Lawsuit could change the way cable companies do business
But a court ruling earlier this month may be a first step toward ending this practice. On Aug. 5, a regional court in Katowice imposed a temporary injunction preventing ¦l±ska Telewizja Kablowa (¦TK) from transmitting the Eurosport channel.
Eurosport's satellite broadcaster, Societe Europeenne Teletransmission Sportive (SETS), is suing ¦TK. The Paris-based broadcaster is seeking zł. 403,000 in damages for ¦TK's alleged inclusion of Eurosport's free transmission on a pay system.
SETS would not say why it picked ¦TK to sue from a number of cable operators that engage in the same practice. Nor would it detail how it arrived at the damages total, other than to say that the figure was based on a formula of number of subscribers and the amount of time the Eurosport signal was broadcast.
Piotr Kochański, SETS' attorney, said ¦TK had refused to pay the amount of damages it is seeking.
But ¦TK wasn't clear on why it was being sued, saying it was not aware of the suit until a week after the court handed down the injunction. However, the cable company is sure that if SETS wins its lawsuit, it will mean wide-scale changes for the cable industry.
"It may concern the entire community of cable operators as most programs available through the cable network in Poland are retransmitted in this way," said Sławomir Dziewulski, ¦TK's president. "In fact, if Eurosport wins this case, it will affect some 350 cable operators throughout Poland."
That's exactly what SETS wants.
"The claim might change the existing routine of not paying for re-transmission of channels which are normally available, free of charge, on satellite," Kochański said. "It's a warning for other operators since re-transmission of programs in their original version, free of charge, has become a custom in Poland."
SETS wants cable operators to include its Polish version of Eurosport and pay for it on a per-subscriber basis. Half the households in the country with access to cable receive the Polish Eurosport this way, said Grażyna Nagawiecka-Połeć, who is responsible for Eurosport's public relations and distribution in Poland.
"The rest, 1.5 million subscribers, use services of cable operators who don't pay for the program broadcast in the English version," she added.
¦TK countered, though, that the Polish Eurosport is simply too expensive at a price of $0.25 per subscriber in a cable operator's system. In addition, this price is not negotiable, Dziewulski said. "¦TK has never evaded payments to producers and broadcasters," he added. "But such payments should result from decent negotiations. Besides, they are demanding payment for the free-to-air program which is broadcast free of charge in English and as such re-transmitted by us."
¦TK has approximately 42,000 subscribers who pay a monthly fee of zł. 28. If the company started paying for channels that it now takes for free, the operator would have to increase subscriber rates, Dziewulski said.
¦TK is as network of local cable stations in Silesia and is run by an operating company in which Netherlands-based KPM International is a strategic investor with 49% of the company's equity. Dziewulski said that should the court rule in Eurosport's favor, ¦TK will appeal. "If we lose that case, we might have to close down," he added.
Fall change
In addition to a switch at its helm this summer, ad agency J. Walter Thompson-Parintex is planning further changes this fall when it will split operations among four distinct business areas.
The refined operating units will include an advertising division, media planning entity MindShare, which is a joint venture with Ogilvy & Mather that began in July; promotional marketing company Parallel; and a public relations company, which has yet to be named.
"We're very close to launching that," said Steven Mangham, JWT's new general manager. He added that the public relations agency will include Elizabeth Belk, who had previously worked with Spin Communications.
The 38-year-old Mangham, who was previously general manager at Saatchi & Saatchi in Warsaw, came on board as general manager at JWT in July. Prior to switching to JWT, Mangham, who had been with Saatchi for 14 years, was to become Saatchi & Saatchi's regional director for the Middle East and Africa in Dubai, United Arab Emirates. However, he decided to remain in Poland. Mangham took over from Fred Winckler, who is moving to an as yet undisclosed position within the JWT network.
Besides changing JWT's operating structure, Mangham also plans to change the firm's management composition. He will not find another deputy general manager to replace Tim Hennessy, who in mid-September will be moving to JWT in Melbourne, Australia, to work as a client service director. Instead Mangham plans to raise the status of account directors and give them more responsibility to work with clients. Mangham said this was a case of "growing up."
However, Mangham said he isn't really introducing a huge change at the agency. Rather, "I want to build upon what he's (Winckler's) done," he said.
New investment
HBO Polska is trying to put muscle behind its claims that although it doesn't have a Polish broadcasting license, it invests into television and movie production here.
The subsidiary of U.S.-based HBO has said it will invest $10 million over the next five years in TV and movie production. This compares to $1.5 million poured in from 1996 to 1998 by the company.
The increased investment will be used to co-produce up to 10 feature films a year, said Phil Roter, managing director with HBO Polska.
HBO has come under fire, both rhetorical and legal, from rival Canal+ because it does not have a broadcasting license here, yet beams its signal in from Hungary on the basis of international broadcasting conventions. Canal+ has claimed that by skirting the license, HBO manages to avoid investment requirements set up by the National Radio and Television Council (KRRiTV).
HBO has defended its lack of a broadcast license and is fighting Canal+ on this issue in court. "We are considered as a foreign operator in Poland," Roter said. "But if you look around Europe there are a number of channels operating which have the same status." As examples he pointed to Belgian VT 4 and Danish Denmark 2.
Moving on
PepsiCo has taken its $5 million media account for Tricon Restaurants from Saatchi & Saatchi over to media planning house Media Direction.
The move took place at the end of July and completes a switch of all PepsiCo's activities from Saatchi & Saatchi to Media Direction, which is a division of BBDO. The total account is worth about $20 million.
In May, PepsiCo had moved its food and drinks division from Saatchi & Saatchi, with which it had worked for five years, to BBDO. Those accounts were worth about $15 million.
