Weeks away from being folded into MTV Networks, The Box
Music Network announced an Internet-TV alliance with ACTV Inc.'s HyperTV Networks
Inc.
The venture will combine The Box's around-the-clock,
video-on-demand programming prowess with HyperTV, ACTV's patented software, which
facilitates the interface of television and the Internet.
The Box's parent, Liberty Media Group, is a minority
investor in ACTV, having agreed to take 12 percent of ACTV common stock with the option to
increase that stake to 25 percent.
The Box -- which claims around 40 million global households
and has carriage deals with major MSOs -- hopes to leverage HyperTV to extend the
interactivity of the viewing experience by providing e-commerce, as well as Web content
and advertising.
For example, while someone is watching a music video on The
Box, the viewer can simultaneously log on to a music Web site and access song lyrics, band
biographies and features. The viewer will also have the option to buy related merchandise,
such as compact discs, videos and apparel.
"The Box has always been ahead of the industry in
terms of interactivity. Ours is a natural and potentially powerful alliance," ACTV
president and chief operating officer David Reese said in a prepared statement.
Although ACTV is cutting this deal with Liberty Digital,
the alliance is expected to be executed under the aegis of MTVN.
Last month, Viacom Inc.'s MTVN announced that it would
buy several TCI Music Inc. assets, including The Box and music Web sites SonicNet,
Addicted to Noise and Streamland.
In return, Liberty gets a 10 percent cut of MTVN's
online-music vehicles, including what MTVN officials said would be a new unit to be spun
off into a separate, publicly traded outfit.
At the time of the deal, MTVN president and COO Mark
Rosenthal did not commit to specifics of how The Box would be integrated into his company.
However, both Liberty and MTVN did say they would work in tandem to launch an interactive
commerce-oriented music channel for advanced digital set-top boxes.
"It's really too early to say how this alliance
will fit in with our plans for the future," Rosenthal said in a prepared statement,
"but we continue to admire what The Box has done -- especially with interactivity and
localization -- and no doubt, this alliance enhances that interactivity and experience for
the consumer."
"We're moving ahead with this alliance, and we
are excited about the possibilities," The Box CEO Alan McGlade said last week.
"We look forward to showcasing our product at the National Show in Chicago."
"This alliance is the culmination of our friendship
with The Box, which began at the Western Show, and the synergies are obvious," ACTV
vice president of programming and production Brent Imai added.
Liberty Digital CEO Lee Masters has been busy of late. In
addition to the MTVN deal, the company recently announced that DMX, its
digital-music-programming service, had signed a multiyear global distribution pact with
Internet portal Lycos Inc.
Under that arrangement, DMX will be featured on theLycos
Radio Network, which will make it possible for consumers to listen to DMX music from their
personal computers.
DMX will also be able to avail itself of supplemental
branding opportunities through Lycos' widespread penetration among Internet users.
The Box has been around since 1985, when it was known as
Video Jukebox Network. Subscribers can either passively view videos, or take matters into
their own hands and call in to order videos for $1.99.
TCI Music bought the network in December 1997. Thereafter,
it started paying launch fees in an attempt to grow the network's subscriber base,
which was a departure from its previous tack of giving operators a cut of the video-order
receipts from subscribers.
This effort boosted the network's subscriber count
from about 6 million one year ago, but it also led to operating losses.
ACTV currently has partnerships with many of the major
competitors in the fields of television, digital technology and the Internet. Beyond the
Liberty relationship, ACTV has also done business with Liberty parent AT&T Broadband
& Internet Services, General Instrument Corp., Fox Sports Net and TV Guide Inc., among
others.
