Arqiva Buys Technology Behind Kangaroo

The UK’s largest broadcast transmission company, Canadian-owned Arqiva, aims to launch a VOD service after it bought the technology behind mothballed broadband TV venture Project Kangaroo.

Kangaroo was set up early 2008 by a trio of UK broadcasters ITV, Channel 4 and BBC Worldwide—the commercial arm of the BBC—to aggregate longform on-demand content and emulate Hulu’s success.

The goal was abandoned in February when UK regulatory body, the Competition Commission, blocked the proposal on the grounds that it would be a “substantial lessening of competition in the supply of UK TV VOD content at the wholesale and retail levels.”

The project was at an advanced stage after an investment of around £30m ($50m) by the partners. Now Arqiva has snapped up the hardware and software assets including the project’s original brand name ‘See Saw’ and GUI, for a fee reportedly around £9m ($14.8m).

Arqiva said the new VOD service would appear in the coming months and feature “free-to-air and pay content propositions.” Although Kangaroo’s partners are bound by law not to resuciteate that venture, the broadcasters could sell their content to the new service and compete with Hulu should it launch here as anticipated in the fall.

“The platform will aim to host top-end quality content from leading broadcasters and independent content providers to provide a broad range of user experiences to its audiences,” Arqiva said.

The move is Arqiva’s first into content provision although it is likely to rent the service to a third party rather than strike and host content deals itself. Executives from Kangaroo including CEO Ron Henwood, who was formerly responsible for Channel 4’s on-demand service 4oD, could rejoin to help it launch.

It was the sole bidder for Kangaroo after France Telecom removed itself from the picture in May,

Arqiva already provides the infrastructure for the majority of TV and radio broadcasts in the UK. It runs the transmission of a third of the channels on DTT platform Freeview and is the likely bidder for ITV-owned Freeview multiplex operator SDN. It hopes to raise an extra £3.7 billion ($6bn) in new business from digital switchover which is deadlined for 2012 and is replacing antennas on the 1,150 masts it owns. It recently took control of Digital One, the national platform for digital radio, and also operates an outside broadcast division and playout and satellite uplink services for example uplinking over 250 channels onto BSkyB’s platform.

Already the main technology gatekeeper to TV and radio in the UK it would make sense for it to buy an advanced suite of VOD technology, rent it out to broadcasters and VOD players, and become a landlord in the broadband market too.

“We believe that online video-on-demand is an exciting and complementary development, and a natural extension to our traditional broadcast business,” Steve Holebrook, the managing director for terrestrial broadcast at Arqiva, said in a statement.

As owner and operator of the UK's terrestrial TV infrastructure, Arqiva will look to leverage its strong relationships with public-service broadcasters and other content providers in the UK.

Australian investor Macquarie paid £1.3 billion to acquire Arqiva in 2005 when it was still a division of the NTL cable company. In June however the Canada Pension Plan announced it was buying MCG, one of Macquarie's listed funds, which owns 48% of Arqiva.

The news comes on the day that the BBC Trust, the body that oversees the Corporation’s use of the licence fee, is to report on Project Canvas, a joint BBC, ITV and BT Retail venture to bring broadband VOD to the TV set via new set-top box. The partners will be praying that this too doesn’t fall victim to the regulators.

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