Flextech Expected to Finalise Agreement with NTL
Flextech, the media company with a string of cable and satellite channels and the largest supplier of British pay television channels after BskyB, is expected to finalise a deal to put UKTV channels (a BBC joint venture) into the NTL cable area soon. The Northern Ireland based subsidiary of NTL, Cabletel, is one of the groups who have expressed interest in buying CableLink with the intention of providing telephone, internet and cable services (whoever buys CableLink will become an important telecommunications company in the Republic). NTL Cabletel entered the market in Northern Ireland two years ago and has experienced enormous growth against BT having invested Stg£600 million in a complete fibre optic network to service 80% of Northern Ireland by 2003 and just completed a Stg£30 million high speed Britain-Ireland fibre optic link. NTL Cabletel has achieved a 40% take up of its television and telephone services in Northern Ireland.
Flextech has secured a joint venture with the BBC to create new channels for satellite and cable using its huge library of programmes. Its core channels - Bravo, Challenge, Trouble and Living - are performing well and this year Flextech launched two new channels, UK Play, a Music Television Channel, with the BBC, and The Travel Shop which is aimed at selling cheap last-minute holidays.
Flextech has a 20% interest in Scottish Media Group which owns Scottish Television and had made a failed bid to take-over UTV earlier this year and ended up selling its 18.2% stake for Stg£23.9 million to CanWest (which owns 45% of TV3 and after the sale owned 29.9% of UTV). To make matters even more complicated 37% of Flextech is owned by John Malone's TCI, America's second largest cable company with 21 million customers. TCI merged with AT&T for an agreed bid price earlier this year. As part of that deal, the stake in Flextech will belong to Liberty Media, Malone's television group, and once the AT&T deal with TCI closes Liberty will have $5 billion to spend. NTL Cabletel's competitor in the Northern Ireland telephone market, BT made a deal this year with AT&T and are set to combine all their international business under one equally owned company which would provide low-cost voice, data and video services to multinational customers via a new Internet Protocol based network connecting 100 cities with expected sales of £6 billion in its first year.
AT&T also paid $11.4 billion for Teleport Communications, a local phone carrier with a fiber-optic network earlier this year and made an unsuccessful $30 billion bid for America On-Line (AOL). It is now rumoured that there is a potential merger or at least an alliance on the horizon between TCI and AOL. It is estimated that it would cost $6 billion to upgrade TCI's network to fiber-optic to every subscriber home which is a lot of money, even for AT&T, but is well within AOL's budget for extending it penetration which stands at 10 billion.
Flextech chairman, Adam Singer believes the industry is on the brink of new round of corporate activity and wishes to expand the company into a number of areas although publishing, more television and movies are obvious areas of interest, a channel distribution deal with NTL could lead to increased telecommunications interests in Ireland.
Murdoch close to deal with Telecom Italia and Frances TFI
Following Italian state broadcaster RAI's decision to exit talks to set up a second Italian digital pay TV platform, Rupert Murdoch is close to finalising a separate deal with Telecom Italia and French pay TV group TF1, according to a report in the Times. Under the new plan, News International, a subsidiary of Murdoch's News Corp., will take a 39% stake in the new venture, alongside Telecom Italia with 51% and TF1 with 10%. The partners hope to launch a rival digital platform to Canal Plus-backed Telepiu, which until last week was urging Murdoch and the other bidders to invest in its own operations, rather than launch a separate venture.
United News and Media could bid for Arsenal
In the continuing buy up of premier division soccer clubs by Media Corporations, British newspaper and TV group United News & Media could be muscling in on Carlton Communications' bid to secure TV rights for U.K. Premier League soccer club Arsenal, according to weekend press reports. U.K. media giant Carlton has been in talks with London-based Arsenal since September, but the negotiations are deadlocked over the size of the equity stake that could be part of the deal, as well as the role to be played by Arsenal's existing directors. The impasse has lead to rival wooing from United News, which owns two commercial ITV television franchises, Meridian and Anglia, and has a 29% stake in commercial broadcaster Channel 5. United also owns the Express newspaper group.
Michael McMahon 12.11.98
