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Thursday, March 7, 2002 |
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• Broadband Networks Face Deadlines, Bids and Bankruptcy • Sony Takes PlayStation2 Online • Comcast To Entice Consumers With Free SVOD Trials • Charter Looks Through Gateway for Broadband Customers • Alcatel Claims DSL Gear Lead • Online Videophiles Get DivX's Picture • Disney In Deal For Wireless Services • Firm To Make Global Crossing Bid
Broadband Networks Face Deadlines, Bids and Bankruptcy
A trio of next-generation networks continue to suffer a case of financial flu today. Next-generation network Williams Communications bought itself a little more time, announcing its lender banks have agreed to extend restructuring negotiations through March 27. The Tulsa, Okla.-based broadband network is mulling bankruptcy as it tries to restructure its operations. Last month, its lender banks questioned whether it has defaulted on an existing credit agreement, which has provided Williams $975 million so far. Meanwhile, the company's former parent, utility provider Williams Co., has agreed to semiannual interest payments on the $1.4 billion of Williams Communications' notes. The broadband provider will see some of those payments forgiven, and payments on other debt will be deferred until the notes mature in March 2004. Qwest Communications International, meanwhile, says it does have options to pay off some of its $24.9 billion debt load, even as its debt rating skates perilously close to junk status and the specter of possible bankruptcy looms. Prompted by debt load concerns, Moody's Investors Service Tuesday lowered the Denver-based RBOC's debt rating to just above junk status. Qwest also is facing questions over whether it can meet its obligations under its $4 billion credit agreement. It is facing a July payment of $850 million. CEO Joe Nacchio told investors Wednesday the company is working on deals to sell cash assets and could cut capital expenditures by several hundred million to conserve funds. And bankrupt Global Crossing may have yet another suitor as it works through Chapter 11. Reports are Platinum Equity is considering whether to make an offer on the telecommunications provider. That would put Platinum founder and CEO Tom Gores in a bidding war with his brother, Alec, who runs buyout specialist Gores Technology Group. Even as those two square up in bidding, Global Crossing has its own reorganization plan on the table that involves a combined $750 million investment from two Asian firms for 79 percent ownership in the company.
Sony Takes PlayStation2 Online
Sony Corp. took another step toward broadband with the announcement it will offer PlayStation 2 owners the option to play games online. Starting in August 2002, PlayStation 2 gamers can buy a special $39.99 Ethernet/dialup network adaptor to plug into their Playstation2 unit's USB port. That will allow them to connect to the Internet through the unit and play online, either alone or in a multiplayer setting. They can link to the Web using their own ISP and play games at either dialup or broadband connections. Beta testing for the adaptor will begin in March. In addition, Sony has entered forged marketing agreements with EarthLink Inc., AT&T WorldNet, SBC-Prodigy and Sympatico to add their ISP information to the promotional startup disk provided with the adaptor. So far, Sony has sold more than 8.8 million PlayStation 2 units. The company plans to roll out its broadband network strategy for PlayStation 2, offering a range of high-speed interactive entertainment services in the near future.
Comcast To Entice Consumers With Free SVOD Trials
LOS ANGELES -- Free subscription-video-on-demand (SVOD) represents just one marketing tactic Comcast Corp. is evaluating in order to remove barriers of consumer acceptance to new on-demand video services, company officials said Wednesday during the opening session of CTAM's Digital Conference. Other carrots Comcast will dangle in front of potential VOD subscribers include discounted movies, and free access to on-demand kids programming and cable networks, and tiered VOD services. Comcast, among the most aggressive MSOs when it comes to VOD, has launched the service commercially in 19 systems. The company plans to market VOD services to consumers "full-scale" with direct mail and video promotions by the second half of the year, said David Watson, executive vice president of sales, marketing and customer service. VOD represents a "booster rocket" to help cable take its digital business to new levels, added Comcast Vice President of Marketing and NewProducts Andy Addis. On digital churn, conference keynoter John Sie, chairman ofStarz Encore Group, urged MSO leaders to maintain their focus on launching new SVOD services, and not to spend too much time strategizing. "Digital growth share is critical," he said, alluding to eroding market share attributed to DBS, cable's toughest competitor. Sie added that the cable has a window of opportunity against DBS, as execs at EchoStar and DirecTV handle their pending merger. Sie also argued that forthcoming Internet VOD services such as Movielink are not a threat to the cable industry, but legitimize the need for cable modem-based streaming applications. Still, the service -- which is backed by MGM Studios, Paramount Pictures, SonyPictures Entertainment, Universal Studios and Warner Bros. - is "egging cable on" to do more with VOD and perhaps push the needle to get better splits in content negotiations.
Charter Looks Through Gateway for Broadband Customers
Charter Communications, Inc.'s high-speed cable modem service now has a new entrance to consumers in a deal with computer maker Gateway, Inc. Under the arrangement, the MSO will market its Charter Pipeline cable modem service in 30 Gateway stores nationwide. As part of the promotion, customers who sign up for service will receive a free cable modem and free installation. Charter pipeline offers tiered service, including a 256 kilobits per second connection for $29.95. It also offers mid-range $39.95 package with downstream speeds at 512 kbps to 768 kbps, depending on network capability and a $74.95 package offering 1 Megabit per second to 1.5 Mbps, again depending on network capacity. Gateway has also signed promotional deals with AT&T Broadband, Comcast Corp. and Adelphia Communications. "This agreement makes it easy for customers to order high-speed cable modem service at the same time they're buying a new Gateway personal computer," said Steve Frank, director of retail for Charter. "Most consumers want a personal computer so they can go to the Internet, and there's no better or faster way to go online than with cable modem service. We want to make it as convenient and affordable as possible for customers to bundle Charter Pipeline service with a new Gateway personal computer right at the time they're buying that computer."
