BPN 1130 Dutch cable operator eyes IPO

The Dutch cable operator Ziggo is contemplating a stock quotation, so its financial director said. The recently formed cable company leaked the news just as it was buried under a flood of complaints. To make matters worse, the company experienced technical hiccups of its network over the weekend.

Ziggo is the largest cable operator in The Netherlands with 3,2 million connections, serving 7,8 million people. The company is a three-way merger of the cable operators Casema, @Home en Multikabel. The companies were bought by two British equity companies Warburg Pincus and Cinven. Usually these companies hold the shares of companies for three to seven years. An IPO in the short run is not expected due to the bad stock exchange climate.

An IPO opens the door for foreign companies to come. Before the merger into Ziggo the private equity houses hoped to sell the cable companies to UPC, which was the largest cable company at that time with 2,1 million connections. Together UPC and the merger would have delivered a countrywide network and would have established competition for the incumbent telecom company KPN. However UPC’s holding company Liberty Global declined the invitation.

The remarks about an IPO were made in a week that the Dutch consumer association started a complaints’ desk as Ziggo was unable to handle all the traffic. In less than a week the consumer association registered 10.000 complaints, ranging from administrative actions to helpdesk problems with telephone, internet and television. The management of Ziggo was completely taken by surprise. Customers grew angry because of the long waiting times and the tariff for the helpdesk. Ziggo will meet the consumer association this week to solve to exchange the results of the complaints’ desk.

By the end of the week the disasters were still not over. Affecting more than 300.000 subscribers in the Utrecht province, the telephone network showed a defect, affecting the telephone and internet services. By Sunday night the breakdowns had been solved.

Despite the swell of complaints and the technical breakdown the company went on to advertise its services on radio, enticing new subscribers. A company spokes person indicated that they had followed the PR rule book for mergers. However they should have known that two is a party and three is a crowd.

Blog Posting Number: 1130

Tags: cable, IPO

Cross-channel rights to Dutch soccer premier division

The Dutch soccer world is in a stage of excitement, as the tender to the broadcast rights of the premier division has been closed. For the Dutch soccer team the rights mean revenues, while for the viewer/user it means access to the summaries and games.

The soccer games have become a cross-channel rights circus. Besides the rights to the premier league games of men, the rights are also sold to the games of women. The cross-channel rights concern television and radio over cable, IPTV and mobile. A complicating factor is the formats: previews, live games, summaries and archived games.

The participants in this tender have not been announced, but there were six major candidates for the all over rights. The Dutch public broadcast NOS lost two years ago the summaries to the new broadcast station Talpa/Ten. Versatel, now Tele2 had the rights to the full games and shared the rights amongst others with the telecom incumbent KPN. But after two years the scene has changed dramatically. Talpa/Ten has terminated broadcasting and the rights went to RTL.nl. Versatel hoped to pick up 100.000 IPTV/ADSL clients with the premier league soccer, but this did not work out at all.

Now the potential bidders limited themselves to six candidates: NOS, Tele2, KPN, RTL and SBS. RTL and SBS have not tendered, but a novice surprised everyone: Zesko, a combination of cable operators (Casema, @Home and Multikabel). This conglomerate does not cover the entire country with its cable infrastructure, but to fill some gaps they went into a deal with Canal Digitaal, a satellite distributor of movies, sports and digital channels. It is taken for granted that no foreign media party has turned in a bid for the rights.

The rights have been eagerly fought over the years. When the public broadcast company lost the rights to Talpa, Talpa paid 35 million euro for it. Yet the broadcast station lost at least a half million viewers due to the change in format and the commercials during the broadcasts. This round of bids might top the 100 million euro, which novice Zesko is said to be prepared to pay. Just twenty years ago the rights were worth 1,4 million euro.

The Premier League combination, which is selling the rights, will take its time for a decision. They have had two bad experiences in the past years. The telecom company Versatel/Tele2 wanted to use soccer to draw in new clients and when this did not work it started to sell out its rights to the digital channel of KPN. And the Talpa/Ten transfer of the rights to RTL has not brought the premier league more exposure; in fact due to the change of stations people have lost track of the premier league. So the question for the premier league combination is now, whether they will accept the high bid of the cable operators’ consortium or whether they will cut the package up and offer it to separate companies, who in turn can make their own distribution combines.

From the content point of view this bidding is interesting. We are talking about highly appreciated sports content. There was a day that on Sunday night at 7 o’clock no less than 4 million sat ready on the couch for the summaries; now only 3 million find the proper broadcast station. So why should the price go up, when the number of viewers is going down. On the other hand live games will be able to be viewed with a set-top box or by IPTV subscription. So there is certainty about part of the revenues.

So far soccer content has been a cross-channel commodity for the Premier League combination and the bidders. No cross-media potential has been seen yet in soccer content. The stress of soccer content has been on distribution; only the larger clubs have been able to form a community and have their virtual club house.

Blog Posting Number: 981

Tags: sports, sports content, IPTV