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Motive Television has recently completed a major change of focus. They are in the process of selling and closing their legacy television production companies to concentrate on sales of Bestv, a software product which could revolutionise Digital Terrestrial Television (DTT).

I spoke to Executive Chairman, Mick Pilsworth, about the Bestv opportunity. Mick is clearly very optimistic about its prospects, so much so that he describes this as the most exciting opportunity for traditional commercial broadcasters that he has ever seen. Such a comment from someone who has had a very successful career in television is worthy of attention. Mick founded the Television Division of Chrysalis Group in 1993, which he built up as Chief Executive before leaving the Group in 2002. This highly successful division, responsible for a number of well known television programmes, including ‘Midsomer Murders’ and ‘Richard & Judy’, was sold for £51 million in 2003.

The Bestv Opportunity

Early in 2009, Motive took the decision to invest in distribution technology for Digital Television. The Company views this as an area with great potential as the worldwide switchover from Analogue to Digital television gets underway.

On 7 July 2009 the Company announced that it had appointed Leonard Fertig to head up the Company’s new Motive Digital division. In the 1990’s Leonard had been Founder and CEO of Central European Media Enterprises, where he took that company forward to become a billion dollar NASDAQ-listed broadcasting company with operations in eight countries.

On 30 July 2009, Motive announced that it had secured the global rights to Bestv patented digital technology from Barcelona based Adecq Digital SL. The rights exclude Spain and Italy where the technology is already in operation.

The Italian launch in November 2009 was a high profile affair where Silvio Berlusconi’s Mediaset teamed up with the Italian national broadcaster RAI to launch a national digital terrestrial pay-TV service based on Bestv.  This page (in Italian!) from the Mediaset website gives details of the launch.

How Bestv works

Bestv provides the opportunity for a DTT broadcaster to supply video on demand, live pause, catch-up TV and pay per view. Because the system does not require a satellite disk or cable it has become known as ‘Pay TV Lite’.

Customers who wish to use Bestv either purchase a set top box (for around £100) in a retail store or, under the terms of a subsidised/subscription customer model, they are given one for free by their DTT broadcaster. The set top box includes a hard drive where video content is stored. The Bestv system works by using part of the digital signal to ‘trickle down’ video content, at about half normal viewing speed, to the set top box. It is anticipated that the set top boxes will have a storage capacity of approximately thirty films at one time.  The system also allows for auto-record instructions to be sent to individual set top boxes, enabling programmes to be tagged for recording and later playback as part of a catch-up TV offering.  

Mick Pilsworth                   

The customer can view a menu showing the films available to view and can select an item to view at any time. Once the film has been viewed it is deleted from the set top box to be replaced by another item (again via ‘trickled down’ through the digital signal).  The Bestv system also handles payment for viewing via SMS, phone calls, on-line or decrementing a pre-pay account.  Alternatively a customer may be given the option to watch a pre-roll advertisement and then watch the item at no charge. 

Bestv will be available in HD and will have internet connectivity from Q2 2010, allowing users to use their set top box to browse TV content on the internet, as well as providing an on-line billing system and detailed information on viewing habits to the broadcaster.

Compelling Case

DTT broadcasters, such as ITV, have been badly hit by falling advertising revenues and increasing competition. Mick Pilsworth describes Bestv as providing broadcasters with a compelling long term strategic opportunity. The attraction to the broadcaster is that the system is a low cost solution which provides facilities to compete with Satellite and Cable TV. This then generates another revenue stream for the broadcaster, independent from advertising.  The broadcaster can also offer targeted advertising, the “Holy Grail” of advertisers, as each set-top box can play out a different selection of commercials depending on the demographic of the viewer.

The opportunity for Motive Digital is that there are 225 broadcasting territories and a worldwide audience rapidly switching to digital television. All countries have to switch off analogue TV by 2015, and in Europe by 2012.  The USA has already switched off analogue TV.

Naturally there are other products available which can provide some of Bestv’s facilities for DTT broadcasters as well as large players wanting to enter the field.  However, the Bestv technology is patented (Spain, applied for in EU). Currently there are no competing products that offer the same facilities as Bestv AND Bestv is tried and tested.

