15 Oct 2010 07:00
15 October 2010
Motive Television PLC
("Motive" or "the Company")
Admission to trading on AIM - First Day of Dealings
The Board of Motive ("MTV"), the AIM quoted media investment company specialising in television technology, is pleased to announce the admission of its share capital to trading on AIM and the first day of dealings in its ordinary shares at 8.00 am today. This follows the completion of the reverse takeover announced on 17 September 2010 and a fundraising to raise £4.75 million (before expenses) through a Subscription for £4,750,000 nominal value of Convertible Loan Notes and 71,250,000 Subscription Warrants.
On admission, the Company will have 768,113,552 ordinary shares admitted to trading on AIM.
HIGHLIGHTS
·; Completed the acquisition of approximately 67.7% of Adecq Digital S.L.
·; Raised £4,750,000 (before expenses) through a Subscription of Convertible Loan Notes and Subscription Warrants
·; Adecq Digital S.L., through its Bestv® brand, is an international software developer of digital technology platforms for terrestrial broadcasters
·; Net proceeds will be used to grow Adecq Digital S.L., make certain debt repayments and to provide additional working capital for the Enlarged Group
·; In June 2009, Adecq Digital S.L. moved from research and development to trading
·; The Digital Terrestrial Television ("DTT") sector offers many exciting opportunities and the potential for rapid growth due to the mandatory "switch over" from analogue television to digital in most of the 120 countries which are members of the International Telecommunications Union ("ITU") by 2015
·; Put and Call Option entered into to acquire the remaining 32.2% of Adecq Digital S.L.
Commenting on Admission, Michael Pilsworth, Chairman of Motive, said:
"Following completion of the fundraising and the acquisition, we believe that Motive Television now has a solid foundation from which to grow. Our recent acquisition of NXVision's technology has synergies with BesTV and we will continue to seek other opportunities in the DTT sector to compliment the business.
"The support that Motive has received has been encouraging and we are now well placed to take advantage of a market that is growing rapidly. With the Board's experience in this sector, including our newest member, we are confident in Motive's future."
Chief Executive Officer, Leonard Fertig, added:
"Our progress with introducing the Motive solutions to broadcasters, particularly in the developing markets of Central and Eastern Europe, re-affirms our business model and a wider acceptance of our proprietary technology. The technical pilot demonstrations in the Czech Republic and Hungary have performed well and we are now seeing interest in these activities in new markets and hope to progress these expressions of interest into commercial tests and market rollouts."
Copies of the Admission Document are available on the Company's website (www.motivetelevision.co.uk) or from the offices of Merchant Securities Limited at 51-55 Gresham Street, London EC2V 7HQ.
Defined terms used in this announcement, unless expressly stated otherwise, shall have the same meaning as in the Admission Document.
Contact:
| Motive Television plc Mick Pilsworth
| T: 020 3080 9430 |
| Merchant Securities Limited (Nominated Adviser) Simon Clements / Virginia Bull
| T: 020 7628 2200 |
| Hybridan LLP (Joint Broker) Claire Noyce
| T: 020 7947 4350 |
| Jendens Securities Limited (Joint Broker) Jeremy Read / Justine Waldisberg
| T: 0203 372 2586 |
| Bishopsgate Communications Gemma O'Hara / Siobhra Murphy motive@bishopsgatecommunications.com
| T:0 20 7562 3350 |
Introduction
On 17 September 2010, the Company announced that it had entered into an acquisition agreement conditional, amongst other things, on Admission, to acquire 1,470,100 ordinary shares in Adecq Digital, representing approximately 67.7 per cent. of its issued share capital. In addition, the Company announced that it had raised, conditional of Admission, £4.75 million through a Subscription for £4,750,000 nominal value of Convertible Loan Notes and 71,250,000 Subscription Warrants.
Background
Motive's strategy is to make acquisitions or investments in the digital television market in order to seek to exploit the market opportunity presented by the "switch off" of analogue television. The Board intends to grow the Enlarged Group through both the expansion of Adecq Digital and by further acquisitions.
The Directors believe that DTT is set for rapid global growth with switchover from analogue to DTT mandated in most of the 120 countries that are members of the ITU by 2015. It is estimated that over one billion TV sets globally will be required to be upgraded or replaced to allow them to receive digital signals.
At the same time, TV viewing is moving from "linear viewing" (real time viewing) to "non-linear viewing" (non real time viewing); consumers are already using Youtube, Sky Anytime, BBC i-Player, and similar delivery systems to consume television programmes as and when they are available to view them. The Directors believe that traditional, linear, television channels are losing viewing and advertising share. Video on demand ("VOD") growth is very strong, with catch-up TV also proving very popular. In addition, the Personal Video Recorder ("PVR") market is growing strongly as a function of this move towards time-shifted, non-linear viewing.
The Board believes that Adecq Digital represents a suitable acquisition in the DTT market, as its Bestv® technology allows DTT broadcasters to offer VOD and time-shifted viewing.
Information on Adecq Digital
Adecq Digital, a Barcelona based software developer, which trades through its Bestv® brand, was founded by Giuseppe Flores d'Arcais and André Vanyi-Robin in November 2005.
