Cable Operators

Comcast, Cox Buying Liberate

1/16/2005 7:00 PM Eastern

Comcast Corp. increased the stakes for ITV and the OpenCable Applications Platform last week, joining with Cox Communications Inc. to buy the U.S. assets of middleware provider Liberate Technologies Inc. for $82 million.

Comcast will be the majority owner of joint venture Double C Technologies, while Cox will hold a minority stake.

NEED FOR SPEED

“Comcast believes strongly in the future of interactive television and the need for customers to have TV on their terms,” executive vice president of new business development Steve Silva said after the deal was disclosed last Monday. “This acquisition, along with our earlier investment in Guideworks and our innovative video-on-demand platform, will enable Comcast to move faster toward creating a more interactive television experience.”

Comcast has worked with Liberate in the past. But Silva said the key to owning Liberate is the ability to move quickly to deploy interactive applications Comcast wants, without relying on a publicly traded vendor that also answers to Wall Street. “This gives us the horsepower,” he said.

Cox senior vice president of strategy and development Dallas Clement agreed. “In the near term, this doesn’t give us more than what we had, but in the long term, it helps us to align with Comcast as well as to have wholly owned resources that help us to be prepared for OCAP and competition.”

The joint venture gets all the assets, patents, intellectual property and certain liabilities of Liberate’s North American business, and agrees to cross-license technology and intellectual property.

ITV’S ON THE MOVE

The move indicates the MSOs’ increased activity on the interactive TV front to match the capabilities of direct-broadcast satellite competitors DirecTV Inc. and EchoStar Communications Corp.

Cox has been active in OnRamp, a pre-OCAP platform, while Comcast has formed an OCAP joint venture with Time Warner Cable. Time Warner has worked with Osmosys and Vidiom Systems Inc., among others, to implement software to enable interactive applications on digital set-tops.

Silva said Comcast plans to use a combination of its Guideworks product and Microsoft Corp. software for baseline interactivity, such as virtual channels and rudimentary polling, on lower end set-tops. Those boxes range from Motorola Inc.’s DCT 700 series, which will be deployed as part of Comcast’s launch of digital simulcast services, to DCT 2000s. Although some Liberate software might appear on that platform, Comcast plans to use the Liberate assets to develop OCAP applications on the high-end Motorola DCT 6408 and DCT 6412 platforms, he said.

The MSO counts some 1.2 million HDTV and DVR customers among its more than 12 million digital set-tops that have been deployed.

But many of the digital set-tops Comcast will deploy in 2005 will likely be higher-end, OCAP-capable boxes.

“We captured an asset that allows us to create a new ITV platform,” he said.

Silva breaks down ITV and OCAP implementations into a platform side and a navigation side. Comcast’s Guideworks joint venture with Gemstar-TV Guide International Inc. is designed to provide navigation systems for various platforms and set-tops.

The so-called OnRamp to OCAP is a combination of Java applications and middleware.

“OCAP is an open standard that is similar to middleware and enables third-party applications,” Silva said.

BOOST TO OCAP

Silva said Comcast currently has no plans to deploy OnRamp, and is focused on deploying OCAP on new advanced set-top boxes.

The DCT 6412 and other OCAP-enabled boxes with more processing power will intersect with the Liberate software, he said. “That’s where we’ll focus those resources.”

Comcast’s deals with Microsoft remains in place, he said. “We now have two viable solutions, one internal and one external,” Silva said.

September