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Quelle: www.nytimes.com March 26, 2001 Another Big Roundup for Mr. Malone By GERALDINE FABRIKANT John C. Malone spent three decades building Tele-Communications Inc. into a national cable power, before selling it to AT&T in 1998 for $31.8 billion - some $2 billion of which went directly to him in the form of AT&T stock. Now Mr. Malone, 59, has set his sights on building another cable empire, even bigger than Tele-Communications. Only this time, the cable systems are overseas and Mr. Malone is not the hands-on manager. Representing him instead is a team made up of a father and a son, who face some severe cultural, technical and financial challenges as they seek to carry out Mr. Malone`s strategy in 22 countries on 4 continents. The father is a crusty, 74-year-old executive, Gene W. Schneider, an old-line Denver cable man who built his own big system, United Cable, before selling it to Mr. Malone a dozen years ago. Since then, Mr. Schneider has put together a Denver-based international cable holding company, United Global Communications, in which Mr. Malone is becoming the controlling shareholder. United Global`s biggest operating company, in turn, is a European collection of cable companies run from London by Mr. Schneider`s 46-year-old son, Mark, a former Washington communications lawyer. United Global`s reach includes more than 1.2 million cable subscribers in Latin America, Australia and the Philippines, but it is the European operation -United Pan-Europe Communications, or U.P.C. - that is by far the biggest piece. U.P.C. represented about 70 percent of the parent company`s $900 million in revenue for the nine months of 2000 ended Sept. 30, the most recent numbers United Global has reported. Owning or holding a stake in cable systems with 8.3 million subscribers in 14 European countries plus Israel, U.P.C. will test whether the Malone- Schneider team can successfully provide programming to a culturally and linguistically diverse set of audiences, while also overhauling the systems for the digital era. U.P.C. plans to spend $5 billion over the next five years to modernize its systems and provide set-top boxes to offer more than 100 digital channels with cable services and video on demand, as well as telephone service and high-speed Internet access. But financing the effort is no sure bet. U.P.C.`s already sizable debt - about $6 billion - and current economic uncertainties here and overseas make the risks difficult to calculate. The elder Mr. Schneider, who is United Global`s chairman, acknowledges the challenges of upgrading the European systems and persuading consumers to take more services. "But when it comes down to it," he said, "the things people like and want over there are not that different than in the U.S." Europe, with its disparate tongues, does not offer the economies of scale for cable programming that are available in the United States. And yet, by using all those additional channels to offer programming either dubbed or subtitled in a variety of languages, U.P.C. can tap into a wealth of existing programming. And as it happens, a number of those cable services - including the Discovery Channel, USA Networks and QVC -are partly owned by Liberty Media, the programming company of which Mr. Malone is chairman and in which he wields voting control. This means that if European consumers show an appetite for more cable channels and other communications services, Mr. Malone stands to benefit handsomely - not only through the success of United Global and U.P.C. but through Liberty`s other investments, too. "Control of cable distribution allows U.P.C. to favor programmers in which Liberty has an interest," said Tom Wolzien, an analyst who follows cable for the investment firm of Sanford Bernstein. "It is similar to what Mr. Malone did in the U.S." Today, U.P.C.`s average European analog system has 30 channels; after the digital rollout, most systems are to have more than 100. Roger Metz, an analyst who follows U.P.C. for Janco Partners, a Denver investment bank, said Liberty`s programming could help fill that bigger pipeline. He noted that U.P.C. had established a translation center in Amsterdam where programming from the Discovery Channel and elsewhere can be dubbed or subtitled in 11 different languages and converted to a digital format. "U.P.C. can always subtitle shows, and Liberty has stakes in many different programmers that U.P.C. can distribute," Mr. Metz said. Whether consumers will have a greater appetite for foreign programming remains to be seen, of course. In the Netherlands, where English is widely spoken and where U.P.C. has 2.2 million subscribers, some two-thirds of the channels on the current analog system are already of foreign origin. But in bigger countries, like Germany (1.4 million U.P.C. subscribers) and France (382,000 U.P.C. subscribers) the current portion of foreign programming is much smaller. U.P.C. has already upgraded many of its systems, and nearly half of the 10 million homes in its markets could receive digital cable. But the company is only now beginning to market digital television services and has just 24,000 digital subscribers around Europe - although it predicts that the number will grow to 3.5 million homes within seven years. U.P.C.`s high-speed Internet access and Internet-based telephone service are attracting more customers so far; more than a half-million households have signed up for one or both. U.P.C. expects the numbers for all of these services to take off later this year when it begins offering customers a combination of digital cable, Internet and telephone service through a set-top box called the Da Vinci. Mr. Malone, who declined to comment for this article, is betting heavily on the Schneiders. His main investment vehicle, Liberty Media, is in the midst of a deal in which it will put an additional $1.4 billion into United Global and transfer title to systems Liberty owns in Argentina, in exchange for United Global stock. When that deal is completed, Liberty will have spent about $2.5 billion in cash and assets to own 43 percent of United Global`s equity. Liberty will also control 81 percent of the votes. U.P.C., meanwhile, has a rash of European acquisitions pending. If they all go through, U.P.C.