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Euro TV’s digital duo

French pay TV giant Canal Plus strengthened its alliance with Germany’s powerful Bertelsmann group by announcing plans to develop joint pay TV technology in Europe.

Bertelsmann chairman and CEO Mark Wossner and his Canal Plus counterpart Pierre Lescure signed a letter of intent Wednesday, the first step in developing delivery outlets, such as pay-per-view and video-on-demand, related to digital technology.

The duo will set up a joint company to coordinate operations, but a Canal Plus spokesman said, “It’s really too early to say what kind of investment each side will put up or who will run the company.”

Bertelsmann and Canal Plus are already teamed up in German pay TV channel Premiere, which has 780,000 subscribers. Each has a 37.5% stake in the weblet.

With the Bertelsmann accord, Canal Plus has finally found the major partner it has been looking for to face the challenges arising from digital technology. A previous deal to form a similar alliance with Rupert Murdoch’s News Corp. fell apart last year amid mutual recriminations over access and control of decoder technology.

In a separate development across the English Channel, British Telecom has lined up some of the U.K.’s leading media companies to supply programs for the upcoming trials of its video-on-demand service.

The BBC, Carlton Communications, EMI Records, Granada TV, London Weekend TV and Thames TV have agreed to provide material in return for access to British Telecom’s trial results. But the telco has yet to reach any deal for the supply of Hollywood movies.

The initial tests will concentrate on films, but British Telecom expects eventually to test with TV programs, information services, home shopping and videogames.

The tests, which involve sending programs over conventional phone wires, start this month.

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