News summary for 8/08/07

Wed, 08/08/2007 - 9:52am

Cablevision sees increased revenue, 168,000 RGUs in Q2
By Traci Patterson

In its second quarter, Cablevision Systems Corp. reported a net revenue gain of 12.3 percent year-on-year, to $1.6 billion. Cable TV net revenue grew 13 percent, to $1.1 billion, compared with the year-ago quarter, and telecommunications services net revenue increased 12.8 percent to $1.2 billion year-on-year.

Cablevision gained 168,000 revenue-generating units (RGUs) in the quarter, including 81,000 voice customers - an increase of 41.7 percent year-on-year and up 6.1 percent compared with the previous quarter.

The MSO added 50,000 high-speed data subs, an increase of 14.6 percent compared with the year-ago quarter and an increase of 2.4 percent sequentially.

The company gained 39,000 digital video subs, up 12.3 percent year-on-year and up 1.6 percent sequentially. Basic video subs declined by 348.

“Our bundle of advanced digital video, Internet and voice products continues to be successful in attracting new customers and expanding existing subscriber relationships,” said Cablevision’s President and CEO James Dolan. “Cablevision's Optimum Voice service, recently honored by J.D. Power, now reaches 30 percent of the homes passed by our fiber-rich network, and the penetration rates of all of our consumer telecom services continue to lead the cable industry.”

During the quarter, Cablevision entered into a definitive merger agreement with an entity created by members of the Dolan Family Group. The agreement states that all outstanding shares that the Dolan Family Group does not own will be converted into $36.26 per share, in cash. The transaction requires approval by holders of a majority of the MSO’s outstanding Class A shares not held by the Dolan Family Group or Cablevision’s directors and executive officers.

Conn. AG pressures AT&T to get franchise license
By Brian Santo

Following a Connecticut court decision that U-Verse is indeed a cable service, Connecticut Attorney General Richard Blumenthal is moving to force AT&T to apply for a statewide franchise license, according to several press reports. 

Blumenthal has filed an emergency petition urging Connecticut’s Department of Public Utility Control (DPUC) to order AT&T to acquire a cable franchise for U-verse IPTV. His petition claims that a recent U.S. District Court ruling that IPTV is cable television nullifies changes to state law weakening regulation of cable television.

If the DPUC agrees, AT&T would have to stop signing up IPTV customers until it secures a statewide license.

Also, because AT&T’s operating area includes most of the state, Blumenthal is also trying to get the DPUC to force AT&T to provide U-Verse across the state.

So far, U-Verse has touched down in neighborhoods, but has covered few, if any, single cities in their entirety, let alone an area the size of even a small state. 

KDDI picks SeaChange, Panasonic to provision on-demand platform
By Mike Robuck

KDDI will use hardware and software from SeaChange and Panasonic to help launch an on-demand platform to cable operators across Japan this summer.

KDDI provides VoIP, backbone Internet services, and other IT services to more than 60 cable operators across Japan. By using the end-to-end platform provisioned by SeaChange and Panasonic, cable operators will be able ramp up their on-demand offerings to customers.

“SeaChange has collaborated with Panasonic to serve the unique needs of operators in Japan’s television community and we are very proud that our rollout with KDDI is the first and best possible proof of that commitment,” said Lincoln Owens, director of broadband, Asia Pacific, SeaChange, in a prepared statement.

In the first stage, on-demand services will be centrally managed at the KDDI network operations centers, with the ability for each cable operator to expand and enhance its service according to its regional coverage. TV and movie content will be provided by KDDI, and cable operators will be able to mix in their own local content as well through the KDDI central site. 

The deployment uses SeaChange’s MediaCluster on-demand servers and Axiom Core management software, as well as the TV Backend System software for end-to-end management of promotions and business rules. Panasonic is adding the front-end interface solution for Japan’s deployed cable television set-top boxes. ITOCHU Techno-Solutions Corp. is SeaChange’s integration partner on the KDDI project.

