Globecast CEO Confident Of Asian Prospects

Globecast is aiming to boost its revenues from Asia, the goal being to eventually grow its Asian segment to 20 percent of the company’s total. Indeed, an intensified focus on the region is one of the company’s main objectives for 2004.

Globecast’s core business is to operate a global network of content distribution platforms via satellite for professional broadcast, enterprise media and information content providers. It has a five-continent satellite and fiber network that includes 15 teleports and technical operation centers in leading media hubs in Europe, America, Asia, Australia and Africa. The company also operates proprietary leases on more than 30 satellites around the world from 10 different satellite systems.

The operator is hoping for an improved performance in the United States during 2004, after a couple of difficult years. In addition, the company has high hopes for Globecast WorldTV, a service available in America and in Australia that delivers international television and radio programming via direct-to-home satellite. It targets millions of foreign- born viewers with the best programming from back home.

In its latest deal announced March 24, the operator says it has inked a pact with Brazilian telecommunications group Embratel to provide broadcast, Internet and telephony services for Brazilian terrestrial broadcaster TV Globo for the 2004 Summer Olympic Games in Athens.

The man in charge of improving the global position of the company is Chairman and CEO Christian Pinon, who arrived in 2000 from Alcatel [ALA]. In an exclusive interview with Satellite News, Pinon told International Editor Mark Holmes about the company’s plans to derive greater revenues from Asia and the United States as well as explaining what role his company can play in the HD (High-Definition) arena, both in the United States and Europe.

Satellite News: What are the major challenges for Globecast in the year ahead? In terms of geographic opportunities, where do you see the biggest opportunities? What levels of business have you seen come out of the Asia Pacific market?

Pinon: I will mention Asia first for obvious reasons. It is the only region of the world that is growing significantly. The growth there will spur the growth in the industry. We want to be present in that region, but we also want to bring content from Asia to Europe and the to the United States. Eventually, we want to bring content from the United States and Europe to Asia.

In terms of growth, we are definitely looking for double-digit growth from Asia. Asia and Australia currently represent only 5 percent of our global revenues. The growth we experienced last year was around 30 percent, so we think we will keep that impressive trend but it is starting from a low level.

We have been present in Asia for around five years, starting from scratch. We now have a presence, and the only challenge is to grow in a dramatic way. In a few years, we want to have 20 percent of our global revenue coming from Asia, as this is really the only proof that you are a global company.

In terms of other priorities, I would also mention the United States for two reasons. We feel there is a recovery of the U.S. broadcast industry. In 2002, it was a disaster for the industry. We suffered a lot that year. In 2003, it was slightly better. In 2004, things look more promising. On top of that, Globecast will gain market share because some of our competitors are in very bad shape or are close to disappearing. So we think we can remain a sound company in the United States.

Satellite News: What impact do you think News Corp will have in the U.S. market? Do you see the dynamics changing? Do you see more competition in the ethnic TV market there?

Pinon: It is little bit too early to say. We are carefully looking at the situation. In the ethnic market, there are two key players — Globecast and DISH Network/EchoStar [DISH]. We are the leader in the ethnic multicultural market, so our objective is to remain the leader. We have some minor competitors in the ethnic TV market, but I would say that two of them are on the verge of disappearing.

Satellite News: How do you view the opportunities in the European market?

Pinon: We cover the Middle East, Africa and Eastern Europe. So, what I want to underline today is that we have offices in Beirut, and we plan to open a new office in Dubai. We also are considering opening an office in Moscow but Dubai is in the plans for this year and Moscow could be for next year. We think Dubai plans to become a kind of gateway/hub in the Middle East region. From Dubai, we can get some access to some fiber connections in Asia and Europe. We can also access teleports in the region.

Satellite News: What impact do you see HDTV having in Europe? With it already having some success in the United States, do you believe there will be more HD channels available in Europe?

