TVN Makes Inroads with Small Ops

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TVN Entertainment Corp.'s turnkey digital pay-per-view
service is getting good early reviews from small and midsized operators that are unable to
afford the capital investment necessary to roll out Tele-Communications Inc.'s Headend in
the Sky service.

TVN's service, which is currently in front of nearly
400,000 subscribers, offers 32-channel near-video-on-demand PPV.

"Things are going well: The operators are happy with
the service, and they are generating the buy-rates that they expected to see," said
Jim Ramo, TVN's president and CEO. "We're going in and financing the equipment, and
providing the customer service and marketing support."

Wyandotte Municipal Cable in Wyandotte, Mich., has already
rolled out 400 digital boxes within its 20,000-subscriber system in the past two months,
with positive results, said William Booker, superintendent of the municipally owned
system, although it was too early to provide specific buy-rate figures.

Without TVN's financial commitment -- it covered the cost
of upgrading and installing the equipment -- the system would not have been able to roll
out digital services to its subscribers.

The system was able to launch digital services on four
analog channels, instead of waiting to fully upgrade its existing 450-megahertz plant to
the 750-MHz configuration that is necessary to launch HITS.

TVN affiliates only have to pay $280 to $290 for each
digital box, as well as a $3 monthly fee for each digital subscriber.

TVN also keeps an unspecified percentage of each PPV movie
and event buy.

"TVN helped us with the equipment. We didn't have the
money to phase in digital, but they helped us to finance it," Booker said. "It's
worked out fine with our subscribers."

Along with the financial help, TVN also controls the PPV
transaction and marketing operations for the system. "We bill the customer for the
digital service, but the PPV transactions and billing are controlled by TVN," Booker
said.

Privately owned Carnesville Cable in Hartwell, Ga., has a
10 percent-penetration rate with TVN's digital service since launching it last September,
said John Williamson, owner of the system, which has fewer than 1,000 subscribers.

He added that he's been particularly impressed with the
marketing and operational support that TVN provides for its digital business.

"They give each system marketing-support money, and
they provide very strong customer and technical support," Williamson said.
"Through their efforts, I'm seeing that our revenue per subscriber through digital is
in the $50 range."

And the system is in the midst of an aggressive acquisition
campaign developed by TVN. Subscribers signing up for digital receive free installation,
one free month of the service and one free PPV movie per month for one year, Williamson
said.

Ramo said the promotion is one of several campaigns that
the company is working on to help operators sign up subscribers. He added that TVN will
continue to target small and midsized operators with future interactive and transactional
services, including VOD, which it will launch later this year.

"What you will see from us is a continued move toward
transactional services," Ramo said. "I think that you will see an additional
broadening of services beyond entertainment."

To further aid its affiliates, TVN has redesigned its Web
site (www.tvn.com). The site now features three distinct sections for cable
customers -- one for its digital turnkey affiliates, one for digital consumers and one for
its analog PPV affiliates -- the company said.

For operators, the Web site provides current TVN movie and
event programming schedules for its 32-channel digital NVOD programming service and its
three-channel PPV service. It also highlights the marketing and technical support that TVN
provides to its cable affiliates.

"Our new Web site is designed to provide cable
operators with a comprehensive look at how TVN can help them to launch digital services,
and at how our customized pay-per-view solutions -- whether NVOD, VOD or analog -- can
increase or create new revenue streams," said David Sears, TVN's senior vice
president, affiliate sales and marketing.

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