NEWS CORP. DETAILS DIRECTV SERVICE, TECHNOLOGY IMPROVEMENTS TO FCC

News Corp. said the companies were considering a combination of Wi-Fi and Broadband over Powerline technologies to help deliver new broadband services to consumers. The company also mentioned the use of digital TV tuners in set-top boxes (STBs) to increase local programming and using Ka-band capacity on Hughes’s SpaceWay satellites for HDTV, both of which the company had mentioned previously. News Corp. said Hughes could have implemented the ideas already, but “the reality is that Hughes’s current owner has show little interest in them. Much of News Corp.’s response was redacted because of confidentiality, but the public version did provide details on new technologies, the implementation of a BSKyB service for DirecTV, methods for lowering costs and the functioning of the audit committee.

The companies also are considering implementing an interactive television (ITV) service similar to what BSkyB and Sky Brazil have introduced, News Corp. said. In addition to receiving video programming, it said, consumers can “engage in banking and advanced home shopping… choose from among multiple camera angles during the broadcast of sporting events, or… choose among multiple segments being broadcast simultaneously on a news channel,” among other services.

News Corp. said it would cut costs through the implementation of technological standards and exhibiting more control over STB design. While DirecTV now specifies STB functionality, the manufacturers can use their own methods to meet the specifications, the company said, and News Corp. cuts production costs by specifying the use of certain components. If DirecTV joined News Corp.’s other worldwide direct-to-home platforms in using a single, specific STB computer chip, DirecTV’s costs could be reduced $60 million in 2 years, News Corp. said. Other standards such as Advanced Video Codec, Advanced Audio Codec, 8PSK and Turbo Coding also could be considered with the additional savings, News Corp. said. Customer service costs and general and administrative expenses could be lowered $40-$80 million each year, it said, “to achieve levels more closely approximating the low-cost provider in the U.S. market (EchoStar).”

News Corp. emphasized that the new technologies and services were just potential strategies for service improvements and told the FCC that calls from critics for more specificity on the rollout of those services, particularly local-into-local, were “inappropriate.” News Corp. and Hughes were “extremely carful not to over-promise with respect to these services -- especially local-into- local,” the company said: “News Corp. has publicly stated that it will increase the number of DMAs in which DirecTV offers local-into-local service [but] it is ‘difficult to predict’ when the pace of technological improvements will make deployment of these types of services practical.” Although it hasn’t identified specific rollout schedules, News Corp. said it would roll out new services as “quickly as technological developments and financial considerations will allow.”

Addressing questions on the functioning of the audit committee, the company said the panel currently had no rules for functioning because it hadn’t been chosen. Once it’s chosen, News Corp. said, the committee’s charter provides the governance and will be available publicly. The committee will be composed of independent directors, News Corp. said, who can be removed by the board. Responding to concerns about the independence of the independent directors, News Corp. said N.Y. Stock Exchange rules defined independence to mean that each individual should “have no material relationship with News Corp. or any of its affiliates.”