European Powerhouses Show Their Cards

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This story was reported by Dieter Brockmeyer, Chris Forrester and Janet Stilson, andwritten by Stilson.

Cannes, France -- Three of the most powerful European mediacompanies gave attendees of the annual MIPCOM program market here a glimpse into theirfuture alliance and acquisition strategies. And News Corp. figured into more than one ofthem.

Of the trio -- Germany's The Kirch Group,France's Vivendi S.A. and Spain's Telefónica de España -- the last made thebiggest splash.

The telco-turned-media conglomerate trotted out the topexecutives of its newly formed Telefónica Media unit for a press conference, followed bya splashy party that attracted the crème de la crème of American programming executives.

TM president and CEO Jose Antonio Ríos said his unit willbe listed on the Spanish stock exchange in the first quarter of 2000, and it iscontemplating a listing on NASDAQ, as well. J.P Morgan & Co. is serving as an adviseron the process.

But as for its expansion plans, Ríos would only say,"Production and content are very important to us. Broadcast TV is very important. Wewill take decisive and quick action" in buying more media properties.

However, informed sources reported that TM's shoppinglist in Latin America includes:

• Buying up the interest in Argentina's No. 1broadcast network, Telefe, beyond the 26 percent it already owns;

• Buying a greater interest in powerful Argentinesports-programming company Torneos y Competencias;

• Buying Brazilian broadcast network SBT if currentBrazilian legislation is passed allowing foreigners to own stakes in broadcast networks;

• Creating a Latin American film-production company;and

• Buying broadcast networks in Peru, Colombia, Chileand Venezuela.

All of this would come in addition to TM's alreadyconsiderable cable-systems and telephony-company holdings in Latin America.

Meanwhile, Vivendi chairman and CEO Jean-Marie Messierdiscussed the likelihood of a merger between two of its partially owned companies --British Sky Broadcasting Group plc and Canal Plus S.A. He termed such a marriage"obvious." Vivendi owns a controlling stake in Canal Plus and 25 percent ofBSkyB.

Messier said Vivendi and News Corp. (which owns 40 percentof BSkyB) were already working together. "I think when we are looking at what we canachieve with Sky, we look at the key growth of the media -- newspapers, TV stations -- andwe think that someday they are going to merge. It may be one month, six months,whenever."

The most immediate goal between News Corp. and Vivendi, hesaid, was "organizing the convergence of the technologies for the next generation ofthe Web set-top box. This is going to be a de-facto fully European standard." Messieradded that this would create considerable leverage with box manufacturers.

In other news, officials at Kirch said its newly launcheddirect-to-home platform, Premiere World, is enjoying significant success early on.

The platform -- which combines the largely unsuccessful DF1platform and premium-movie-channel group Premiere -- relaunched over the Oct. 1 weekend,generating about 25,000 new subscribers. Subsequent days drew slightly less than 10,000each, according to Jan Mojto, general manager of Kirch's BetaFilm distribution unit.

When Premiere World launched Oct. 1, it had about 2.1million subscribers, including 900,000 digital subscribers.

Those gratifying results for a venture largely considered afailure before may be why rumors are now spreading that Premiere World is angling to sellsmall equity stakes to several major Hollywood studios -- probably as aprogram-distribution bargaining chip.

Kirch officials would not comment on that speculation, butMojto did say that Premiere would be a rich bride that could be selective about itssuitors.

Murdoch had been negotiating on and off for a stake in theGerman DTH platform's earlier incarnation, DF1, for about six years. Each time anagreement seemed likely, it was blocked by one of the platform's partners. Thoseequity players have changed with time, and they currently include Kirch's Pay TV unit(95 percent) and CLT-Ufa (5 percent).

Regardless of whether Murdoch joins forces, a strongerboost in the platform's customer base is likely to come in November, when DeutscheTelekom starts selling its digital set-top box -- the so-called d-box -- in all of itsshops across Germany, along with subscriptions for Premiere World.

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