Content company may be possible suitor for struggling MDS operator Look: analyst

Look Communications Inc may be in the final stages of securing a financing arrangement with a major content provider or entertainment-type company that would see the struggling MDS operator live another day, an industry analyst suggests. The Milton ON-based company has until Sept. 7 to come up with a plan to pay back $98 million to its primary lenders, BCE Inc and Telesystem Ltd, or close up shop for good (RoW Update, Aug. 27/01). The money was originally due Aug. 25, and while BCE and Telesystem agreed to extend the deadline, they weren't willing to provide further financing to keep the company afloat beyond the end of this week. However, some speculate a deal to save the embattled wireless cableco is in the final stages of development. Eamon Hoey, senior partner at Hoey Associates and Telecommunications Consulting Services Inc, says the two-week extension could provide Look with just enough time to get the deal done. "My sense would be they would be looking towards getting some new investment in there and (that) they've got something reasonably solid," he told Report on Wireless. "Also, given all the machinations, this is going to be a costly kind of entry." The crux of any potential agreement, however, rests on BCE's willingness to part with its 20 per cent share in the company. Hoey suggests that Look needs these shares back to attract a new investor. Alternately, BCE could choose to keep its equity and write off the loss. Look's failure would also mean one less competitor in the market against BCE in the broadcast distribution and ISP markets. "My sense is that is not likely the behaviour we're going to see, largely from the perspective (that) Jean Monty and his entourage don't want to be accused of thwarting competition." While it's still unclear which, if any, company is interested in Look, Hoey suggests that it would likely be a content-type company or one that has a reason to be in that kind of distribution business which could benefit from both Internet and TV pipes. Look has already experimented with the distribution of content through its LookTVi portal (For more information on the LookTVi portal, refer to the Sept. 6/00 issue of RoW affiliate publication, Canadian NEW MEDIA). "You look at some of the companies that are showing a sudden interest in cable. We've got everybody from Disney to Microsoft wanting to be in this business largely because they want to make sure they have a supply line to their customers," Hoey says. "Now whether a company the size of Microsoft or Disney would take an interest is a whole other issue." Key differentiators never materialized for Look Problems for Look began almost at the outset. The company tried to compete in a market where incumbents such as Shaw Communications and Rogers Cable were already well entrenched, and satellite TV companies such as Bell ExpressVu and Star Choice had entered the fray. CRTC packaging rules also prevented Look from offering a service much different from its competitors. Look may have also under-estimated customer inertia. "The value proposition that Look has is no different from (the one) that ExpressVu offers and for that matter not significantly different from the value proposition that Ted Rogers offers," Hoey says. "Their value proposition has become a commodity one of 'we've got the best price in town', and I don't think you can build a business on the best price in town." Despite the near-fatal position of Look, Hoey isn't yet ready to count out the wireless cableco, especially with chair Michael Cytrynbaum holding the reins. "I think Michael Cytrynbaum has got a real dandy here, but he's no slouch," he says. "But certainly, he needs a new partner to fill in where BCE is today."

Content company may be possible suitor for struggling MDS operator Look: analyst

News | 09/04/2001 4:00 am EDT

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