PepsiCo has said that the shift to using BBDO for both media planning and creative work is part of a global strategy.
Chris Rivituso, Justyna Wrobel, contributed to this story.
Eurosport's satellite broadcaster, Societe Europeenne Teletransmission Sportive (SETS), is suing ¦TK. The Paris-based broadcaster is seeking zł. 403,000 in damages for ¦TK's alleged inclusion of Eurosport's free transmission on a pay system.
SETS would not say why it picked ¦TK to sue from a number of cable operators that engage in the same practice. Nor would it detail how it arrived at the damages total, other than to say that the figure was based on a formula of number of subscribers and the amount of time the Eurosport signal was broadcast.
Piotr Kochański, SETS' attorney, said ¦TK had refused to pay the amount of damages it is seeking.
But ¦TK wasn't clear on why it was being sued, saying it was not aware of the suit until a week after the court handed down the injunction. However, the cable company is sure that if SETS wins its lawsuit, it will mean wide-scale changes for the cable industry.
"It may concern the entire community of cable operators as most programs available through the cable network in Poland are retransmitted in this way," said Sławomir Dziewulski, ¦TK's president. "In fact, if Eurosport wins this case, it will affect some 350 cable operators throughout Poland."
That's exactly what SETS wants.
"The claim might change the existing routine of not paying for re-transmission of channels which are normally available, free of charge, on satellite," Kochański said. "It's a warning for other operators since re-transmission of programs in their original version, free of charge, has become a custom in Poland."
SETS wants cable operators to include its Polish version of Eurosport and pay for it on a per-subscriber basis. Half the households in the country with access to cable receive the Polish Eurosport this way, said Grażyna Nagawiecka-Połeć, who is responsible for Eurosport's public relations and distribution in Poland.
"The rest, 1.5 million subscribers, use services of cable operators who don't pay for the program broadcast in the English version," she added.
¦TK countered, though, that the Polish Eurosport is simply too expensive at a price of $0.25 per subscriber in a cable operator's system. In addition, this price is not negotiable, Dziewulski said. "¦TK has never evaded payments to producers and broadcasters," he added. "But such payments should result from decent negotiations. Besides, they are demanding payment for the free-to-air program which is broadcast free of charge in English and as such re-transmitted by us."
¦TK has approximately 42,000 subscribers who pay a monthly fee of zł. 28. If the company started paying for channels that it now takes for free, the operator would have to increase subscriber rates, Dziewulski said.
¦TK is as network of local cable stations in Silesia and is run by an operating company in which Netherlands-based KPM International is a strategic investor with 49% of the company's equity. Dziewulski said that should the court rule in Eurosport's favor, ¦TK will appeal. "If we lose that case, we might have to close down," he added.
Fall change
In addition to a switch at its helm this summer, ad agency J. Walter Thompson-Parintex is planning further changes this fall when it will split operations among four distinct business areas.
The refined operating units will include an advertising division, media planning entity MindShare, which is a joint venture with Ogilvy & Mather that began in July; promotional marketing company Parallel; and a public relations company, which has yet to be named.
"We're very close to launching that," said Steven Mangham, JWT's new general manager. He added that the public relations agency will include Elizabeth Belk, who had previously worked with Spin Communications.
The 38-year-old Mangham, who was previously general manager at Saatchi & Saatchi in Warsaw, came on board as general manager at JWT in July. Prior to switching to JWT, Mangham, who had been with Saatchi for 14 years, was to become Saatchi & Saatchi's regional director for the Middle East and Africa in Dubai, United Arab Emirates. However, he decided to remain in Poland. Mangham took over from Fred Winckler, who is moving to an as yet undisclosed position within the JWT network.
Besides changing JWT's operating structure, Mangham also plans to change the firm's management composition. He will not find another deputy general manager to replace Tim Hennessy, who in mid-September will be moving to JWT in Melbourne, Australia, to work as a client service director. Instead Mangham plans to raise the status of account directors and give them more responsibility to work with clients. Mangham said this was a case of "growing up."
However, Mangham said he isn't really introducing a huge change at the agency. Rather, "I want to build upon what he's (Winckler's) done," he said.
New investment
HBO Polska is trying to put muscle behind its claims that although it doesn't have a Polish broadcasting license, it invests into television and movie production here.
The subsidiary of U.S.-based HBO has said it will invest $10 million over the next five years in TV and movie production. This compares to $1.5 million poured in from 1996 to 1998 by the company.
The increased investment will be used to co-produce up to 10 feature films a year, said Phil Roter, managing director with HBO Polska.
HBO has come under fire, both rhetorical and legal, from rival Canal+ because it does not have a broadcasting license here, yet beams its signal in from Hungary on the basis of international broadcasting conventions. Canal+ has claimed that by skirting the license, HBO manages to avoid investment requirements set up by the National Radio and Television Council (KRRiTV).
HBO has defended its lack of a broadcast license and is fighting Canal+ on this issue in court. "We are considered as a foreign operator in Poland," Roter said. "But if you look around Europe there are a number of channels operating which have the same status." As examples he pointed to Belgian VT 4 and Danish Denmark 2.
Moving on
PepsiCo has taken its $5 million media account for Tricon Restaurants from Saatchi & Saatchi over to media planning house Media Direction.
The move took place at the end of July and completes a switch of all PepsiCo's activities from Saatchi & Saatchi to Media Direction, which is a division of BBDO. The total account is worth about $20 million.
In May, PepsiCo had moved its food and drinks division from Saatchi & Saatchi, with which it had worked for five years, to BBDO. Those accounts were worth about $15 million.
PepsiCo has said that the shift to using BBDO for both media planning and creative work is part of a global strategy.
Chris Rivituso, Justyna Wrobel, contributed to this story.
