PCCW scraps talks with Next
HONG KONG - Pacific Century CyberWorks scrapped talks to ally with Next Media, the online arm of Hong Kong's top-selling magazine publisher, a setback to plans to make people pay for its Web entertainment service.
The city's biggest telephone company had planned a partnership with Next Media, which derives content from a magazine that sells 150,000 copies, to revive its unprofitable multimedia business and cut production costs.
"When we were very close to agreeing on something, the deal was broken off," Pieter Schats, chief executive of Next Media, said in an interview. "It certainly wasn't us who pulled out."
CyberWorks announced plans to charge for its video clip and entertainment site this year and fired staff after losing US$886 million last year. Losses at the Internet entertainment arm need to be cut as efforts to repay $5 billion in debt have been frustrated. CyberWorks stock fell 88 percent in the past year and a US$2.5 billion bond sale failed last month.
"It's another setback for its business-to-consumer service and will inevitably postpone its launch,"' said David Loo, an investment adviser at Coutts Bank (Schweiz), which owns CyberWorks' shares in a private fund.
CyberWork's spokeswoman Joan Wagner declined to comment. Schats didn't elaborate on the collapse of the alliance. Next Media founder Jimmy Lai earlier said the proposed exclusive deal would help his firm break even this year, after losing HK$145.8 million (US$18.7 million) on Web investments.
CyberWorks stock fell 1 percent to HK$1.97, while Next's share fell 2 percent to 24.5 HK cents.
"The news is not going to be well taken," said Dipak Jethwa, an analyst at Prudential-Bache in Hong Kong. "`It certainly doesn't speak well for other ongoing talks."
CyberWorks, which originally planned to start charging subscriptions and pay-per-view fees for its Website in late July, is still talking to Television Broadcasts, Hong Kong's biggest broadcaster, according to Fonda Wong, a spokeswoman at TVB.com.
The two companies Web sites would have complement each other. CyberWorks' existing entertainment site, found at now.com, offered free video clips viewed through personal computers of rock music, adventure racing, film stars and computer game reviews.
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