Kirch takes a punch in battle of the boxes

The Kirch Group appears to have suffered a setback in the digital decoder war currently taking place in Germany.

Kirch has been squaring up against French pay TV giant Canal Plus and the German Bertelsmann group in an attempt to impose a digital decoder standard in Germany.

Last week, Deutsche Telekom indicated it favored the Canal Plus and Bertelsmann-developed Mediabox decoder over a rival Kirch box. Observers now say that Kirch’s efforts to corner the German digital market have been stopped.

“History shows us, particularly in the U.K. and France, that control of decoders gives incredible power in a market and whoever gets his decoder out first tends to capture that market,” noted one senior exec involved in the decoder scuffle. BSkyB is decoder king in the U.K., while Canal Plus dominates the field in France.

Digital broadcasting is expected to hit Germany and other parts of Europe next year, providing services such as basic video-on-demand, pay-per-view and teleshopping along with a slate of thematic channels.

Deutsche Telekom is the majority partner in the MMBG consortium, which will market digital decoders and manage access to the system in Germany. The other MMBG partners are Bertelsmann, Canal Plus, RTL, the CLT and German pubcasters ARD and ZDF. MMBG has opted for an open-access policy, allowing any channel operator access to its decoder.

Although Telekom engineers examined both the Kirch digital decoder and Mediabox over the summer and came down in favor of the latter, Kirch boss Leo Kirch has been fighting a spirited action ever since.

In articles in Germany and France, Kirch execs played the nationalist card, insisting that Germany required a German decoder, not a French one.

This line of attack infuriated Canal Plus, which pointed out that Mediabox has been developed jointly by Bertelsmann, which is German.

A Bertelsmann spokesman admitted to Variety that the group had been slow to counter Kirch claims that Mediabox is French.

On Nov. 22, Canal Plus Chairman Pierre Lescure and Bertelsmann top brass counterattacked with a media binge in Cologne to stress that not only did Mediabox work, but also that it is Franco-German technology.

German Chancellor Helmut Kohl, a friend of Kirch, also has put discreet pressure on Deutsche Telekom to reconsider its decision to favor Mediabox. Canal Plus execs privately admit that while they might have expected such political games in France they have been taken by surprise to find such goings-on in Germany.

Given the political pressure it has come under, Deutsche Telekom management was last week continuing a delicate balancing act, indicating that it preferred Mediabox to Kirch’s decoder while at the same time hoping to bring Kirch into MMBG.

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