MULTIMEDIA UPDATE: REACTION TO MURDOCH-MCI ALLIANCE
The announcement last week that MCI would invest $2B in
Rupert Murdoch's News Corp. "stunned the communications world,"
according to the current BUSINESS WEEK. The alliance with
Murdoch "has the potential to take MCI much further along the I-
Way" than any of its previous interactive ventures. TCI Chair
John Malone: "MCI doesn't bother me. But Murdoch scares me to
death" (Lewyn, Grover & Dwyer, BUSINESS WEEK, 5/22 issue). The
cash from the MCI deal has Murdoch reportedly eyeing several
other media properties, including Italy's Finnivest, Time
Warner's stake in Turner, or Seagram's stake in Time Warner.
Murdoch may also launch a BSkyB-style satellite service in Latin
America or expand News Corp.'s 63% stake in Star TV in Asia
(ADVERTISING AGE, 5/15 issue). Michael Milken "played an
advisory role" in the MCI-Murdoch deal (L.A. TIMES, 5/16).
NEXT MERGER? AT&T and Time Warner Cable are discussing "teaming
up to offer local and long-distance telephone service to millions
of consumers in a direct strike at local phone companies" (WALL
STREET JOURNAL, 5/16).
CABLE'S FUTURE: The NCTA convention in Dallas last week
"was about cable -- but not necessarily television," according to
Jessell & Berniker of BROADCASTING & CABLE. Talk of the future
"was more likely to be about telephony and high-speed data
communications than about more program networks or interactive
TV." In another piece, Discovery Commun. President & COO Greg
Moyer says that in the current environment, "More channels alone
may not be the only answer" (B&C, 5/15). ELECTRONIC MEDIA's
Wayne Walley reports that the industry "is slowly shaking off its
malaise -- but what's behind the better mood isn't necessarily
good news for programmers" (ADVERTISING AGE, 5/15 issue).
DIFFERENT VIEWS OF CD-ROM INDUSTRY: Reviewing the
Electronic Entertainment Expo (E3) staged in L.A. over the past
week, the L.A. TIMES' David Colker reports that the CD-ROM medium
"is at long last catching up with its hype." Colker calls
several of the upcoming home games "are surprisingly fresh and
promising." Of the hot new titles he lists, none are sports-
related (L.A. TIMES, 5/14). But in Washington, Kara Swisher
writes that a "shakeout" is due for the CD-ROM industry. Still,
the Software Publishers Assoc. reports that sales of CD-ROM
software in '94 rose 229% to $640M, compared with '93 (WASHINGTON
VIDEO GAMERS GET UGLY: The battle between video game makers
at E3 "was not a pretty sight," according to TIME's Philip Elmer-
DeWitt. Five manufacturers -- Nintendo, Sega, Sony, 3DO and
Atari -- "are battling for one of the top spots in a market that
most analysts believe has room for no more than two or three"
(TIME, 5/22 issue). Software developers at E3 "expressed anxiety
about which of the technologies will emerge victorious."
Nintendo plans to employ a cartridge system, while the others use
CD-ROM (Swisher & Pegoraro, WASHINGTON POST, 5/13). Sega will
spend $50m marketing its new $399 Saturn system, released last
week (Bradley Johnson, ADVERTISING AGE, 5/15 issue).