German pay net to square off with Kirch's DF1

BERLIN Hamburg-based pay TV channel Premiere announced plans on Wednesday to go digital next month in direct competition with Bavarian media mogul Leo Kirch’s digital pay TV web DF1.

PremiereDigital will begin as a pilot project in selected regions of Germany. Starting Feb. 15, 30,000 Mediabox digital decoders will be distributed to Premiere subscribers, who will lease the decoders for an introductory price of just over $ 6 (9.9 marks) a month until the end of August, when the rental price will go up to $ 13 (19.9 marks). Premiere’s monthly subscription rate of $ 27 will remain the same for digital customers.

In addition to receiving Premiere’s usual programming, which includes sporting events and premium movies, households equipped with PremiereDigital will also have access to four pay-per-view channels and a time-delayed version of Premiere called Premiere Zwei.

Customer trust

Premiere reported that more than 55,000 of its subscribers responded to the web’s call for participants in the pilot project. “Our customers clearly trust Premiere to develop digital programming that will interest them,” Premiere managing director Bernd Kundrun said.

Premiere, which limped along for five years before hitting the 1 million customer mark, finally started to take off last year. The web reported in December that it had grown by 30% in 1996, finally breaking even. With a healthy base of 1.4 million subscribers, Premiere’s shareholders view it as an ideal launching pad for digital television in Germany.

It remains to be seen, however, if Premiere will succeed in launching a digital form of the web without joining the DF1 platform.

Media giant Bertelsmann, which holds a 37.5% share in the channel, wants Premiere to remain independent of Kirch’s DF1, and is thus pushing the use of French broadcaster Canal Plus’ Mediabox decoder instead of Kirch’s D-Box for Premiere’s test runs.

Meanwhile, Kirch, who owns 25% of Premiere and is its principal programming supplier, believes that the addition of Premiere to DF1’s platform would boost his digital web, which has scraped together a mere 30,000 subscribers since its launch in July.

Wild card

The wild card in the Premiere power struggle is Canal Plus, which has a 37.5% stake in Premiere. As a Premiere shareholder, Canal Plus long seemed to be aligned with Bertelsmann against Kirch.

Since its takeover of Dutch pay TV group Nethold last fall, however, Canal Plus owns the technologies of both the D-Box and the Mediabox decoders. In November, the French partner indicated it was moving toward rapprochement with Kirch by placing its package of Multithematiques digital channels on the DF1 platform, while rumors circulated in December that Canal Plus was planning to offer its share in Premiere to Kirch in exchange for Kirch’s stake in Italian pay TV web Telepiu.

Industry sources have told Daily Variety that Premiere’s shareholders will meet to discuss the PremiereDigital project before its start in February, and the substitution of the D-Box for the Mediabox should not be ruled out.

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