Thomson Selling Up to 30% Stake


Paris-based Thomson Multimedia announced late last week
that its sole shareholder, the French government, plans to sell off up to 30 percent of
its equity.

Thomson signed memoranda of understanding with four large
technology companies: DirecTv Inc., Microsoft Corp., NEC Corp. and Alcatel Telecom have
each proposed to buy 7.5 percent stakes in Thomson, a worldwide manufacturer of
consumer-electronics products.

All deals are subject to due-diligence and regulatory
approval. They are expected to close this fall.

Jim Meyer, executive vice president and chief operating
officer of Thomson Consumer Electronics, Thomson Multimedia's wholly owned U.S.
subsidiary, said the deal will significantly improve Thomson's financial performance
and debt structure.

In addition to the increased capital from selling equity
stakes in the company, Thomson stands to gain from recurring revenue streams through
interactive-services deals with DirecTv and Microsoft.

"The growth of the consumer-electronics industry has
traditionally been slowed by eroding prices and lower margins," Meyer said.

Thomson Consumer Electronics already has a small team of
interactive-content developers at its headquarters in Indianapolis. It plans to expand the
team there, and to build one on the West Coast, as well.

Meyer called the agreement with Microsoft
"far-reaching." The two companies plan to work together to distribute electronic
programming guides in analog and digital televisions.

Microsoft also named Thomson as a WebTV Networks licensee.
Meyer said the company would not only produce stand-alone WebTV boxes under the RCA name,
but it will also build the Internet technology into televisions, direct-broadcast
satellite systems and, possibly, cable set-tops.

The company recently exited the Internet set-top box market
when NetChannel shut down its business. Meyer said it's important to have a strong
partner handling the interactive service, and he believes that both DirecTv and Microsoft
are strong partners. When it starts selling WebTV products, Thomson may market to former
NetChannel customers, Meyer said.

Thomson will also "harness the Windows CE
platform" to help facilitate rapid deployment of interactive services, Meyer said.
And while Microsoft's Windows CE will be the technology of choice for set-tops,
Thomson has retained the right to use other operating systems if a cable operator prefers
to do so, Meyer added.

Thomson and DirecTv have been partners on the Digital
Satellite System since 1991. Through the new deal, Thomson will help to create new
interactive services and hardware for DirecTv and the DSS platform. The two companies will
also co-market new receivers that combine digital-terrestrial and DSS signals.

DirecTv officials were not available for comment last week.
The company is expected to announce details of its interactive-television plans as early
as today (Aug. 3).

Alcatel will help Thomson to develop digital home networks
that can link electronic devices throughout a house.

NEC and Thomson are co-developing flat-panel plasma
television screens.