PCCW inks $100M deal for TV network

HONG KONG, China (CNN) -- Pacific Century CyberWorks has signed deals worth just under $100 million to revamp its struggling NOW television and Internet network.

Hong Kong-based PCCW also said it will scrap an agreement that produced English-language programs for the network at a London studio.

Once the centerpiece of the company's dreams of worldwide broadband domination, NOW is being overhauled in a bid to boost sales and audience interest.

Its new deals refocus it on sports and are worth $99.39 million in all.

Significant job losses

Led by 35-year-old tycoon Richard Li, PCCW was once the darling of the stock market. But the dot.com and telecom company is now down at heel.

PCCW stock lost 54 percent of its value last year, making it the worst-performing stock in the Hang Seng index.

In turn, Hong Kong's Hang Seng was the worst performing index in Asia.

PCCW said in a press release Wednesday that it will terminate its content deal with Trans World International (TWI) to make programs in London.

Scraping the TWI deal "could result in the loss of a significant number of the 400 jobs at the studio," PCCW stated.

Total costs for aborting that deal amount to nearly $11.15 million.

Locked into 10-year deal

Last year, PCCW said it would cap Internet investments at $190 million and make best use of existing assets in Hong Kong.

It said any regional expansion would happen only with strict financial limits.

However, PCCW had been locked into a 10-year agreement with TWI, starting in 1999, to produce English-language content.

Wednesday's pact replaces that earlier deal.

Under the new agreement, PCCW will source and produce Asia-focused sports television programs, as well as online games, as it looks to focus on the region's fervor for sports.

Focus on sports ahead of World Cup

The content revamp leads up to the soccer World Cup finals in South Korea and Japan later this year and the 2008 Olympic Games in Beijing.

The new deal with TWI gives PCCW a 10-year royalty-free license to use sports archives and programming owned by TWI for $48.24 million.

PCCW would fund the content deal by issuing 175 million new shares, or what will be 0.765 percent of all its shares outstanding, to TWI at HK$2.15 each.

The Hong Kong telecom has also agreed to take a 10 percent stake in TWI subsidiary Leverlake, which will provide online and TV games, for $30 million with the option to increase its stake to 40 percent by May 2004.

PCCW will also enter into a consulting deal with TWI, paying the firm $19 million over four years.

A spokeswoman declined to provide revenue figures for the NOW service, and said the unit's results are included in PCCW's overall Internet services operations. They reported revenues of $83 million for the first half of 2001.

Shares in PCCW closed Wednesday up 1.16 percent at HK$2.175. They have gained around 12 percent in the last three months.

Reuters contributed to this report.