LIBERTY MAKES MOVE TO GROW PPV

Tele-Communications Inc.’s programming arm, Liberty Media, is forming Liberty Prods. Inc., a pay-per-view programming division with a mandate to redefine the pay-per-view event programming category beyond boxing, wrestling and music.

Liberty Prods. Inc. wants to premiere movies and TV shows in hopes of creating a new window on the distribution food chain as well as bringing new users to the industry. TCI president and CEO John Malone has often expressed a desire to premiere a theatrical release on pay-per-view.

The formation of Liberty Prods, is seen as a precursor to the long-anticipated merger of the cable industry’s two leading pay-per-view companies – Viewer’s Choice and Reiss Media’s Request TV. Request is majority-owned by TCI and 20th Century Fox, while cable operators Time Warner, Viacom, Cox Cable, Continental Cablevision and Comcast Corp. hold stakes in Viewer’s Choice. TCI also recently acquired a stake in Viewer’s Choice when it acquired cable operator Tele-Cable, and that is motivating the desire to merge the two PPV services.

Bruce Karpas, most recently president and chief operating officer of Reiss Media, will join Liberty Prods, as president and CEO, which may indicate that merger talks are almost complete. According to industry sources, TCI would like to announce the merger before April 4, which is when the Cable Television Administration & Marketing Society holds its annual pay-per-view conference in New Orleans.

A merger of the industry’s two leading pay-per-view services no doubt will be under scrutiny from the Justice Dept., which spent months investigating the Comcast-TCI acquisition of QVC because TCI also has a controlling stake in the Home Shopping Network. The studios also may be concerned about having to do PPV business with one shop.

According to industry sources, the merger plans would result in the pay-per-view companies being rolled into TCI’s direct broadcast satellite company, Primestar.

The goal of both Request and Viewer’s Choice is to program 40 PPV movie channels for distribution both to digital cable boxes and to satellite dish owners through Primestar, one source said. And it would be too expensive for just one of the those companies to put up 40 PPV channels. That, the source said, is the main reason for the planned merger.

Primestar currently has only 10 channels of satellite-delivered PPV movies, five each from Request and Viewer’s Choice. A merger of the two is expected to save money on marketing, programming and affiliate relations.

Since Viewer’s Choice and Request have struggled, the argument to Justice likely will be that the merger is necessary to keep the business afloat and consumers better served.

While execs involved in the talks expect the deal to pass regulatory scrutiny, any investigation will likely add months to the deals closing and potentially slow the whole pay-per-view industry.

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