TVN Entertainment Corp. received $200 million in capital
last week to help fund its drive to offer a digitally enhanced, multichannel pay-per-view
operation.
But the network still has an uphill battle against
PPV-network juggernaut Viewer's Choice, which controls the analog-PPV business, and
which is offering its own digital-PPV channels.
TVN sold $200 million of senior notes and warrants in a
private placement to help finance its 35-channel, digital, near-video-on-demand
programming service for operators. The deal was financed at a relatively high 14 percent
interest level, leaving some industry observers speculating about the company's
future standing among Wall Street investors.
But Jim Ramo, president and CEO of TVN, said the sale went
smoothly, adding that there was no trepidation among potential buyers.
"This was clearly a high-yield offering for a company
in the early stages of development," Ramo said. "We have a business plan
that's intended to help small cable systems to roll out digital cable, and this will
give us the necessary wherewithal to support that plan."
The company has already signed a digital distribution deal
with Comcast Corp.
systems representing 1 million subscribers. It also has
deals with Marcus Cable Co. L.P. and with several small MSOs including Summit Cablevision,
Kentucky-based Green Tree Cable, Arkansas-based Clinton Cable, Cable America and Pinetree
Cablevision.
Cablevision Systems Corp. also distributes TVN's five-
to eight-channel analog service to its more than 2 million addressable households. But
Cablevision has yet to sign on for TVN's digital-PPV service, and it may end up
offering a stand-alone digital service, sources close to the situation said.
As for the rest of the industry, TVN will battle with
Viewer's Choice for supremacy in the digital-NVOD world. Viewer's Choice is
providing a 32-channel digital service for operators, and it has a built-in advantage
because several of the largest MSOs -- including Time Warner Cable and Tele-Communications
Inc. -- hold ownership interest in the service.
Nevertheless, Ramo said, TVN will push forward, adding that
it has several deals in the works, although he declined to be more specific.
At least one MSO said it was taking a wait-and-see attitude
with regard to TVN. "They have an interesting story to tell, and we'll be
listening," an MSO executive said.