Sana Security safeguards Cox’s Internet subs
By Traci Patterson

Cox Communications is now offering Sana Security’s anti-malware software to its high-speed Internet subscribers whose computers are infected with bots, Trojans and other types of malware.

The software - which Cox is offering to its customers free of charge - is designed to protect users’ identities and computer systems by safeguarding them from malware before it causes any harm. The technology also detects and removes bots - the fastest-growing threats and the most difficult to spot, Sana Security said.

Infected computers are directed into a “walled garden,” where customers are notified of the malware and given the option to download the product. The threats are then removed before critical information can be stolen from a user’s computer and before the user re-connects to the Internet.

“The ability to ‘seek and destroy’ even the most recent bots, viruses and other threats is absolutely critical when you realize that - according to the real-world customer data we’ve collected - seventy-six percent of these threats appear before a signature is even available,” said Timothy Eades, SVP of sales and marketing for Sana Security. 

The three main benefits of the system are reduced support calls, healthier consumer networks and improved customer satisfaction, Eades said.

The software is based on Sana Security’s Primary Response SafeConnect product. Once the threats have been removed, Primary Response SafeConnect continues to protect users’ PCs with no further action needed from the user. 

In 2008, Eades said security will be less dependent on the operating system (OS) and much more Java-based.

The company’s current technology does not account for this, but a Sana Security product that does will hopefully be beta tested in Q4, Eades said.

“It will be an interesting world in 2008 when service providers look at new ways to protect their customers,” he said.

Liberty Media’s Q2 a mixed bag; Liberty Capital to split stock
By Mike Robuck

Liberty Media said during its second-quarter earnings report today it will split its Liberty Capital Group into two stocks once the deal to buy DirecTV closes.

Cable pioneer John Malone and Liberty Media expect the acquisition of DirecTV to close either later this month or in early September. Once that happens, the new trading stock will be Liberty Entertainment Group, which will include Starz Entertainment, Fun Technologies, GSN, DirecTV and the three regional sports networks included in the deal, and WildBlue Communications. Liberty Capital will trade as the second stock and will include a smaller group of Liberty assets.

"The reclassification should achieve two purposes,” said Liberty President and CEO Greg Maffei, in a prepared statement. “First, it will create a focused distribution and programming business in Liberty Entertainment. We believe this new Liberty Entertainment group equity should increase shareholder value and provide a strong currency that will increase our strategic flexibility. Second, the new Liberty Capital group will focus the complexity that contributes to our trading discount into a single, smaller group of assets that can be more effectively simplified over time."

Operating income at Liberty Capital Group dropped to $42 million from $44 million.

Starz, which is part of Liberty Capital, ,saw its revenue decrease by 4 percent to $254 million while operating cash flow increased 10 percent to $55 million.

Home-shopping network QVC, which is in the Liberty Interactive Group, saw an increase of 4 percent in its revenue to $1.69 billion while its operating income went from $242 million a year ago to $244 million.

Virgin Media posts 8th quarterly loss; sale stalls on debt market
By Emeka Obiodu, World Markets
Copyright 2007 World Markets Research Limited
All Rights Reserved

Turmoil in the global debt market has forced a rethink of the planned sale of Virgin Media.

The United Kingdom's only significant cable operator, Virgin Media has posted an eighth straight quarterly loss as customer churn to key rivals takes its toll. Virgin Media said its second-quarter net loss narrowed to $241.39 million from $398.7 million a year ago, as it lost 40,000 TV customers in the quarter due to the removal of several TV channels from the Virgin Media package. Overall, Virgin Media lost 70,000 TV customers in the quarter although it won 45,800 net new broadband customers and 52,800 new mobile customers in the quarter.

Meanwhile, Virgin Media's planned US$11.1 billion sale became the latest victim of the turmoil in the global debt market as the company announced it was delaying the auction process to await more favorable debt conditions. Dow Jones reports that Virgin Media had planned an initial first-round bid deadline for this week, but uncertainty in the credit markets has raised concerns that some private equity bidders may not be able to raise debt financing.

