Major Russian cable deal on horizon
Consolidation in Russia’s pay-TV market is gathering momentum, with the Moscow-based cable operator Akado about to be bought by the telco Svyazinvest. Kommersant reports that the acquisition will be undertaken in two stages, with the Svyazinvest subsidiary Center Telecom initially acquiring 50% of Akado and thereby securing operational control of the company. Svyazinvest has been looking to enter the Moscow pay-TV market for some time and Akado, formerly known as Renova Media, would be a good acquisition for the company. Data published by IKS –Consulting indicates that Akado had 670,000 broadband and 446,000 pay-TV subscribers, the vast majority of who (600,000 and 423,000 respectively) were in the capital itself, as of Q1 this year. Its analogue (‘social TV’) subscriber base meanwhile stood at 985,000. Akado accounts for 5% of the Russian broadband market and 7% of pay-TV subscribers in the country, while Svayzinvest claims a 36% share of the broadband market. Akado currently lists Viktor Vekselberg and Yuri Pripachkin as its main owners and is believed to be worth some $630-650 million (€498-514 million). However, it also has debts of $350 million.

UPC reflects on Romanian market
UPC saw its revenues in Romania grow earlier this year and remains optimistic about the future despite challenging market conditions. Quoting a report published by Liberty Global, ZF says that UPC Romania’s revenues in Q2 amounted to €30.8 million, or 1.32% more than a year earlier. Its half-year revenues meanwhile rose by 2.3% year-on-year to €62.3 million. The report speaks about subscriber losses, which it attributes to strong competition from RCS/RDS and Romtelecom. UPC Romania’s revenue increases are likely to be down to changes in its subscriber base, with a growing number opting for additional services such as HD channels and DVRs. Typically, such customers provide four times as much in revenues as those receiving just analogue cable services. Significantly, the report raises concerns about the large number of cable TV contracts that will expire in June 2011 and a prospective law that could allow subscribers to terminate contracts early without incurring penalties.

Cyfrowy Polsat on a roll
Poland’s leading DTH platform Cyfrowy Polsat ended Q2 with 3,263,546 subscribers, a year-on-year increase of 419,000. Of these, 2,592,000 (+281,000) received the Family/Premium and 672,000 (+139,000) the Mini/Mini Max packages. ARPU for the former package rose by 5% year-on-year in Q2 to PLN41.9 (€10.5), while for the latter it was up by 23% to PLN10.9. Cyfrowy Polsat’s subscriber growth was accompanied by a good financial performance that saw its revenues rise by 22% year-on-year in Q2 to PLN377 million. Its EBITDA amounted to PLN109 million and net profit PLN67 million, respective increases of 40% and 19% on the same period in 2009. In revenue terms, subscriptions claimed the lion’s share of the total (91%) in Q2 this year, followed by sales of reception equipment (3%) and telecom services (1%). The one down side was churn, which rose from 7.3% in H1 2009 to 10% in the first six months of this year.

Czechs look to pay-TV and 3D
Pay-TV is growing rapidly in popularity in the Czech Republic, with the number of thematic channels rising and two 3D services, operated by IKO TV Central Europe, soon set to make their debuts. Parabola reports that the number of pay-TV viewers in the country has risen by between 20-28% a year over the last three years, with a similar growth rate seen in the number of viewers for thematic services provided in the Czech Republic (and Slovakia) by IKO Central Europe. Importantly, there is still scope for further growth in thematic services in the Czech Republic, the country having historically been poorly served by such services compared to markets such as Poland, Hungary and Romania. Speaking to Parabola, Erika Luzsicza, IKO Central Europe’s director for the Czech Republic and Slovakia, confirmed that the company is finalising plans to add two 3D channels to its portfolio.

RTL Group may exit Russia
RTL Group may sell its 30% stake in the Russian TV station Ren TV, which it has held for the past five years. Kommersant reports that such a move may be inferred from RTL Group’s decision for the first time not to include Ren TV in its latest set of results. This was put down to an agreement signed by RTL Group and REN TV’s majority owners National Media Group (NMG), which currently control 70% of the station, back in April. This agreement was struck due to the fact that NMG is also the majority (72.4%) owner of Channel Five, which is classified as a “publicly owned channel” and therefore one in which no foreign company can invest. Although RTL Group is not expected to exit Russia this year, it is pursuing a strategy of pulling out of territories in which it does not have overall control of its assets or is the market leader. This was demonstrated as recently as last month, when it sold Five in the UK. Ren TV was launched in 1997 and has seen a number of ownership changes in its 13-year history. According to TNS, it is currently the sixth most popular channel in Russia.

Czech Republic takes to DTH services
The take-up of digital satellite TV services is growing steadily in the Czech Republic thanks largely to the success of Skylink and CS Link. Data produced by ATO-Mediaresearch and published by Digizone shows that just under a third (28.9%) of households received satellite TV as of the end of June. On the other hand, 41.1% received DTT signals and 25.1% analogue TV, though the percentage of analogue-only homes was down to just 15%. Cable/IPTV services were meanwhile received in 24.5% of homes. Set-top boxes were the most popular way of receiving DTT signals (26.6% of all households, including those not watching DTT), followed by digital TVs (14.4%) and DVD players with digital tuners (1.1%).

