OpenTV Nearing HITS Deal

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OpenTV Corp. is close to signing a deal with Headend in the Sky to tap into
its satellite transponders and deliver virtual interactive channels to cable
operators.

What's more, OpenTV hopes to use the deal to entice HITS programming
affiliates to author enhanced-TV programming using OpenTV's software, all in the
name of providing a taste of interactivity to smaller cable operators.

'We're in discussions with HITS with the intention to deploy games,
information on-demand and commerce services,' OpenTV chief operating officer Jim
Ackerman said. 'This will enable small operators to deploy interactivity.'

AT&T Broadband spokesman Andrew Johnson said HITS and OpenTV have yet to
sign such a deal. 'HITS is always looking at how we can better use digital
capabilities, including in the interactive space,' he added.

Johnson also noted that AT&T Broadband has made it basic policy not to be
tied to any one technology vendor, pointing to set-top software work the company
is doing with OpenTV competitors such as Liberate Technologies and Microsoft
Corp.

OpenTV is widely deployed abroad, including on Rupert Murdoch's British Sky
Broadcasting Group plc satellite service. But its U.S. deployments are largely
through EchoStar Communications Corp., which now counts more than 1 million
subscribers with access to OpenTV.

Last week, Open TV showcased its lone U.S. cable deployment -- USA Media
Corp.'s Half Moon Bay, Calif., system -- for attendees at the Cable &
Telecommunications Association for Marketing's Summit, being held in nearby San
Francisco.

The set-top middleware provider hopes cable-program networks will write
OpenTV-powered TV applications for the HITS platform. 'Discovery [Channel] has
enhanced TV with its [When] Dinosaurs [Roamed America]
special,' and Game Show Network is also writing advanced applications for the
OpenTV platform, Ackerman said.

OpenTV hopes the deal will close in the next few weeks and that trials will
begin in the fourth quarter. A source familiar with the deal said Wednesday that
the deal could be announced as early as Aug. 6.

An OpenTV deal with HITS could carry possible interactive-TV implications for
AT&T Broadband, a HITS corporate cousin and its largest MSO affiliate.

Just prior to June's National Show, word emerged that AT&T Broadband was
scaling back its interactive-TV plans for the thick-client Motorola Broadband
Communications Sector 'DCT-5000' box.

The MSO is opting instead to squeeze all it can muster from the more than 3
million 'DCT-2000' set-tops it has already installed, then following up with a
new, enhanced digital set-top for more advanced applications and services such
as personal video recording.

Of course, a HITS deal would provide OpenTV with a digital avenue that
extends beyond AT&T Broadband. Such an accord would also give OpenTV
potential access to roughly 4 million households.

In the HITS deal, OpenTV expects to download its middleware to thin-client,
DCT-2000 digital boxes already deployed by HITS affiliates, senior vice
president of marketing Michael Collette said.

'Day two, we transmit applications through the channel to the set-top,'
Collette said, which could be news, weather and gaming virtual channels from
providers such as AccuWeather Inc. and Bloomberg L.P. 'That's the broadcast
model,' he added.

The second phase will see commerce and transactional services downloaded to
servers deployed in HITS headends, he said. That would allow for enhanced-TV
services and transactional services to be deployed.

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