Outage Cuts Nick Back in Hungary

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Budapest, Hungary – Financial difficulties at an
operator here have severely reduced the reach of two satellite-delivered niche channels.
The change could also affect the Hungarian ambitions of both the Nickelodeon and Fox Kids
networks.

Hungarian Broadcasting Corp. -- which owns the two
channels, MSAT and SZIV TV -- has failed to fulfill its financial obligation to satellite
company Antenna Hungaria, sources said. Neither company returned calls for comment, but as
of Sept. 26, the two channels were available only in Budapest, cutting their reach from 39
percent of Hungarian households to approximately 10 percent.

It's unclear why Antenna continues to transmit the
networks in Budapest, but observers speculate that HBC has been behind in payments for
months and the partial blackout is a last-ditch attempt to get the company to ante up.

The drop is especially problematic for Nickelodeon, which
has transmitted programming on MSAT since last fall. The pressure is on at Nick to gain
momentum, as its rival, Fox Kids Europe Ltd., plans to launch a Hungarian channel at the
end of the year.

Fox is negotiating to broadcast a block of its programs on
either one of Hungary's two commercial stations or the state-owned station, while
also developing its own channel.

"A lot of people don't know Fox but know our
characters," said Tatjana Vucanovic, director Central and Eastern European operations
for Fox Kids. "HBC's problems are good news for us. Hungary is a small market
and three children channels would be a bit overcrowded."

Nick isn't the only kid-oriented channel it has to
worry about: Cartoon Network also is transmitted in Hungary.

Bruce Tuchman, general manager of global network ventures
at Nickelodeon International, would not say whether his firm was seeking to end its
relationship with HBC. "For us, HBC has been a meaningful way to connect to
kids," said Tuchman.

Until earlier this year, HBC's channels were also a
meaningful way for advertisers to reach specific markets. Barry Cupples, managing director
at Optimum Central, the media-buying arm of ad agencies DDB Needham and BBDO, said he
often bought time on both stations.

SZIV TV, with its theatrical movies and local programming,
was an especially good way to reach middle-aged housewives.

However, Cupples had not advertised on the stations for six
months because ratings company AGB would no longer verify the stations' viewership.
Lately, SZIV has broadcast mainly music videos.

Nickelodeon continues on MSAT, which also telecasts series
such as Pacific Blue. "For a while they were really doing okay. I need these
cable-satellite stations but I if I can't verify, I can't take the risk with
clients' money," said Cupples.

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