TVN24 secures deal with Aster City Cable

TVN24, Poland's first 24-hour news channel, has high hopes for a deal signed with Aster City Cable last week to expand its market reach. The agreement means that TVN24, launched last August, will be beamed into another 210,000 homes for a total of 1.3 million viewers, a move that is aimed at attracting more advertising revenue. "Including TVN24 into Aster City's offer is crucial for us because many advertisers that we have talked with so far have told us that broadcasting in Warsaw is extremely important," said Maciej Sojka, chief executive officer of TVN24. "It took us some time (to find a distribution channel in Warsaw) but finally both sides are aware of the mutual benefits. In addition, we're counting on a 20% increase in subscriber-fee revenue." The agreement with Aster City Cable is TVN24's second with the leading Polish cable operator. Last fall, after a 90-day free trial broadcast with Aster City, the channel failed to secure a deal with the cable network despite promising market research surveys, which showed that 74% of subscribers said they wanted TVN24 in Aster City's programming package. But TVN24 was unable to persuade most cable operators, which argued the channel's subscriber fees were too high. According to unofficial information, TVN 24 was asking $0.20 per household per month while cable operators were willing to pay no more than $0.10 per household per month. But last week's deal with Aster City doesn't necessarily mean that TVN24 drastically lowered its prices. Sojka, who refused to disclose details of the deal, said only that the price for the channel had to be consistent. "I would like to emphasize that we're trying to stick to the conditions we made public at the beginning," he said. "We need to be consistent in negotiations." Price continues to be the biggest bone of contention between the channel and cable companies. Cable operators said last week the deal with Aster City would not herald a real breakthrough in negotiations unless TVN24 was more flexible. "Many operators promised their subscribers that there would be no increases in subscriber fees and any pay channel included into their programs increases the costs of a network," said Janusz Rozpłochowski, a member of the National Chamber of Cable Communications (OIGKK). "TVN24's price offer has been always very stiff. Right now cable operators cannot afford to follow Aster City's example."

BRE Bank pressures Aster City Meanwhile, a source close to the TV market said many cable operators maintain that Aster City's management wouldn't have made the decision to include TVN24 into its programming package if not for pressure exerted by BRE Bank. BRE is the largest shareholder in Elektrim, which holds 51% in Elektrim Telekomunikacja, Aster City Cable's owner. BRE Bank also holds ITI Group's three-year bonds; ITI owns TVN24. ITI paid BRE Bank in cash and bonds for the 25% stake in Internet portal Onet.pl last year. "If Aster City's management had the good of the company in mind it never would have agreed to include TVN24 into its offer," the source said. "So there was no agreement between two partners, (rather) the management had its back up against the wall. TVN24 is offered at a price two times higher than most cable operators could accept, and there is also this five-year commitment that TVN24 requires that is unacceptable, especially under the current economic conditions in Poland." But Janusz Arciszewski, president of Aster City Cable, which for months rejected TVN24's offer, said last week there were concrete financial reasons to include the channel in the network's programming. "What changed our mind is the fact that recent renegotiations with our current programmers have allowed us to make some savings," he said. "These savings have allowed us to reconsider taking on TVN24. The decision was made easier once UPC (UPC Telewizja Kablowa) introduced Polsat Sport (currently broadcasting the World Cup) into its lineup. Given the choice of the two channels, we made the difficult decision of choosing TVN24 based solely on its past performance on our network and our belief that our viewers in Warsaw will appreciate this program more on a long-term basis." BRE has a very close banking relationship with Elektrim but the bank did not directly participate with Aster City in any negotiations or talks with TVN24, Arciszewski said. For his part, Sojka admitted he wasn't optimistic about negotiations with UPC TK, Poland's largest cable operator. "The negotiations are in progress but they keep saying no," he said. Meanwhile, TVN24 has been boosting its reach in other ways. Since June 3, its live broadcast is available online. "We're more than just a television channel, as we have information content that we can distribute in different ways," Sojka said.