Sirius Satellite Radio shares were down more than 5% in late-afternoon trading Thurs. even though company met its Feb. 14 target of launching commercially in introductory markets of Denver, Houston, Jackson, Miss., and Phoenix.
Viacom reported 4th-quarter loss of $42.5 million, saying results reflected one-time hit of $159 million because of overhaul in Blockbuster products and restructuring at MTV networks and UPN. Loss compares with earnings of $30.4 million same time last year. For all of 2001, Viacom lost $224 million. Company said combined revenue from all of its cable networks -- MTV, VH1, Nickelodeon, TV Land, TNN, BET, CMT, Showtime and National Network -- was down $4 million because of soft ad market. Viacom said revenue from CBS and UPN was up slightly, led by CBS, which saw double-digit growth in prime time from increased pricing and ratings. Infinity Radio stations also suffered in ad slump, with lower revenue in quarter. Firm had one-time pre-tax gain of $288 million from gains on station swaps and recovery of ad commitments. Without gain, loss would have been $140 million. Overall TV revenue grew 2% to $2 billion, but cable revenue was down 3% to $1.15 billion. TV operating profit declined 22% to $230 million, but cable operating profit was up 3% to $463.7 million.
Disney Interactive (DI) begins shipping its first self- published title for Game Boy Advance (GBA) -- Peter Pan Return to Never Land -- this week at $39.99. Game also is first GBA title to incorporate Disney feature film movie scenes. During gameplay, kids can unlock and watch up to 4 clips from upcoming theatrical film Return to Never Land. Also being released by DI this week in conjunction with film is Disney’s You Can Fly With Tinker Bell on CD-ROM at $19.99. Title is Windows 95/98/Me/XP and Mac compatible.
Congressional speakers told NARUC major changes in federal law aren’t necessary for rural broadband development, even as NARUC and leading state regulators began new drive to discredit pending Tauzin-Dingell broadband deregulation bill coming up for crucial vote soon. Rep. Wilson (R-N.M.) said bringing broadband to rural areas wouldn’t require wholesale changes in Telecom Act and goal could be accomplished with modest changes in universal service support system, coupled with relief from prohibitively costly and burdensome right- of-way access requirements.
NARUC’s Telecom Committee adopted watered-down version of controversial policy resolution addressing broadband telecom implications of direct broadcast satellite merger pending at FCC and passed resolution urging FCC to establish performance monitoring program for interstate special access services. NARUC telecom panel late Tues. also passed rewritten version of another contentious resolution addressing local right-of-way management as potential barrier to broadband service development.
Most important universal service issues pending before FCC, according to FCC Comr. Abernathy: (1) Action on remand by 10th U.S. Appeals Court, Denver, in Qwest v. FCC. Appeals court ordered FCC to reexamine how it calculated high-cost universal service support for nonrural telcos. Abernathy said she would like to have had action already, “we need to get back to the court.” (2) Action on “contribution methodology,” issue teed up for agenda meeting Thurs. She said FCC had to look at how it collected universal service contributions in light of declining revenue and new technology. (3) Effect on universal service funding of “migration of technology to new digital platforms.” Depending on how those new technologies are defined, move to digital technology could eliminate providers’ obligations to contribute to universal service, she said. That could jeopardize current funding structures and place “tremendous burden on isolated users,” she said. Abernathy spoke at FCBA brown-bag lunch on universal service. She also said she would like to see data developed to compare telephone penetration rates vs. universal service funding vs. use of Lifeline and Linkup programs. She said it would be interesting to see whether data showed relationships to guide FCC and states in upcoming proceedings. Asked about universal service funding restrictions for rural LECs that buy exchanges from Bells, Abernathy said that’s tough policy decision. Some rural customers are “probably better off” with smaller telcos but “you don’t want to create a land grab” mentality, she said. Nanette Thompson, Alaska Regulatory Commission chmn., who also was featured at lunch, said that when GTE sold off exchanges in Alaska, smaller company bought them knowing it might not get much universal service funding but “they were willing to make the investment anyway.” She said that was “some of the worst plant in the state” and regulators were “happy to see a small company, closer to the community, take over.” On issue of universal service portability, Abernathy said it was difficult to determine whether competitors should get support based on incumbents’ costs or their own costs. She said it struck her as odd for competitors to get support based on incumbents’ costs. It doesn’t appear to be good long-term business plan for competitor, she said: “I don’t like to create uneconomic incentives like that.” Thompson said she agreed, but said it was difficult to determine CLEC costs because PUCs traditionally hadn’t sought as much information on them: “The prospect of having to learn the costs of CLECs troubles me.” Some have advanced idea of giving CLECs support based on either ILEC costs or unbundled network element (UNE) rates, whichever is lower, she said. Thompson said that would be “a good incentive for ILECs to set UNE rates right.”
