Broadcast Transmission Company, Arqiva, Acquires Project Kangaroo Platform Assets

--Plans to Launch VOD Service in Coming Months

Broadcast transmission company, Arqiva (note: the company owns and operates two of the UK's six digital terrestrial TV multiplexes, and is currently in the running to acquire a third), announced last week that it has agreed to acquire the platform assets of Project Kangaroo, the VOD platform developed by UKVOD, a joint venture between the BBC's commercial arm, BBC Worldwide, and terrestrial broadcasters, ITV and Channel 4. The deal--which is believed to value the Project Kangaroo assets at £8 million--is expected to close within a few weeks.

According to Arqiva, the Project Kangaroo platform assets that it is acquiring include hardware and software, and related intellectual property that was developed for the service. It says that they provide "the technical basis of a VOD platform designed for a content-aggregation service, where a wide variety of TV content is brought together in a one-stop-shop for long-form video content." According to a report in the UK newspaper, The Guardian, Friday, the assets include the brand, "See Saw," under which the Kangaroo joint venture was to do business; and Arqiva is also in discussions to hire a number of senior executives from the venture (note: senior executives still involved in the venture include CEO, Rod Henwood; CFO, Christine Mullin; CTO, Lee Morgenroth; commercial director, Cosmo Lush; and product director, Richard Dines).

Project Kangaroo was believed to be close to launch, when it was nixed in February by the Competition Commission, an independent public body that investigates mergers, markets and regulated industries at the UK government's behest. The Commission, which claimed that the service would result in a "substantial lessening of competition in the supply of UK TV VOD content at the wholesale and retail levels," also compelled the partners in the venture--which are believed to have spent over £30 million on its development--to commit to various "undertakings" in order to ensure that they do not again engage in joint activities that would restrict competition in the UK VOD market (note: the undertakings, which are slated to be in effect for five years, prohibit each of the parties--unless it first secures "the prior written consent" of the Office of Fair Trading, the regulatory body at whose behest the Competition Commission launched its investigation of Project Kangaroo--from 1) acquiring control of "all or any part of the video-on-demand activities carried on" by either of the other two parties; 2) having any of its directors or managers hold "any directorship or managerial position in any company or other undertaking carrying on or having control of all or any part of the VOD activities" of the other two parties; and 3) carrying out "any agreement or arrangement with any person" that would allow it to circumvent these prohibitions).

Arqiva says it plans to use the Project Kangaroo platform assets to launch a new VOD service to UK consumers in the coming months. It says that the service--which initially, at least, will be Web-based, and consumer-facing, rather than white-labeled--will offer both free and paid content, including "top-end quality content from leading broadcasters and independent content providers"; its public statements indicate that it believes that the "strong relationships" it enjoys with public service broadcasters and other UK content providers, as a result of its broadcast transmission business, will put it in a good position to offer such a service. "We are delighted to have reached this agreement to acquire the platform assets of Project Kangaroo," Arqiva's managing director for terrestrial broadcast, Steve Holebrook, said in a prepared statement. "Arqiva and its direct predecessors have been delivering linear analog and digital TV services to UK viewers for many decades and we're currently upgrading the TV network to deliver DSO. We believe that online video-on-demand is an exciting and complementary development, and a natural extension to our traditional broadcast business." Arqiva's service will likely face competition from Hulu, the broadband video service owned by UK broadcasters, NBC, Fox and ABC (Disney), which is expected to launch a UK version of its service later this year.