Choice
was unable to acquire critical programming from the major studios as well as CBS, NBC and
Fox.

In fact, NBC last week announced it will provide
programming to Intertainer, a new interactive VOD service backed by Comcast Corp. and U S
West that plans to offer entertainment and shopping services via the computer and digital
cable boxes later this year.

Even ABC is trying out a time-shifted service of its own,
sending soap operas to selected cable systems.

Industry observers said Your Choice TV would have a
difficult time securing top programming, since broadcast networks are considering offering
time-shifted shows within a couple of years to help program new digital channels on their
owned-and-operated stations.

"The world is different than it was a few years ago,
especially with the broadcasters having those digital channels," said Bert Gould,
senior vice president of marketing and new business development for Comedy Central.
"The exclusivity on time-shifting doesn't exist anymore, but it still sounds like a
great idea."

When Your Choice launched in 1992, Discovery Communications
Inc. chairman John Hendricks championed it as the service that would pave the way for
interactive television in a multichannel, digital environment. The service evolved
technologically, from literally bicycling tapes to operators in an analog environment to
offering a digitally enhanced, satellite-delivered service -- complete with its own-screen
navigator service and a preview channel.

But the service was stymied by the slow growth of digital
and VOD technology.

"Your Choice had the right concept, but the business
didn't develop as fast as they wanted it to," said one industry observer. "At
the same time, other companies began to pick up on the concept and withheld their
programming. Without proven programming, operators were reluctant to support it."

But Jim Penhune, analyst for The Yankee Group, said that
there is a market for time-shifted VOD programming, but the cable industry first has to
hurdle the technological obstacles of providing VOD signals to the digital headend -- not
to mention selling the public on the digital boxes.

"I think there is a potential for time-shifted
programming, but no one has been able to make it work yet ... but consumers are looking
for more control over what and when they view," Penhune said.

Initially, three of Your Choice's six channels were part of
Tele-Communications Inc.'s Headend in the Sky "six-pack" -- the digital cable
package that TCI is rolling out at most of its systems -- which would have guaranteed
fairly wide distribution. Last June, however, TCI moved Your Choice to a new, 13th
transponder which allowed for distribution of all six of Your Choice's channels.

At the time, Your Choice officials welcomed the move, but
it turned out to be the beginning of the end for the service.

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