In a statement, Virgin Media said potential strategic and financial counterparts have continued to confirm a strong ongoing interest in the sale. However, "to enhance shareholder value, Virgin Media's financial advisers have recommended that Virgin Media extend the process until these parties can complete their proposals in a more stable debt market environment," the company added.

Despite a fervent campaign to turn around the company's operations, Virgin Media is still playing second fiddle to its key rivals. On the telecoms side, Virgin Media surrendered its top position as the United Kingdom's leading broadband provider earlier in the year to BT. Similarly, Virgin Media has failed to close the gap between it and satellite pay-TV provider BSkyB, which has even managed to poach customers away from Virgin Media.

A change of name earlier in the year to Virgin Media was expected to revamp the company, doing away with the bad customer-service reputation of NTL and repositioning the company to take on the market. Instead, and despite becoming the United Kingdom's first quadruple-play provider, the fortunes of Virgin Media have not boomed. Given the continued impact of the removal of some BSkyB TV channels on Virgin Media's prospects, the outcome of the ongoing legal feud with BSkyB may prove a critical factor for the future of Virgin Media, both financially and with the possibility of a takeover.

Virgin Media's decision to put off its planned sale exposes the lack of a really strong strategic reason behind the company's sale. Many of Virgin Media's suitors are private equity players with financial motives and they have been inevitably caught up in the ongoing global debt turmoil. Ongoing volatility in the global debt market has already affected other private equity-led takeovers and there is no guarantee that the situation will abate soon. Virgin Media's latest position could also have been encouraged by unconfirmed press reports earlier this week suggesting that several private equity firms are pulling out of the deal. So far, strategic investors have been limited. Cable giants Liberty Global and Comcast have reportedly signaled their interest to take over Virgin Media although private equity firm Carlyle, which initiated the takeover process, remains the key contender.

Broadband Briefs for 8/08/07
* Mediacom, Insight launching Listings2Go

By Traci Patterson

Gemstar-TV Guide International Inc. said that Mediacom Communications and Insight Communications will soon launch TV Guide's Listings2Go, an online TV guide application, on their respective portal sites.

Listings2Go is one of the initial phases of My TV Guide, the company's suite of cross-platform personalized guidance tools and services. Mediacom and Insight’s launch of the application will enable their customers to personalize grid views and search local TV listings online.

* Former CBS, CNN sales exec moves to AnswersMedia
By Traci Patterson

Former CBS and CNN executive John Lee has joined multi-platform HD video producer AnswersMedia as the SVP of sales. He will be responsible for introducing the company’s content to advertisers who are looking for new ways to reach customers, the company said.

At CNN Newsource, Lee also served as SVP of sales. Prior to that, he was the SVP of business development at CBS Television Network.

* Metalink adds two former industry execs to advisory board
By Traci Patterson

Metalink, a provider of wireless and wireline broadband communication silicon solutions, has added two industry vets to its strategic advisory board: Michael Powell, former COO, VP and general manager of the Broadband Access Business Unit of Conexant Systems; and Izik Kirshenbaum, former general manager of Intel's Broadband Wireless Division.

The additions will help to boost Metalink's growth in the wireless digital home entertainment market, the company said.

* Ferrara joins Tollgrade
By Mike Robuck

Tollgrade Communications has hired Joseph Ferrara as senior vice president of marketing and sales. Prior to Tollgrade, Ferrara was CEO of Marconi’s North American operations as well as holding other executive positions at Marconi.

* CommuniGate’s free app combines communications functions
By Brian Santo

CommuniGate Systems is now providing free versions of its Flash-based client Pronto! and its Pro Internet Communications platform. The company’s new portal, TalktoIP, gives consumers a free account to Pronto!, a Flash-based user interface that integrates e-mail, calendaring and secure IM in a single dashboard.

The CommuniGate Pro Community Edition gives up to five users accounts installable on any computer or server inside a home or small business. The product is compatible with any operating system - Windows XP, Windows Server Edition, Apple OSX, and Linux. This version is aimed at small businesses that are unlikely to have their own IT support.



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