Background
The Vendor Directors believe that, despite a multitude of new media technology systems and options, including the internet, 3G mobile phones (including the iPhone), SKY+ and BBC iPlayer, there remains a high level of demand, even in the most advanced countries in terms of broadband penetration, for traditional television broadcast from a transmitter through an aerial to a home TV set. The Vendor Directors believe that this is due to the ubiquity and ease of use of television as well as the viewers' desire to "sit back and relax" during which viewers mainly want to be passive while enjoying the most popular programmes.
Television broadcasters and Pay TV operators, identifying an opportunity, have started to move from traditional 'linear' television (i.e. one television program being broadcast and viewed at any given time) to 'non-linear' television which allows viewers to watch television programmes at the time they are aired or, alternatively, at a later time which is more convenient to them. Examples of non-linear television include catch-up TV, such as the BBC iPlayer and 4 on Demand, and VOD. In addition, Pay TV operators have launched PVRs which, similarly, allow viewers to watch already aired TV at their leisure. PVRs are further increasing pressure on free-to-air ("FTA") broadcasters as the PVR allows the viewer to fast forward through advertising.
The Vendor Directors believe that there is an opportunity for broadcasters to enhance their content offering and increase revenue through pay television and new advertising models. This is achieved by using a combination of datacasting, auto recording and overnight (remote) recording technologies through the Bestv® platform, which should optimise the more limited bandwidth of terrestrial networks and enables the non-linear services for DTT. Adecq Digital has created a business-to-business software solution which uses the concept of remote set-top-box recording and control to allow the broadcaster full control of its product offering whilst providing the viewer with an enhanced viewing experience.
It is the intention of the Board to focus on some of the many countries in the world mandated to switchover to DTT before 2015, in accordance with the GE 06 Agreement of the ITU. The transition from analogue to DTT is currently underway and most developed markets are already in parallel broadcasting mode. The Directors believe that if all the households affected by the switch-over were to upgrade their TVs, it would amount to greater than one billion units.
Adecq Digital's business
Adecq Digital's product, Bestv®, is a business-to-business software solution which allows broadcasters to manage the non-linear content, advertising and user experience they wish to provide to viewers, gaining extra value by leveraging the premium content which they already have or can access and by adding value by providing targeted advertising to viewers.
Bestv® uses an existing DTT broadcast signal to continuously send instructions and data-cast content to a set-top-box in a user's home. This results in the "best of" existing television plus additional programming to be stored on the set-top-box, accessible by the user as and when he or she wishes to view it. This allows for 'anytime' viewing or catch-up TV for the user. All the data-casting and automatic recording is provided on a 'push' basis (there is no return feed of information) so no internet, cable or DTH should be needed. The UK's most comparable product is SKY+ Anytime, where the PVR automatically records programmes transmitted overnight and stores them to the PVR hard drive allowing viewers to access popular content which is not being currently broadcast and which they did not record on their 'personal planner'. Bestv®, however, combines overnight recording with real-time programme recording and data casting and enables these technologies on terrestrial networks on a 24/7 basis, whether the television is being watched or not. This facilitates the transmission of more content. In addition, users' viewing habits may be utilised to provide targeted advertising, through which the viewer cannot always fast forward. The ability to fast forward through advertising will be at the broadcasters' discretion.
The Directors believe that the benefits to broadcasters in both control and revenue enhancement are attractive and that the Bestv® platform will be well received by the industry and lead to increased Shareholder value in the Enlarged Group.
In June 2009, Adecq Digital signed a software licensing agreement with Nagravision to supply services in conjunction with it to Mediaset in Italy. Mediaset is Silvio Berlusconi's national commercial TV company. The Mediaset product is now in operation and revenues are being generated from this collaboration with Nagravision.
Commercialisation of Bestv®
Bestv® can be commercialised in several different ways depending on the business model of the broadcaster. The Enlarged Group's strategy is to offer a bespoke service to broadcasters who can choose between a turn-key service, a platform service, software licensing or an amalgamation.
For a turn-key solution the Enlarged Group will aim to provide an end-to-end service which incorporates consumer product planning, deriving the technical specifications, integration and installation of the server at the broadcaster, selection and management of provision of set-top-boxes, and content acquisition and digital rights management. Consumer marketing can be undertaken by either the broadcaster or the Enlarged Group or both. Following set up, the Enlarged Group can then look to provide operational and conditional account management, customer accounts and CRM management and training, upgrades and continuing support. Some of the services offered within the turn-key solution may be outsourced to partners of the Enlarged Group and third party solution providers
The Directors believe that for a platform service, the Enlarged Group can assist the broadcaster with the set up of the service to whatever extent is required which will be dependent on the broadcaster's internal technical controls. The Directors believe the Enlarged Group can integrate and install the servers and then provide operational and conditional account management, customer accounts and CRM management and training, upgrades and continuing support.
