Key player in the brave new world of pay-television

Date: 25/07/1996

By Thomas Klau

SET against household names of the European media industry, such as Germany's giant Bertelsmann conglomerate or Italian tycoon Silvio Berlusconi's Fininvest, the name Nethold does not - as yet - ring a bell with many outside the charmed circle of media and investment specialists.

But the international Dutch-based pay-TV company, which achieved its present global position in 1995 through the merger of two smaller firms with a well-established tradition of cooperation, is now one of the key players in the raging battle for emerging television markets and already boasts a subscriber base of over 2.7 million households.

As the company's public relations manager Jean-Louis Erneux explains, the firm has carved out a market share in 59 countries, a position which gives it, in Erneux's words, “a huge potential growth opportunity”.

Jointly owned by the South African firm MIH and the Swiss-based South African-controlled Richemont conglomerate, Nethold has the financial wherewithal to play a pioneering role in the emerging mega-market of digital and pay-television, which experts predict will substantially alter the lifestyle of almost everyone who watches television.

“People will be much freer to choose which programme they watch and at what time,” says Erneux. “You will no longer be the slave of your TV.”

The pioneers of pay-TV, he explains, are channels offering sports events or films, with digital technology allowing several films or sports shows to be broadcast simultaneously on what have until now been single-programme channels. “Sports and film are clearly the two areas with the biggest demand,” he stresses.

Erneux predicts that “pay-TV movie channels will be dominated by classics such as Casablanca and ET and movies only a few months old”.

With international and local channels for digital packages being launched this summer in the Benelux and Nordic countries, Nethold recently struck a deal with the Hollywood giant MGM in a move aimed at ensuring a regular supply of recent releases.

While its smaller parent-company MIH's main activity is its 50&percent; stake in Nethold, the other owner Richemont is the power behind an empire of high-profile luxury and tobacco brands such as Cartier, Montblanc, Piaget, Lagerfeld, Rothman and Peter Stuyvesant.

But in a move typical of the television market, with its huge demands on capital and know-how, Nethold has been keen to form strategic alliances with others, teaming up with Berlusconi's Mediaset and German TV tycoon Leo Kirch to set up Telepiu, the first pay-TV company in Italy.

In the battle between the competing decoder systems of European rivals Kirch and Bertelsmann, Nethold naturally backs that of its ally Kirch, which Erneux says is more advanced.

“We will be leading the way in terms of technology,” he stresses.

Public criticism of both media giants' inability to agree on a common digital key, which will force viewers to buy more than one decoding system although all are based on common standards, is countered by experts who argue that rival systems will eventually benefit the television viewer as competition will force prices down and quality up.