In light of Enron scandal, cable analyst Tom Wolzien of Sanford C. Bernstein & Co. took closer look at media companies’ accounting practices and found that some used “off balance sheet” financing, meaning that some liabilities went unreported to Wall St. Report from Wolzien’s team examined AOL Time Warner (AOL TW), Comcast, Cox, Disney, Liberty Media and Viacom, specifically studying health and transparency of their corporate balance sheets. Study was undertaken to reassure investors, but analysts cautioned that they couldn’t be sure companies had disclosed all of their liabilities. Study comes as several media company CEOs have said publicly that for time being they would issue less guidance to analysts. Nevertheless, Wolzien’s team said nothing they learned changed their views about any of 6 companies, and all were rated either “market perform” or “outperform.”
State commission telecom staffs gathered for NARUC winter committee meetings in Washington refused Sun. to support broadband-related policy resolutions on access to local rights of-way-and on pending EchoStar takeover of Hughes in satellite deal. But in unusual move for NARUC, some state commissioners pushing for those resolutions said they would ask Telecom Committee today (Feb. 12) to adopt resolutions despite staffs’ disapproval.
Assn. of Public-Safety Communications Officials International (APCO) urged public safety agencies to respond to FCC spectrum audit for land mobile radio licenses below 512 MHz. Audit covers construction and operational status of those licensees to update Wireless Bureau licensing database. Without responding, agencies could “suffer some serious consequences,” said Ron Haraseth, dir.-APCO automated frequency coordination. FCC has been auditing spectrum below 512 MHz to assess who is using licenses and where spectrum is lying fallow and should be returned to Commission. In first wave of letters to licensees, FCC sent out 266,000 requests for information, with responses requested by mid-March. “Failure to respond within the specified time frame may eventually subject you to administrative action such as a forfeiture or license cancellation,” said Haraseth, who said FCC was expected to be flexible with compliance dates. One concern cited by APCO is that many public safety agencies haven’t maintained current contact information on police, fire, ambulance or other radio authorization license with FCC. Each licensee is responsible for maintaining such information and can lose license if they fail to respond, APCO said. Licensees can verify whether their stations are included in audit by checking Wireless Bureau database at www.fcc.gov/wtb/plmrs/audit.html. APCO said 128,034 licensees had responded and 139,833 hadn’t yet.
Rentrak signed DVD revenue-sharing agreement with MGM Entertainment that added revenue to 3rd quarter earnings, but wasn’t enough to offset decline in overall sales to $26.4 million from $32.8 million. Despite downturn in sales, Rentrak net income increased to $2.2 million from $229,510 as it benefited from final $1.5 million payment from Rentrak Japan. Rentrak’s DVD revenue-sharing agreement with MGM generated revenue in Nov.- Dec. and company is attempting to land similar agreements with other studios. Rentrak has revenue-sharing pacts for VHS with all studios except Columbia TriStar. Total entertainment business revenue slipped to $20.7 million from $26.4 million as company shipped 757,189 VHS cassettes and 120,082 DVDs. Rentrak’s 3PF fulfillment operation, whose customers include Red Envelope.com, reported $503,505 profit in quarter, reversing year earlier $329,210 loss despite decline in revenue to $6.4 million from $7.5 million. Revenue downturn was tied to bankruptcy of customer CyberRebate.com, which accounted for $2.4 million in revenue in year-ago quarter. Meanwhile, testimony in complaint 3PF filed against Hollywood Entertainment with American Arbitration Assn. (AAA) was completed this week with decision expected by spring, company said. 3PF had filed complaint with AAA in Nov. 2000 alleging breach of contract and seeking $4.7 million in connection with Hollywood Entertainment’s former Reel.com business. Latter was shut down in mid-2000. Rentrak also is seeking to sublease and/or sell lease to 3PF’s 388,264- sq.-ft. warehouse in Columbus, O., while maintaining 2 others in Wilmington, O., CEO Paul Rosenbaum said. Meanwhile, Rentrak is moving to open new revenue stream with plan to license software. Among software is Essentials, a real-time online inventory tracking system, and Fastrak, technology that company uses to “capture” rental transaction data at video stores and transmit it to studios as part of its pay-per-transaction (PPT) business. Rentrak forecast it would gain software licensing revenue in fiscal 2003, but declined to provide details. Goal is to expand Rentrak software into other retail channels, Rosenbaum said.