Ads To Drive Internet

Television Digest with Consumer Electronics, March 13, 2000

PanAmSat said Galaxy XR satellite is delivering cable and telecom service to N. America from 123 degrees W. following 4 weeks of in-orbit testing. Satellite eventually will migrate to 127 degrees W. Galaxy XR has 24 C-band and 24 Ku-band transponders.

TV ad revenues grew 8.6% in 4th quarter 1999, TvB said, including 6.8% growth in local spots, with 0.3% decline in national spot. TvB said syndicated TV ad revenue grew 12.1%, network TV 14.7%.

After 2 years in limbo, Child's Online Protection Act (COPA) Commission met March 7 at Commerce Dept. to develop proposals for govt. funding and to issue report on solutions to protect children from adult-oriented Internet sites by Nov. 30 deadline. Commission, appointed by Congress and made up of 16 representatives from Internet companies, advocacy groups and others, also elected Network Solutions Consultant Donald Telage chmn. There currently is no funding for Commission staffing or activities, which many members said should come from Congress. "We need to take a look at cost" and structure, global commerce issues, law enforcement in addition to filtering technology, said Arthur DeRosier, pres.-Rocky Mountain College. Commission formed subcommittee headed by Robert Flores of National Law Center for Children & Families, to draft letter to Congress outlining Commission's financial needs. Commission members include 3 govt. officials who don't have vote: NTIA Dir. Gregory Rohde, Justice Dept. Chief of Staff Michael Horowitz, FTC Div. of Ad Practices Assoc. Dir. Lee Peeler. Commission plans 4 meetings before issuing final report, with next meeting being April 14 at yet to be determined location.

AOL's merger with Time Warner (TW) could be justified by "tactical synergies" alone, meaning marketing and distribution savings, but that's not why deal got done, AOL Pres. Robert Pittman told PaineWebber conference in N.Y. last week. He said companies will be able to create new businesses that neither could begin alone, with online music distribution and AOLTV first examples. Combined companies' financial, intellectual property and technological resources are enough "to create whatever our imaginations can devise," Pittman said. Past attempts at interactive TV have been hampered by necessity of partnering companies with differing agendas, he said, but AOL/TW will have all elements under its own control. Companies aren't "waiting for the merger to close" to meld businesses, he said: "We're working on it everyday." Pittman projected combined company will see revenue growth of 12-15% annually, with cash flow growing even faster as TW's investment in cable infrastructure starts to pay off. On cable open access, he said TW's cable executives are "looking forward to choice," which they expect to increase cable modem subscribers. AOL isn't afraid to compete, Pittman said: "We love choice. We do very well." He said AOL hasn't offered wide scale DSL service yet because it doesn't want to let down customers by promoting service not available to them. Company is working on program with Bell companies that will individually pitch DSL to those subscribers with upgraded homes, Pittman said. AOL hopes to turn Internet into equivalent of electricity, element necessary for every other segment of economy, he said, with company targeting every major appliance in home, including computer, TV, stereo and phone. As ISP adds new services, it's becoming harder for subscribers to leave, reducing churn rate, Pittman said. Customers with calendars, pictures and stock portfolios online find "if you want to give up AOL, you have to give up a whole lot of stuff," he said. PaineWebber released bullish report on merged companies at conference, valuing AOL (which has traded around $60 per share) at $92. One analyst told us AOL is "nobrainer" buy right now, since if merger goes through its benefits will be apparent, while if deal fails stock will shoot back to its preannouncement price.