NeuLion/JumpTV moves management team to NY; in talks to crack U.S. MDU market

A Canadian IPTV pioneer is considering a partnership with U.S. satellite TV companies as a way to break into the multi-dwelling unit market, according to G. Scott Paterson, NeuLion Inc./JumpTV Inc.’s Toronto-based vice-chair. It also hasn’t given up hopes of further expansions into the Canadian market. “We need to circle back,” Paterson says. “There are great opportunities in Canada. We’ll get there, one step at time.” Meanwhile, the company is looking to US satellite companies DirecTV Inc. and the Dish Network LLC to expand its subscriber base. “It is something on the drawing board and we have been in discussions to that end,” Paterson says, adding that it’s too soon to provide many details. He explained that many satellite operators are locked out of the multi-dwelling unit market because condos and apartment buildings often forbid tenants from attaching satellite dishes to balconies and window ledges. If the satellite companies teamed up with NeuLion/JumpTV, they’d be able to send programming to people’s TVs via Internet-connected set-top boxes. It’s just the latest idea in NeuLion/JumpTV’s portfolio of novel concepts. The result of a merger that began about a year ago, the firm combines the back-end web know-how of New York-based NeuLion and Toronto-based IPTV pioneer JumpTV. Together they support the video features of numerous sports organizations, including the NHL’s GameCenter website and video streaming for 170 U.S. college sports teams. The merged firm also offers international TV programming, such as Talfazat.com, which streams 35 Arabic channels of different genres – including Qatar-based Aljazeera, which has been criticized in the West for its ease of access to al-Qaeda. JumpTV was one of the earliest Canadian IPTV companies, following iCraveTV.com, which drew the ire of content creators and traditional broadcasters that weren’t quite sure what to make of the whole Internet TV idea. (For an update on iCraveTV’s founder and his latest exploits see “iCraveTV founder back from Bermuda...”.) While JumpTV also attracted the wrong kind of attention from the industry – copyright issues were a major sticking point – it sidestepped the controversy by broadcasting foreign content that wasn’t available from traditional distribution units. Since then, the company has grown. It began trading on the Toronto Stock Exchange in 2006 and last summer it instigated a stock swap with NeuLion. And plenty more has changed since the merger began, Paterson says. While JumpTV and NeuLion used to have independent management teams, the companies agreed to station most of their management in Plainview, NY. “I didn’t think we could really necessarily pick the best people from each crew,” Paterson says, who was JumpTV’s chair prior to the merger. “Charles Wang in particular had proven capabilities operating the business.” Now the owner of the New York Islanders NHL team, Wang was the founder of high-tech company Computer Associates Inc. in Islandia, NY. He retired from that firm in 2002. His wife Nancy Li, a former Computer Associates executive herself, is NeuLion’s CEO. Wang is the chair. As the Toronto-based vice-chair, Paterson works with about 20 local staffers – down from 55 before the merger, he says. Beyond staff and structure, the company also changed its approach to international content. Whereas JumpTV used to aggressively collect new stations to stream, NeuLion/JumpTV takes a slower approach, packaging stations in portals such as Talfazat.com and marketing them as a single offering. Business wasn’t always so well contained. By 2005 the company was amassing channels to stream – perhaps too much, too soon. “We had 330 channels from 30 countries. We were too ambitious,” Paterson says, explaining that it was difficult to support so many stations technologically, and marketing was an ongoing challenge. “We took a step back and said, let’s be more focused.” That initial lack of focus combined with general disappointment about the pace of IPTV uptake may have hindered JumpTV’s share price on the TSE. It opened at $5.50 on its first day in August 2006 and reached nearly $10. But today it’s in the $1 range. “There was a lot of expectation that the growth would happen quickly. It took more time,” Paterson says, adding that TV stations and sports organizations are starting to understand the potential of using NeuLion/JumpTV’s technology. “We have our costs under control...and unbelievable technical competency.” Reporting on the quarter ending March 31, NeuLion/JumpTV announced that its revenue had increased 247% year over year, from US$1.9 million to US$6.6 million. But its losses also increased from US$1.5 million to $5.8 million. How will the company break into the black? “We need a few more quarters,” Paterson says. The company is still in growth mode, building back-end systems for more sports organizations – but of course, those efforts haven’t yielded a drop of revenue yet. “We think the fourth quarter will be very big for us,” when sports seasons start. The company has signed up 140,000 subscribers, but Paterson says it’s difficult to measure the audience figures. The measurement doesn’t include people watching videos on NHL GameCenter, for instance. Revenue growth is the better yard stick. “It tells you flat out if you’re getting more subscribers.” Now that the CRTC is considering a new regulatory regime for Internet broadcasters like NeuLion/JumpTV, is the firm worried about potential regulatory constraints? “Not very much,” Paterson says. “We’re pretty U.S. centric... But they’re tough issues to resolve. There’s merit in preserving Canadian productions, though it’s very challenging in a new media business. It may actually push away the entrepreneurs.” Stefan Dubowski is a freelance writer in Ottawa. You can reach him via sdubowski@rogers.com.

NeuLion/JumpTV moves management team to NY; in talks to crack U.S. MDU market

Broadcast | May 21, 2009

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