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Industry Roundup

News Corp. and DirecTV: The satellite broadcast merger appears to be a done deal now that both the Federal Communications Commission and the US Department of Justice have given their approval. News Corporation will buy a 34% stake in Hughes Electronics, giving it control over satellite broadcasting service DirecTV.

Terms of the $6.6 billion deal as approved by the FCC include having DirecTV deliver local TV stations in the top 130 markets by the end of 2004. That's 30 more than were anticipated by the deal's architects. Also, News Corp. must offer its programming (Fox, etc) to competing cable and satellite providers on "a nonexclusive and nondiscriminatory basis," and agree to arbitration of any disputes. The Justice Department requires that News Corp. appoint only US citizens to the Hughes Electronics Corp./DirecTV audit committee. News Corporation chief Rupert Murdoch is Australian. FCC Chairman Michael Powell described the merger as offering "a particularly compelling public interest benefit in light of continued cable rate hikes."

NEC's single-head HD DVD: On December 18, NEC Corporation announced that it has developed prototypes for a high-definition DVD disc system that is backward-compatible with standard DVDs. The HD DVD system uses both red and blue laser diodes (red for standard, blue for high-def) but only one optical head with a 0.6 numerical aperture for the object lens. Company officials stressed that the single optical head structure should enable "production of smaller and thinner HD DVDs at lower cost." NEC has demonstrated full- and half-height drives achieving a data density of 15 gigabytes (GB) for a single-layer ROM disk, 30GB for a double-layer ROM disc and 20GB for rewritable disks. Standard DVD are limited to less than 5GB of data. Last month, NEC and development partner Toshiba won approval from the DVD Forum for a blue-laser DVD-ROM. NEC plans to unveil its new technology at the upcoming Consumer Electronics Show (CES), with volume production of HD DVD drives scheduled for 2005.

RePlayTV's new pricing policy: On December 22, Santa Clara, CA–based ReplayTV announced a new flexible pricing model for its 5500 Series Digital Video Recorders (DVR). From that date forward, consumers who purchase one of four ReplayTV 5500 Series models will have the choice of either purchasing the ReplayTV service for a $12.95 monthly fee, or choosing lifetime service bundled with the product for a onetime payment of $299. ReplayTV 5500 Series customers who have already purchased three-year subscriptions to the ReplayTV Service under the previous pricing model will have their services automatically extended for the lifetime of the product at no additional charge, according to the announcement.

ReplayTV's 5500 Series DVRs include the $799.99 RTV5532, with a 320 capacity hard drive; the $449.99 RTV5516, with 160-hour capacity; the $299.99 RTV5508, with 80-hour capacity, and the $149.99 RTV5504, with 40-hour capacity.

Temporary peace: Time Warner and Cablevision are negotiating under a white flag. The two New York cable providers have been engaged in a turf war characterized by an advertising blitz telling consumers which programming would and would not be available once carriage contracts expire December 31. According to late December news reports, Time Warner's New York system will continue to carry Cablevision-owned Fox Sports New York, MSG Network and MetroChannels.

Theater owners rebel: The National Association of Theater Owners (NATO) and its international counterpart, the Union International de Cinemas (UIC), have issued a "strongly worded" protest against Digital Cinema Initiatives (DCI) and against a technical subcommittee of the Society of Motion Picture and Television Engineers (SMPTE) over security issues that could "disrupt the relationship between theatrical exhibitors and distributors."

A December 22 report by The Hollywood Reporter notes that theater owners are upset that the DCI could give copyright holders and distributors unprecedented control over when and how theaters could show films. Under proposed standards, a distributor unhappy with timing or placement of a film in a digital cinema could withhold a feed, leaving that theater with a dark screen. "The two theater organizations, who have cooperated with DCI and SMPTE by offering input on the specifications, have threatened to withdraw support from the standard-creating efforts 'unless and until several actions take place,' " says The Reporter.

DCI is a coalition of seven studios working toward a digital future free of the need to deliver physical copies of films to theaters. All parties in discussion are concerned about security to prevent unauthorized copying of feature films, according to the report.

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