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Troubled Kirch Group Tightens Belt

By | June 5, 2002

      In an effort to reduce its operational costs, the highly indebted Kirch Group has implemented a far-reaching cost savings plan, which will affect not only its core business, but also its various subsidiaries. One company suffering from the belt tightening is Beta Research, the Munich-based media company’s subsidiary that develops digital set-top-box d-box and proprietary encryption system Betacrypt. By this summer, around 100 employees will be let go, Beta Research spokesman Dirk Barz told Interspace, adding that the axing of jobs forms part of an overall restructuring of the company.

      According to Barz, Beta Research will in future focus on its core business activities. These include the encryption technology Betacrypt, the set-top-box middleware Betanova and the development of an MHP solution. Barz said that the company will work on the commercialisation of its subscriber management system Betanexxt. “With those steps the future direction was set,” said Barz who will himself leave the company to “face new challenges.”

      Another recent development that will contribute to improving Kirch Group’s financial situation is the company’s recent sale of shares in Swiss pay-TV broadcaster Teleclub. The 40 percent stake was acquired in equal parts by Teleclub’s fellow shareholders Ringier, Medializenz and Chriteco. A Kirch spokesman confirmed this; however, he declined to disclose financial details. According to sources close to the negotiations, Kirch Group received a much needed cash injection of six million Swiss francs ($4 million) for its stake. Teleclub currently has 85,000 subscribers and claims to operate at a financial profit.

      Just ahead of Kirch Group’s retreat, the Zurich-based broadcaster has launched its digital package. The bouquet, which is available to cable viewers in the German-speaking part of the country, comprises 10 thematic channels bundled into three package options. “Teleclub Movie” consists of four movie channels: Teleclub Cinema (30 movies as TV premieres per month), Teleclub Star (movies as repeats), Premiere Serie (soap operas, sci-fi, cult, fantasy and comedy series) and Krimi & Co (dramas, thrillers and detective series). Both Teleclub Cinema and Teleclub Star transmit partially in the enhanced audio system Dolby Digital 5.1.

      “Teleclub Family” targets the whole family with entertainment channel Disney Channel, children’s channel Fox Kids and documentary channel Discovery Channel, while “Teleclub Sports” contains the three sports channels Premiere Sport 1, 2 and 3, which offer Formula 1 racing, live games from the German first division football league, international football, tennis, boxing, golf, ice hockey and American sports from NBA and NHL. The digital package is gradually being rolled out to cable households in the German-speaking part of Switzerland, but a satellite transmission to homes is not currently envisaged.

      Teleclub uses the Nagravision encryption system and subscribers are issued a set-top-box manufactured by Advanced Digital Broadcast (ADB) free of charge. Since the receiver, in addition to its embedded Nagravision conditional access system, contains a common interface slot, it can also be used to receive other pay-TV services. If the subscribers already own a set-top-box or want to use a receiver other than the ADB box, Teleclub offers a free CI-CAM module as an alternative.

      The monthly subscription costs amount to between 39.90 Swiss francs ($26) and 59.90 Swiss francs ($38), depending on the individual package combination the subscriber chooses. All subscribers who are unable to receive the digital bouquet because their cable network doesn’t yet carry it can receive Teleclub Cinema in analogue, which has replaced the current Teleclub channel. The channel is available for 35 Swiss francs ($22) per month.

      Meanwhile, the digitalisation of the television market is not only making progress in Switzerland, but also in Germany. While initially the large nationwide broadcasters made the move into the digital era by simulcasting their analogue channels in digital, the local broadcasters have commenced efforts to switch to a digital transmission. The Bavarian media authority Bayerische Landeszentrale fur neue Medien (BLM) recently approved a trial project in which a selection of Bavaria’s broad range of small and medium-sized local TV channels will transmit their services in digital on the Astra satellite system (19.2 degrees East).

      The channels, which have so far only been available on cable and terrestrial frequencies in their respective regions, aim for a larger audience reach by moving to satellite, at a time when digital television is set to grow substantially in Germany. This is mainly because of the end of the much criticised d-box monopoly and the leading broadcasters’ agreement on using MHP as the future standard for multimedia applications.

      Both developments are expected to put an end to the confusion among consumers, which has proven to be a barrier for the development of digital television. According to BLM, digital capacity will be rented from satellite operator SES Astra by ONTV, a consortium of local broadcasters. ONTV is backed by TVA Ostbayern, Tele Regional Passau 1, Regionalfernsehen Landshut, Oberpfalz Nord and Donau TV, with each broadcaster holding a 20 percent stake. The group plans to transmit from June 11 a “best of” selection of their progammes each night between 18.00 and 24.00 CET.

      –Jorn Krieger

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