Pinon: HDTV could be at the convergence of terrestrial and satellite broadcasting, not to mention cable broadcasts. It is like a fire. It is about who lights the match and who starts the fire. I think once the fire starts, it will be dramatic, because HDTV will be a way for broadcasters to differentiate from one another so everyone will be obliged to follow and bring HDTV content to the subscriber.

We feel there is more movement in HD in the United States than in Europe. This is not really a surprise. Our contribution in the HD arena in the United States and in Europe is the transmission of channels, and we are ready to start providing services in this area. We have signed significant contracts, for example, in the football area.

In the field of distributing TV channels, we have studios in Miami and new facilities in Los Angeles. We are trying to inform and make the industry aware of the fact that we could be a technical provider of HDTV this year. We think we can gain a significant share of revenue from HDTV.

In terms of when HD will start in Europe, I know some of our big customers in France with studios are looking to provide news. Some bouquets are also considering having some movie and sports channels in HDTV. The market will start with some experiments here and there, and then the competition between operators will really spur competition. For example, if one bouquet were to start with a movie channel in HDTV, competitors are likely to follow. Also, there are discussions in France with digital terrestrial television, and some are promoting HDTV as an alternative to the classical analog broadcast.

Satellite News: So, you don’t think the HDTV fire has started yet? What impact will HDTV have for Globecast in terms of revenues?

Pinon: I cannot say it has started yet. Everybody is looking at it as a weapon to use, but who will be the one to start it? I don’t know. Once HD gets started, it will have a positive impact for the company in Europe. It will need more bandwidth, and our business is more or less related to the bandwidth of the content we provide. It means for us additional investment in bandwidth. It will also require more capital expenditure investment, and it will not be an easy game for anybody. There is no content business with secure profitability. When it is successful, I imagine it will be a good model for us.

Satellite News: You launched the second digital HOT BIRD DTH platform from London around a year ago. How successful has it been since launch?

Pinon: As of today, we have eight platforms: two from London, five from Paris and one from Spain. The policy is to have platforms close to the content and to have these platforms in the United Kingdom, France and Spain — interconnected via fiber — so that we can consolidate the platforms in a consistent way, benefiting from local fiber. The two U.K. platforms are full, so we are very satisfied with that.

We have more challenges this year because we will open an additional platform in France. We are looking for more growth. We are very confident because, by the end of this year, we will operate ten platforms instead of eight today. The fill-up factor will be good, and it takes around six months to fill up a platform. If the market trends confirm that, we will have two more platforms.

Satellite News: Could you tell us about your expectations for Globecast WorldTV? What levels of revenues have you generated for this?

Pinon: This year, we will be above $20 million in revenues. We will have more and more channels. At the start of this month, we leased our eighth transponder, which basically means we are growing at around two transponders per year, which is quite significant when you consider the flat situation of the satellite industry.

In terms of why we are successful, I think the market is becoming more mobile. For political, religious and cultural reasons, broadcasters want their content to be broadcast everywhere. For Globecast, being a global service provider, we are in quite a good situation to tap into this market and bring content to key regions such as the United States.

We are quite satisfied with our growth. When we consider the challenge we have here, I think we have only reached around one-third of the potential of this market in terms of content delivery. I don’t think there is a limit. We think we can go on with the current trends and basically add another 20 channels per year.

Satellite News: Finally, how do you see the satellite services landscape changing during the next 12 months? What role do you expect Globecast to play on this changing landscape?

Pinon: The market is growing, which is not necessarily an obvious statement. In 2002 in the United States, and 2003 in Europe, that was not the situation.

In some way, we have had our own Internet bubble in the broadcasting industry. Some channels disappeared. Some bouquets merged. Conversely, we can say that there was some cleaning of our industry, and now we are back on track. Recent statistics show that the broadcast industry in Europe is growing at a 4-percent rate per annum. I would not be surprised to see the global average to be around the 4-percent to 5-percent rate per year. This is good news. Secondly, we think we can gain a good share of business.

(Lucy Smith, Globecast, 011 00 33 1 55 95 26 10)