TS News - Deutsche Telekom To Leave MMBG

TELE-satellit News, 28 September 1996

Deutsche Telekom To Leave MMBG
  MUNICH, Germany, 96/09/16 (SatND) -- At the end of last week, the digital
TV landscape in Germany seemed calm; the surprise over the announcement of
the Nethold-Canal+ merger a week earlier had settled.

  But today, nothing is the same. According to a report in today's
Suddeutsche Zeitung, the still state-owned telecommunications monolith
Deutsche Telekom will leave the Multimedia-Betriebsgesellschaft (MMBG,) a
group of broadcasters and companies once created to distribute digital TV. A
Telekom spokesman has meanwhile confirmed the report but refused any further
comments on the future of MMBG.

  Their original goal to create a single pay TV services company for all
broadcasters, however, was never achieved. One of the major players in the
market, Leo Kirch, pushed ahead with its own digital package and decoder.
Observers noted that Kirch's jump start secured him continued access to the
movie libraries of Hollywood majors as he was able to offer free and pay TV
distribution channels.

  To achieve this, he would support his ailing digital package DF1 which so
far reportedly attracted just a few thousand subscribers.

  Deutsche Telekom, driving force behind the MMBG and major shareholder at
the same time (27 percent,) was left with publishing giant Bertelsmann AG,
its former ally Canal+, commercially uninteresting public broadcasters, and
some smaller firms. This alliance surprisingly survived the defection of
Rupert Murdoch, who decided to jump on Kirch's train, and the merger of
Canal+ and Nethold, a pay TV company that is heavily co-operating with
Kirch. But it will unlikely survive this latest blow.

  Telekom's decision to leave the MMBG will probably have more impact on the
German TV market than any of all those mysterious moves, mergers or
misalliances before. The company which is slated to go public this November,
operates the largest TV cable network in Germany (5.5 million subscribers)
-- and suffers heavy losses from it. Having left the MMBG, Telekom will gain
the freedom to set up a conditional access system of their own -- of course,
with a proprietary decoder.

  In this way, the company will make more money out of any service that
wants to be
distributed over its cable network. A spokeswoman for publishers Bertelsmann
admitted that the company was reviewing its investment in MMBG as the basic
conditions had changed. Talks on MMBG's future were held with the remaining

  By: Peter Klanowski
  Source: SatND

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