Merger in iTV space - Broadcasting & Cable

Merger in iTV space

OpenTV to acquire interactive companies Wink, ACTV
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Liberty Broadband Interactive Television (LBIT) has been busy the past few months, picking up interactive companies Wink and ACTV along with a controlling interest in OpenTV. Last week, the company answered the question of how the three would work together when it agreed to sell Wink and ACTV to OpenTV, a move that will allow for easier consolidation and faster profitability.

"What we're going to be able to offer operators is our OpenTV middleware, which is already deployed in 27 million set-top boxes worldwide, with the capability for interactive advertising and commerce," says OpenTV CEO James Ackerman.

LBIT sold Wink to OpenTV for $101 million cash, the same amount it had paid for Wink in July. The acquisition of ACTV, which requires approval from shareholders and is a stock-for-stock transaction, should be completed by year's end. Wink and ACTV become subsidiaries of OpenTV, but LBIT will maintain controlling interest in OpenTV.

Wink's technology has already been deployed by cable operators such as Time Warner and Charter and can be found on EchoStar (where OpenTV also has deployments) and DirecTV. One criticism of OpenTV has been that its proprietary platform would not make it attractive for deployments on U.S.-based cable systems. The acquisition of Wink goes a long way toward making that point moot, although there may still be resistance to the OpenTV platform.

"Wink has gained some traction in the cable space and is seeing usage and increased subscriber satisfaction, according to MSOs," says Yankee Group analyst Adi Kishore. "So, while this won't help the OpenTV platform, it will help their applications business. Between OpenTV and Wink, they more or less own the iTV applications space today, both on cable and on satellite."

There will be some staff restructuring and cuts. "We want to take the best-of-breed out of each operation, consolidate operations, and operate out of fewer offices," says Ackerman. "The goal is to eliminate duplication and redundancy so we can get ourselves into a position of break-even cash flow as soon as possible."

When interactive television's prospects seemed a lot clearer, Wink seemed to have taken the leading role. In October 2000, it teamed with DirecTV interactive to offer an early version of iTV to more than 1 million DirecTV subscribers equipped with RCA DirecTV receivers. At the time, Wink offered 30 interactive channels, including NBC, CBS, CNN, ESPN, Weather Channel, E! Entertainment, TBS and CNBC.

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