POLAND’S DIGITAL DTH TRIPLE PLAY

Poland has been at the forefront of developments in Central and Eastern Europe’s television industry since the region returned to democracy a decade ago, writes Chris Dziadul.

Having begun the 1990s with only a single broadcaster, it saw in the new millennium boasting a market that included several commercial stations, a cable sector serving almost one in three of the country’s 12.6 million television homes and – perhaps most significantly – three digital DTH platforms.

Digital broadcasting became a reality in Poland in late 1998 following the launch of competing services owned by Canal+ (Cyfra+) and @Entertainment (Wizja TV). Soon afterwards they were joined by a third (Polsat 2 Cyfrowy) operated by Polsat, the country’s leading commercial broadcaster.

Wizja TV, along with Poland’s leading cable operator Polska Telewizja Kablowa-PTK (now known as UPC Telewizja Kablowa), was acquired by United Pan-Europe Communications (UPC) in mid 2000 and took little time in establishing itself as one of the leading digital platforms in Europe. Indeed, it ended this November with just over 400,000 DTH and 760,000 cable subscribers, its success having prompted UPC to launch similar services (known as UPC Direct) in Hungary, the Czech Republic and Slovakia only two months earlier.

Although Wizja TV was initially licensed by the ITC (its signal being uplinked from Maidstone in the UK), it secured a Polish licence from the country’s National Broadcasting Council (KRRiT) earlier this year. According to Andrzej Muras, the president of Wizja TV and vice president of UPC Telewizja Kablowa, this will now allow it to both offer more proprietary channels in Poland (those currently licensed being Wizja Jeden and Wizja Sport) and carry existing local services such as TVP’s two national channels legally.

In the first quarter of 2000 UPC announced plans to spend around $10 million (E11.37 million) a year until 2003 upgrading its cable networks in Poland. It also decided to invest up to $100 million on the introduction of high-speed Internet and telephony services over the same period. Muras says that homes served by UPC Telewizja Kablowa in Warsaw and Krakow (where the first networks are being upgraded to two-way interactivity), along with Wizja TV subscribers, can now expect to be offered high-speed Internet access through UPC’s subsidiary Chello within a “matter of weeks”. Telephony, however, will not be introduced until the market is fully liberalised in 2003.

Muras expects Wizja TV to gain subscribers following the launch of new interactive services, which besides high-speed Internet are also likely to include home banking, e- commerce and pay-per-view. Indeed, the platform is likely to start the New Year in 500,000 DTH homes – exactly the same figure its nearest rival Cyfra+ is aiming for.

He is also confident that UPC will soon be able to reach a distribution agreement with TVP and that the public broadcaster will start to produce thematic channels for Wizja TV. The latter may nevertheless prove difficult, given that TVP’s owner (the treasury minister) has hitherto objected to the launch of such services and indeed appeared to discourage co-operation with any of the three digital players.

Cyfra+, however, has recently reached agreements with both TVP and the commercial station TVN (which is backed by SBS Broadcasting), thereby paving the way for the launch of new thematic channels on the Canal + owned platform. Yet even TVN appears to have run into problems in this area, with the launch of its first such service (an info-based channel) having been put back from late this year to sometime in mid 2001.

Christian Kozar, CEO of Canal+ and Cyfra+, believes that one of Canal+’s biggest challenges in Poland to date has been trying “to help cable operators to distribute digital channels in their networks”. He also feels that the company is now able to do so through new technologies and stresses that the country will in the future be “in the forefront of Canal +’s interactive strategy”.

Kozar is also of the view that the attitude of subscribers to technology has changed, with their “excitement at everything that is new” having been replaced by a desire to “exploit and use it”. Although the technology currently employed in reception equipment may still be “too complicated for the client”, this should change following the introduction of a single box (G2) by Canal+ “in the next few months”.

Canal+ has been present in Poland since March 1995 and its analogue service still has around 90,000-100,000 “loyal” subscribers. Cyfra+, however, is clearly its focus of attention and the digital platform – which currently offers three programme packages (thematic, premium and super premium) as well as four interactive channels – will from next year also offer such services as home banking and high-speed Internet access.

Speculation that Wizja TV and Cyfra+ will eventually merge still continues despite the fact that the two platforms both appear to be enjoying considerable success. While Kozar refuses to be drawn on any possible deal, he does concede that – bearing in mind that the break-even figure is 1 million subscribers – “we cannot win the battle alone and need to work with partners”. Any agreement, however, will have to be beneficial for both parties and “with the objective of giving a better service to their clients”.