The Directors believe that a fully integrated media company such as Mediaset, which has experience of Pay TV, may prefer to simply license the Adecq Digital software, merely requiring Adecq Digital (or its sub-contractors) to install the servers and to provide training, upgrades and ongoing support. In this situation, the Adecq Digital set-top-box software would be integrated into the manufacturers' set-top-boxes and Adecq Digital would provide a certification service to confirm that the box was Adecq Digital 'approved'.
Adecq Digital is already in discussions through its agents with many different broadcasters across five continents.
Adecq Digital's revenue model
In the case of the turn-key solution, the Enlarged Group's model envisages revenue from Bestv® from up to six different sources:
1) Platform licenses from the broadcaster resulting in a one-off fee or a recurring fee per month, per subscriber/broadcaster;
2) Platform planning and integration fees from the broadcaster for the provision of engineers and consultants by Adecq Digital;
3) One off set-top-box license fees payable by the box manufacturer per set-top-box;
4) Set-top-box integration fees payable by the box manufacturer for the provision of engineers and consultants by Adecq Digital;
5) One off set-top-box certification fees payable by the box manufacturer; and
6) Platform management fees from the broadcaster resulting in a recurring fee per broadcaster, per month or per subscriber, per month.
The Directors believe that the majority of income will be derived from licenses, platform planning and integration fees and at a later stage platform management fees. It is their opinion, however, that these fees will not deter broadcasters from investing in the Adecq Digital product offering due to the amount of benefit which the broadcasters could receive from subscription fees, pay-per-view and advertising.
The Directors expect that due to the strategic nature of the decision to move to Pay TV for FTA broadcasters, there may be a significant lead time between discussions beginning and, if successful, the commencement of a project. It is intended that part of the proceeds of the Subscription will be used by the Enlarged Group to provide working capital during this period to increase its international sales activities and for investing in integration and field engineers. In addition, the Board believes that in the short term any revenues generated will be attributable to project fees. In due course the Directors believe that the revenue stream will be enhanced by license fees and/or recurring platform management fees.
Directors and Senior Management
Michael Pilsworth (Executive Chairman), aged 59, has worked in the television industry since 1979. He was managing director of USM-listed SelecTV plc from 1990 to 1993. After the sale of SelecTV to Pearson/MAI for £40 million, he moved to Chrysalis Group PLC where he established a new television division. As CEO he built the division into a group of television production businesses with sales of £87 million and EBITDA of £8.4 million on its sale to Bridgepoint Capital in 2002, for £51 million.
Leonard Fertig (Chief Executive Officer), aged 63, was co-founder and CEO of Central European Media Enterprises Ltd ("CME"). Leonard took CME from a start-up to a billion-dollar NASDAQ-listed broadcasting company (NASDAQ-CETV) with operations in eight countries covering 110 million viewers. More recently he was CEO of Futuremedia PLC. In the 1980's Len helped to establish and build television networks such as A&E, Comedy Central, Request Television and DirecTV. He is also a non-executive director of Metrodome Group PLC.
Alistair King (Finance Director), aged 50, is a Chartered Accountant and a member of the Chartered Institute of Taxation. After qualifying as a chartered accountant in 1984, Alistair worked for KPMG in a number of management positions before leaving to become a partner in a firm of Practicing Accountants. In 1995 he set up his own consultancy business specialising in providing strategic advice, consultancy services and management information to a number of businesses, both privately-owned and listed. Alistair joined Motive in January 2006 and was appointed finance director in October 2006.
Leonard Ryan (Non-executive Director), aged 44, is, with Michael O'Rourke, one of the two founding shareholders and co-chief executive of Setanta Sports Holdings Limited, a Dublin-based global sports, media and broadcasting group with interests in satellite-delivered television sports channels, radio stations and new media.
Michael O'Rourke(Non-executive Director), aged 45, is co-founder and co-chief executive of Setanta Sports Holdings Limited, along with Leonard Ryan.
Giuseppe Flores d'Arcais (Proposed Executive Director),aged 40, is a co- founder of Adecq Digital. He has a MSc in Economics and Business Administration from Erasmus University Rotterdam. He has worked at AT Kearney Management Consultants in Milan and at Philips Electronics where he became responsible for Professional AV solutions (Business Units CDS) for Latin America, Eastern Europe, Middle East, Africa and India and latterly Global Marketing Manager out of Atlanta, USA. He left Philips in 2000 to found his own broadcast consulting firm Nextudio. Nextudio supports governments, media authorities and broadcasters in defining business strategies, legislation, technology strategies and digital switchover plans. In 2005 he founded Adecq Digital with Andre Vanyi-Robin. He is co-author of the Spanish terrestrial television switchover plan, approved in Parliament in 2007 and has been heading the digital television group of the Spanish industry association ASIMELEC.
Senior management
André Vanyi-Robin (Chief Operating Officer of Adecq Digital), aged 39, is a co- founder of Adecq Digital. He has a Masters in Business Administration (MBA) from the graduate business school of the University of Miami and a Bachelors Degree in political science from the State University of New York (SUNY) and from l'Institut National de Sciences Politiques (Sciences Po). André was President and Chief Executive Officer of Visualcom, Inc. (Miami, Florida). Visualcom was acquired by Fusion Networks, Inc. (Nasdaq: FUSN) in 2000.