French Internet gear maker Alcatel is the leader in digital subscriber line equipment, according to international market research firm Infonetics. Infonetics estimated Paris-based Alcatel accounted for 42 percent of the DSL port shipments by the end of 2001. So far, the company has shipped some 15.7 million DSL lines worldwide, 8.7 million of which have been shipped to the United States. "Alcatel's commitment to providing the right solution for service providers to meet the high-speed access needs of today is key to their global leadership position," according to Infonetics' Jon Cordova, in a release.
Online Videophiles Get DivX's Picture
DivXNetworks Inc. is riding high on the release of its latest MPEG-4-based video software. The San Diego, Calif.-based company's DivX 5.0 streaming video compression software has racked up 1.5 million downloads in less than two days of release on the www.divx.com Website. The software is free; the company makes its money licensing the encoding software and management systems to content developers. "Based on the quantum improvements in speed, visual quality and overall performance contained in DivX 5.0, we had high expectations for the release and prepared our technical operations accordingly," said Tay Nguyen, director of technology delivery at DivXNetworks, Inc., in a release. "But the five-fold increase in site traffic and downloads in the last few days have surpassed even our own expectations, to the point where we're sustaining more than 150 Mbps of outbound network traffic." The company claims the download rate surpasses that of competitors including Apple Corp.'s QuickTime 5 and Microsoft Corp.'s Windows Media 7 releases. DivX5.0 is geared to produce DVD-quality video over broadband connections, at file sizes 41 percent smaller than previous DivX versions, according to the company.
Disney In Deal For Wireless Services
Walt Disney Co.'s Internet and wireless group said it had signed a deal to develop news and entertainment for a wireless software platform being rolled out by the nation's largest wireless telephone network. Under the deal, Walt Disney Interactive Group will create ESPN-branded sports services for a new applications platform being developed by Qualcomm Inc. for use in wireless telephones. The platform is being incorporated into the Verizon Wireless national network, which is jointly owned by Verizon Communications and Britain's Vodafone Group. Disney Interactive supplies free information from ESPN.com and ABCNews.com to Verizon Wireless users, spokeswoman Kim Kerscher said. But the development of new platform applications would allow Disney Interactive to offer fee-based applications, provided the company reaches an agreement with Verizon Wireless, she said.
Firm To Make Global Crossing Bid
Despite its financial woes, Global Crossing may still be one of the hottest commodities around. The telecommunications giant, the fourth-largest company to ever file for Chapter 11 bankruptcy, is set to receive yet another offer for its assets, which includes 100,000 miles of fiber-optic network linking 27 countries. Tom Gores, founder and chief executive of Platinum Equity, said Wednesday his buyout firm likely will make an offer for Global Crossing sometime next week. "It's 99 percent sure we'll submit a bid," he said. "We will make a bid for the entire company." This will likely set up a battle between Gores and his brother, Alec, who operates a separate buyout firm, Gores Technology Group. Meanwhile, Global Crossing has proposed a rescue plan of its own that would see two Asian firms investing a combined $ 750 million for 79 percent of the company. Under that plan, creditors who are owed billions of dollars would receive the remaining slice and $ 300 million in cash. Platinum Equity's bid will likely include a larger cash injection than $ 750 million, said Gores, who declined to provide further details. Los Angeles-based Platinum Equity has completed 37 acquisitions since 1995, buying numerous troubled divisions of large technology players, including units of Alcatel, AT&T, IBM and Motorola. It has 20,000 employees and $ 4 billion in sales, the company said. Gores Technology Group, also based in Los Angeles, is also preparing a bid with substantially greater value than what creditors would get from the $ 750 million rescue offer made by Hutchison Whampoa and Singapore Technologies, sources familiar with the offer said. Any offer will have to convince creditors that they can recoup more of their losses if Global Crossing is restructured rather than liquidated. Some of the creditors are becoming increasingly concerned that Global Crossing will burn up a significant amount of its nearly $ 700 million of cash in operating and other costs before a rescue plan is put in place.
• The National Post reports that Ted Rogers, the founder and chief executive of Rogers Communications Inc. has delayed his planned retirement at the age of 70 by up to three years. In a brief statement, the company's board of directors said yesterday it has approved a revision of Mr. Rogers' employment contract, extending it until Dec. 31, 2006, with the option for him to terminate it early on six months' notice. Rogers, now 68, will be 73 at the end of the contract, according to the Post. • AT&T Wireless said today it has named G. Michael Sievert to the position of executive vice president and chief marketing officer. Based at the company's headquarters in Redmond, Wash., Sievert becomes a member of AT&T Wireless' senior leadership team. He will be responsible for the marketing strategy, programs, and resources in the company's core mobility, or voice, business. Most recently, Sievert was chief marketing and sales officer at E*Trade Group, Inc., Menlo Park, Calif. • USA Broadband Inc. will acquire Verizon's multidwelling unit digital satallite video systems and property access agreements in California and Texas. The deal entails about 5,000 MDU subscribers, and the deal should close over the next 90 days, the companies say. Financial terms were not disclosed. • John Rainger was appointed CEO at Openet Telecom. He was COO of Lucent Technologies' software products group, with $1 billion in sales and more than 1,300 employees • DirecTV Latin America named Antonio B. Barreto senior VP of programming and marketing, effective March 11. Barreto replaces Milton Torres, who was promoted to executive VP. He was senior VP and GM of ESPN International.
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