Wizja TV’s Andrzej Muras, on the other hand, believes that any deal between the two platforms will ultimately be made outside Poland. He also insists that Wizja TV is “coping well” with competition and sees Cyfra+ as not having an Internet strategy.

Both Wizja TV and Cyfra+ are nevertheless having to wake up to the fact that they now face real competition from a third party. Polsat 2 Cyfrowy, which is owned by entrepreneur Zygmunt Solorz, is the latest addition to a media empire that includes national station Polsat, news-based Polsat 2 Info, regional broadcaster TV4 and foreign interests in all three Baltic Republics. Despite its low profile launch in 1999, it currently claims 120,000 subscribers and expects to have a further 30,000-40,000 by the end of 2000.

Although Polsat 2 Cyfrowy initially carried only a handful of channels, its programme offer has improved considerably in recent months and now contains several proprietary thematic services including On, Ona and Junior (aimed at men, women and children respectively). However, its greatest appeal – and one that has drawn considerable criticism from other parties – has arguably been the fact that after paying an activation fee and refundable decoder deposit, subscribers have been able to receive the service free of charge.

Polsat used a conference organised by the Polish National Cable Communicat-ions Chamber of Commerce (OIGKK) in late November to unveil its interactive strategy for Polsat 2 Cyfrowy. According to Dominik Libicki, the company’s digital platform development co-ordinator, this will include the introduction of a number of services including home banking (through TeleInvest Bank), e-commerce (via a service named emarket) and education (TeleUniwersytet, providing a link between students and their lecturers).

Zygmunt Solorz, meanwhile, announced at the same conference that the services – known collectively as Telewizja Interaktywna Polsat (TIP) – would be marketed principally at cable operators, who would then be able to offer them to their subscribers. TIP’s strong selling point would be that there would be no need for operators to modernise their networks.

Although Polsat recently entered the Polish cable market through the acquisition of one of the country’s largest operators (Radom-based Dami), Solorz insists that it has “no more plans at present” to buy other companies. Indeed, its priority is to work with cable operators in the distribution of Polsat 2 Cyfrowy and TIP.

Polsat has for some time been rumoured to be looking for a foreign partner, with Rupert Murdoch mentioned as the most likely contender. At the OIGKK conference Solorz confirmed that it was engaged in talks with potential investors and that any deal would in all likelihood be followed by a stock market floatation.

The appearance of three digital platforms has led to unprecedented growth on the content side, with nearly all foreign programmers (with the exception of CNN) now offering localised versions of their channels. For the UK-based broadcasting and distribution company Zone Vision, Wizja TV in particular has proved to be an invaluable distribution vehicle for its new services, which include Reality TV, Romantica and Le Cinema.

Commenting on the digital market in Poland, Zone Vision’s president and CEO Chris Wronski believes it would be difficult for Wizja TV to merge with Cyfra+. Polsat, on the other hand, could in his view quite conceivably team up with either one of its competitors.

Although Zone Vision was tied down by an exclusivity deal with Wizja TV when the platform was owned by @Entertainment, this was terminated when UPC took it over. It now also distributes Reality TV on Polsat 2 Cyfrowy and is in discussions with both Polsat and Canal+ that could result in further carriage agreements.

Wronski adds that Zone Vision plans to launch a further channel in Poland – and indeed other markets it operates in – next month. A joint venture with the US company Showtime, Showtime Action will be a movie-based service and be distributed on at least one of the digital platforms. More significantly, the company expects to launch transactional services in Poland within the next year and is “obviously speaking to UPC and Polsat”.

The digital platforms themselves have also taken the opportunity to launch a growing number of proprietary thematic channels. Sport, for instance, is regarded as a reliable genre to attract new subscribers and both Wizja TV and Polsat 2 Cyfrowy now have sports channels (Wizja Sport and Polsat Sport respectively). Cyfra+, though, still without such a service, has meanwhile invested heavily in securing rights to certain sports, one of its largest outlays to date ($100 million in mid 2000) being for Polish football league for five years.

Other genres, however, have proved more problematic. Although it is generally assumed there is a market for news and info-based channels in Poland, TVN has put back the launch of such a service (expected late this year) for reasons its head Mariusz Walter recently described as “political”. He also confirmed that the service – when eventually launched next year – will no longer be partnered by CNN and have a programme breakdown in which new material will account for 70 per cent of total airtime.

TVN was in a rush to launch its new channel in order to compete with a similar service operated by TVP. The latter, which was also due to appear late this year, has nevertheless been put on hold until further notice.

Polsat, meanwhile, looks set to launch a general news and business channel in early 2001 providing it can find a strategic partner. According to local press reports, the service will obtain some of its programming from a local company named BTV, which already supplies Polsat 2 Info.