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Murdoch winning pay-TV battle

April 3, 2002 Posted: 4:56 AM EST

Murdoch  
Murdoch's BSkyB is the winner so far in the battle for dominance in pay TV

LONDON, England (CNN) - With two ditigal pay-TV platforms crumbling in Germany and the UK, there is a growing sense that only a handful of players can make money in digital pay television.

And the obvious winner so far is Rupert Murdoch -- his Sky television network in Britain is hailed as the most succesful model to date.

His power is as feared as his media empire is successful, and he is never to be underestimated.

So there is no question that Murdoch's fingerprints will be all over the future of Leo Kirch's empire in Germany and also ITV Digital in Britain.

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This week, talks will continue between Kirch's creditors and Murdoch.

Murdoch's BSkyB network in Britain owns a quarter of Kirch's Premiere pay-TV service, but Murdoch has vowed to not put in one more cent.

Germans are not watching pay-TV and Premiere is bleeding red ink.

"It's certainly going to be very difficult to make any success of it, given that the most experienced German companies have failed to crack this market," says analyst Hening Dransfeld.

"Even Bertelsmann, one of the most successful media houses worldwide, has not touched the pay-TV market in Germany."

But Murdoch wants his money back from Kirch. So the cash-strapped Kirch empire will have to give up something more valuable than Premiere.

Kirch also owns the content rights to most movies and sports aired in Germany -- something Murdoch definitely wants to add to the content of his Fox studios in Los Angeles.

That is where Murdoch is expected to meet Kirch's creditors this week.

"I don't think Murdoch would be doing this if he wasn't talking to the other studio owners, and they all need to find a way of keeping the German market going. It's just too big a market," says media consultant Jonathan Davis.

Murdoch's competitors and European governments might normally cry fowl at the prospects, but Davis says it may be time to stop fighting Murdoch's charge.

Leo Kirch may give up control of debt-laden KirchGruppe  
Leo Kirch may give up control of debt-laden KirchGruppe

"Let's sort it out with Murdoch and let's agree what the rules are, let's make sure rights holders are not prejudiced, let's make sure consumers are getting a good deal."

But trying to keep Murdoch's rivals afloat seems expensive and, in the end, doomed.

Among those rivals is ITV Digital in Britain. One of the world's first digital TV services with no satellite or cable needed, its success in the battle with BSkyB for subscribers was hinged on second-tier football rights in the UK.

Now court-appointed administrators are trying to keep the channel alive, or subscribers may have no choice but to sign up to BskyB.

But Murdoch's News Corp. empire is not without its own challenges.

It's expected to announce next month a huge loss for the previous year, and British regulators will soon decide if BSkyB has abused its market dominance over film and sports rights.





 
 
 
 



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