If you read nothing else read this!
To: art slott who wrote (9310)
From: Steve Hausser Saturday, Feb 12, 2000 10:37 AM ET
Reply # of 9316
On numerous occasions over the last several years, John Malone has said repeatedly that one of the best ways to create shareholder value is through the creation of joint ventures. Thusfar, ACTV has been the benefactor of two JV's (LMG/IATV Events PPV and Digital ADCO). They were created under the auspices of John Malone and have the potential individually to be as big as any of the other companies in the interactive sector.
Our PPV JV has John Malone to procure events while iNDemand provides the access to deliver the events. It is the future of PPV events plain and simple.
Digital ADCO which is 51% owned by ACTV and 49% owned by GIC is also in a category by itself. It will provide local addressable individualized advertising that will have no peer. In addition, HyperTV will take the customer right to the store so that instant purchases can be made.
This brings me to what may happen next. As I have stated frequently on these boards over the past few months, I have seen the possibility of more JV's in our future.
1 - Comments that were made by Bill Samuels during the road show as well as tidbits in past Liberty releases suggest that some kind of deal with OPTV could be in the offing. Since this company is also part of the Liberty Digital portfolio, a JV deal is never out of the question. By wedding the OPTV platform with ACTV's capabilities Liberty will have a very potent force in their portfolio. When you contrast this to the "light" interactivity supported by other systems, such as WINK which merely gathers product orders, you again wind up with capabilities that are far and away superior to any competitors.
Whether its a JV or some other deal, OPTV should figure into ACTV's not too distant future.
2 - I have stated quite a few times that a JV HyperTV deal with Liberty Digital is a distinct possibilty. The question is what does Liberty gives us to warrant their value in the venture? Procurement? ACTV seems to be doing OK on their own although Liberty could gives us the ability to open doors that would certainly would be harder to open on our own. Patent protection? Maybe. It sure wouldn't hurt to have an 800 lb gorilla rattling the cage on our behalf. We'll just have to wait and see.
"We are going to create a company to do that[create icons on the screen that you would click to order something directly from the screen]. We are going to start at the beginning of 2000. In a couple of months, we'll get it under way. I have a budget for creating the company. We intend to create it at the beginning of the year for the tests when they get done. We have a name but we may not use it: "TV Portals."
-Lee Masters 12-99
3 - I can certainly see a JV with the soon to be formed Liberty Livewire. Dating back to the Leo Hindery days at TCI, ACTV has enjoyed an excellent working relationship with Liberty Livewire's new head, David Beddow. Livewire's post production ambtions are huge and will touch everything in interactive TV from the Internet to TV programming and commercials. They plan on reinventing the post production business and they are going to do it globally. They really need ACTV technology. Competitors will not be able to compete with Livewire's capital resources. Capital resources required to stay afloat in what has now become a business requiring extensive capital infusion to keep pace with changes in technology. This deal could be as large or even larger than any of the other JV's. This will make ACTV's products ubiquitous globally. With this JV we would be touching every practically facet of the interactive world.
The 2 box solution of HyperTV is nothing compared to what it will be in the one box world. Judging from recent results the 2 box has nontheless been a smashing success. The numbers are there and will continue to grow. By not waiting and going forth with the 2 box solution, ACTV will have a considerable client base already up and running for when the real thing is ready. This has been a stroke of genius on the part of management. Even in the one box world, the 2 box solution will still have its place and evolve into other venues such as radio and maybe even into the wireless hand held device market.
Indiviualized TV similarly will need the advanced set tops to achieve its full potential. The wonderful thing is that PPV, the future of all PPV events is ready to go now. After being crucified for his promise of delivering 500 channels prematurely, John Malone certainly will not box himself into a corner and promise delivery sooner rather than later. That is why I look to be surprised for once and have this JV beat any speculative dates on when the first event actually will be held.
I wouldn't be surprised to see some key acquisitions on the part of ACTV. Nobody knows this sector better than Bill Samuels. If any body would know where to invest in this sector it would be him. A CEO of one of the VOD companies told me how sharp they were in acquiring Catch TV. He is now sitting on $138m with $30m more to come next month from Liberty.
It is easy to see when you put all the pieces together why Bill Samuels keeps stating that "We are going to be the largest digital media company in the United States". The only problem that I have with this statement is why he didn't say ...in the world. They have used the Liberty approach for creating value. John Malone believes the best way to create shareholder value is through the creation of joint ventures.I see no reason why they would discontinue that approach. When think of the possibilities, JV's with iNDemand, John Malone, Liberty Digital, AT&T, General Instruments, Motorola, Libert Livewire, OPTV etc. it is staggering. All these new ventures sitting in the heart of a nascent industry poised to literally explode.
I can't predict what the price will be next week or the week after that but this I can tell you. Once news starts coming out we will fly. That is something you can't get by looking at a chart. |