DTT grows in Hungary
The take-up of DTT is growing rapidly in Hungary, with the national service MinDig TV now watched in 100,000 households, or over 12% of all terrestrial homes. There was an over fivefold increase year-on-year in the number of DVB-T MPEG-4 compatible receivers (set-top boxes, integrated TV sets, PCI cards and USB sticks) sold in the first half of this year. As a result, 8% of Hungarian households now own a DVB-T receiver. Antenna Hungária, the operator of MinDig TV, puts this growth down to a number of factors including significant network expansion at the end of last year, successful marketing campaigns, the launch of the MinDig TV extra service at the end of May and FTA coverage of the World Cup in HD. Antenna Hungária plans to add to the 17 TV channels, three of which are in HD, already offered by the platform and to make MinDig TV and MinDig TV Extra available to 95% of the population by the end of this year.

Mixed picture for Comstar pay-TV operations
Russia’s Comstar-UTS ended the second quarter with 121,000 triple-play subscribers in Moscow, a 9% reduction on the same period last year. Its ARPU was also sharply down year-on-year, by 51% in rouble terms to R272 (€7.0) and 47% in dollars to $9.1.However, it was a different picture in the regions, where the company ended the second quarter with 2,055,000 pay-TV subscribers, a 5% increase on a year earlier. Its ARPU was also up, at R112 (+6%) and $3.7 (+13%). All told, the company had 2,176,000 pay-TV subscribers nationally at the end of June, or 4% more than a year earlier. Its broadband internet subscriber total (1,437,000, +22%), was also substantially higher.

Spotlight on major Latvian cable deal
A proposed merger of the two leading Latvian cable operators Baltkom and Izzi is about to be scrutinised by the country’s Competition Council (CC). DB reports that were the merger to go ahead, the resulting company would account for around 50% of the pay-TV market in the capital, Riga, and 30% nationally. However, these figures are questioned by the TeliaSonera-backed incumbent telco Lattelecom, which would face greater competition from a merged Baltkom/Izzi. It says that the latter would account for over 70% of the pay-TV market In Riga and over 40% nationally.

Digital take-up slows in Lithuania
The transition to digital broadcasting in Lithuania is not going entirely to plan, with the number of subscribers receiving services growing by only 8.4% in the year ended June 30. Delfi reports that the main reason for this is believed to be a scaling back of the publicity campaign surrounding digital TV. According to data produced by the regulator RRT, the number of digital pay-TV subscribers in Lithuania at the end of June stood at 245,900, equivalent to around 17-18% of TV homes. However, it does not provide figures for the number of viewers still watching FTA services. The main player in the transition to digital broadcasting in Lithuania is the incumbent telco TEO LT, which operates DTT and IPTV services that both use the GALA brand name. Lithuania is due to complete ASO in 2012.

Estonian market in decline
Estonia’s ad market was worth EEK512 million (€32.7 million) in the first half of this year. It nevertheless continues to decline in all sectors except the internet, in some instances alarmingly. According to data published by TNS Emor, total ad spend in Q2 amounted to EEK293.6 million, a 7.8% reduction on the same period in 2009. That for TV, which accounted for 32.3% of the total, was 1.2% lower than in Q2 2009. Internet spend grew by 13.2% year-on-year, while magazines posted the biggest loss (-23.2%) over the same period. Despite falling revenues, the TV sector’s overall share of the ad market is growing. It stood at 30% in Q2 2009 and only 27% a year earlier.

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Chris Dziadul Reports VOD bandwagon heads East On demand services are becoming increasingly popular in Central and Eastern Europe (CEE), with Poland currently the scene of major activity.

Among the leading cable operators, UPC launched its VOD service UPC na Zadanie in December 2009 with an offer that already included hundreds of hours of movies and TV series. It has since been enhanced considerably – most recently this week with the addition of content from Cartoon Network – and at the same time expanded in reach from just Warsaw to most large population centres served by the operator.

Vectra, the second largest player in the Polish cable market after UPC, meanwhile plans to launch an on demand service shortly that it says will have a back channel and focus more on the quality of content rather than the volume. Among other leading cable operators, INEA, which is based in western Poland, plans to launch its on demand service this October, while Toya expects to give a debut to its a month earlier. Further details about the latter will be revealed at IBC.

Both Multimedia Polska and Aster already have VOD services up and running. In the latter case, it was launched in June 2009, employs a back channel and plans to add sVOD to its offer in the near future.

Among Poland’s DTH platforms, n set things rolling on the VOD front and was subsequently followed by Cyfra+ and more recently (December 2009) Cyfrowy Polsat. In the latter case, the platform differentiates itself from the competition by offering a nVOD service, employing a satellite transponder with 15 dedicated channels that viewers can receive without the need to buy or rent a set-top box with a hard drive.

The incumbent telco TPSA, on the other hand, operates a VOD service that can be received by both its IPTV (streamed) and DTH (downloaded) subscribers.
On demand services are also provided in Poland by a growing number of portals including onet.pl, which is owned by TVN.

Although on demand services are also being rolled out rapidly elsewhere in the region – Romania’s Romtelecom, for instance, will launch its on demand operation, already available to IPTV customers, commercially this autumn – Poland is undoubtedly in the vanguard at present.

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