`s operations will be the cornerstone of Mr. Malone`s overseas empire, with partial or total ownership of systems serving 8.5 million subscribers in Europe and Israel. And those subscribers, together with United Global`s cable holdings in Australia, New Zealand, Latin America and the Philippines could give Mr. Malone effective control of systems with nearly 12 million subscribers. That would be even more, in other words, than the 10.5 million subscribers Tele-Communications Inc. had when Mr. Malone sold it to AT&T. What is more, those 12 million do not include a pending deal by Liberty and the London investor group Klesch & Company to pay about $2.4 billion for 55 percent of Deutsche Telekom`s cable operation, which serves 10 million German subscribers. "In the end, Malone is making a huge bet that he can roll up all these companies and one day sell them to a larger buyer at a big premium, as he did with Tele-Communications," predicted Mr. Wolzien, the analyst. (When Mr. Malone announced the sale of TCI to AT&T, the terms represented a 31 percent premium to TCI`s stock price.) For now, there are no definite plans to combine Liberty`s separate European cable holdings with U.P.C.`s systems. "We may cooperate on buying a lot of services," Mark Schneider said, alluding to set- top boxes, for example, which could yield big discounts through volume purchases. But the interests of Mr. Malone and the Schneiders are nonetheless tightly interwoven: he has a 10-year agreement that requires him to vote his United Global shares with the father and son. And it is the Schneiders who are making the day-to-day decisions, particularly the senior Mr. Schneider, who is often on the phone in Denver with his son in London. "I talk with my father every day," Mark Schneider said. The elder Mr. Schneider made clear that parent and parent company call the shots. "Nothing is done in U.P.C. that the United GlobalCom board does not approve," he said. "It`s like General Electric, which has subsidiaries all over the world." Right now, the European part of United Global`s world is under enormous pressure. Mark Schneider has been forecasting that U.P.C.`s sales will grow from the current annual level of about $1 billion to more than $5 billion a year by 2006. By then, he predicts, subscribers who now spend an average of $10 a month will be spending $25 a month, for a package of entertainment, Internet and telephone services. But U.P.C. has only enough money to meet its capital spending program through 2002, when the digital upgrade would not yet be complete. If revenues do not grow sufficiently, U.P.C. could be out of cash in 2003 and would have to find other ways to raise money. Already, the company has trimmed its capital spending budget to $1 billion a year, from $1.7 billion previously, with most of the cuts coming in Eastern Europe. There, in an illustration of the so-called digital divide, U.P.C. is reluctant to add to its debt because lower household incomes mean smaller potential revenue increases from overhauling the networks. Although U.P.C. could seek additional financing from Liberty or even Microsoft, which owns 6.5 percent of United Global, such deals could dilute the value of other shareholders` stock. No wonder, especially in the current economic climate, that Wall Street is skittish about Mr. Malone`s European campaign. United Global`s shares closed at $10.875 on Friday, down from a 52-week high of $95. Separately, American depository receipts of U.P.C., which trade on Nasdaq, closed at $6.50 on Friday, compared with $63.50 a year ago. Meanwhile, Liberty`s stock, which was trading above $30 last March, ended last week at $14.02. And U.P.C.`s bonds are trading at a 30 percent to 40 percent discount to their par value, according to Areyah Bourkoff, a fixed-income analyst at UBS Warburg. Dennis Leibowitz, who follows the international cable industry for Credit Suisse First Boston, said that "investors worry that the cash flow won`t grow adequately to pay off the high debt load." Michael Graham, an analyst at Robertson Stephens, raised similar concerns in a recent report on U.P.C.. "Longer term, the company faces a fairly significant financing gap, which we believe will need to be addressed before the stock is viewed as low risk enough for many institutional portfolios," Mr. Graham wrote. Technology is another source of concern. In many cases, the Schneiders are buying antiquated European systems that do not easily convert to modern digital networks. In the Netherlands, for example, the pace of U.P.C.`s digital conversion last fall was too slow to keep pace with customer demand for the company`s high-speed Internet service, Chello Broadband. Although the consumer complaints and the critical local newspaper articles have subsided, "the service has not been all that good," said Danny van Doesburg, an analyst with F. van Lanschot Bankiers, in Amsterdam. And U.P.C. has encountered various bugs with the software that Microsoft developed for cable set-top boxes. As a result, the set-top boxes U.P.C. has started rolling out in the Netherlands use more limited-capability software from the Dutch company Royal Philips Electronics. And later this year, in Austria, U.P.C. will introduce set-top software from Liberate Technologies, an American company. Elsewhere, the company has not decided what software to use. Mark Schneider said those early problems were simply the inevitable challenges of starting a new technology-dependent business. "This is a period of building something for the future," he said. "People have to take a longer view." Certainly, the long view is what the empire builder John Malone seems once again to be taking. |
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| aus der Diskussion: | PRIMACOM THREAD 93 |
| Autor (Datum des Eintrages): | Krisenmanager (21.04.01 05:51:01) |
| Beitrag: | 33 von 141 (ID:3357370) |
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