Original Investments

Motive Television was first set up in 2004 and listed on AIM in 2005. The Company invested in a number of television production companies and revenues from these companies had been growing up until 2008 (£4m). However, these production companies have been badly hit by the recession. Independent television’s problems with falling advertising revenue have been well publicised and these have meant cutbacks, particularly in programmes screened at off-peak viewing times. Unfortunately for Motive this area had been the main focus for their production companies.

The Company has taken measures to cut costs to improve matters. They have also secured contracts with the BBC which has been less affected by the recession. However, with prospects for independent television companies still not seeming bright, and with the opportunities arising around Digital Television, the Company has taken the decision to sell or close all of its television production assets. The Company is currently in negotiations regarding the sale of the two remaining active companies, Brown Eyed Boy and the Irish Motive Television company. The Company is hopeful that there will be news on the sale of Brown Eyed Boy within the next few weeks. 

news... within the

next few weeks

Results and Finances

Having no revenue from its loss making television production companies, Motive has recently needed to raise funds to invest in its new Digital Division. The fund raising exercise has taken longer than planned because of the takeover of the Company’s NOMAD and Broker, Dowgate Capital.  Indeed, Motive’s shares were suspended from 4 January to 12 February 2010 while the appointment of a new NOMAD was finalised.

The Company has raised £384,000 (see 9 February announcement here) net of expenses. It is anticipated that these funds, along with the money from the sale of the production companies, will be sufficient to take the company into profitability.

Regarding recent results, Motive reported a loss of £1.49 million in the year to 31 December 2008 and will undoubtedly be reporting a loss for the year to 31 December 2009. However, these figures have little relevance to the future of the business which will be very different from 2010 onwards.

The Shares

When Motive’s shares were first listed in May 2005 they traded at around the 4 pence level. However, the shares have been below a penny since 2008, reflecting the difficulties in the television production businesses. The chart below shows the share price fluctuations since January 2009.

The placing announced in February 2009 was at 0.2 pence, which was a considerable discount to the share price seen in the latter months of 2009. The placing shares (including some debt conversion) represented 39.5% of the enlarged share capital.

On return from suspension on 12 February the shares leapt 75% in a day. They have subsequently settled back and it now seems that they may be returning to the trading range seen throughout much of 2009.

the shares leapt by

75% in a day

What Next

Much of the Directors’ time in recent months has been taken with the closure and sale of the television production companies. The remaining two company sales should be completed in the early months of this year which will free up time for the Directors to concentrate on the development of the digital television business.

Given Len Fertig’s background at CME it is anticipated that the first Bestv sales for Motive will be in the USA and Eastern Europe. The USA, which has already completed the switchover to digital television, is a huge potential market. Here cable television rental can be as much as $100 per month and Bestv would be an extremely useful tool for the DTT broadcasters as they compete with the cable companies. 

It is anticipated that the Company will be profitable and cash flow positive on a monthly basis by the end of 2010. At present Motive Television has very low fixed costs. The Company is likely to employ a small number of sales consultants at some stage to assist in sales of Bestv.

Equity Development produced a short research note on Motive Television on its return from suspension on 12 February. The note, entitled ‘Alive and Kicking’ can be found on the Equity Development website here – registration required, but it is free. Equity Development are working on a more comprehensive research note at present and this may throw some light on the likely future development of the business.

Aimzine Comment

Motive Television is a classic ‘penny’ share, having considerable potential and yet no guarantee of any sales from their Bestv product.

Nonetheless they have a number of important factors in their favour. Firstly, they have extremely experienced and successful directors in Mick Pilsworth and Len Fertig. Secondly, Bestv is fully tested and available to an industry desperate for new revenue streams. Furthermore, the Company has sufficient cash resources for the immediate future and are optimistic of sales. For a Company with a market cap just a shade over £3 million they represent an interesting play.

We look forward to reporting further news on Motive in our Featured Companies update over the coming months.

Footnote: As well as having an illustrious career in television, Motive Television’s Executive Chairman, Mick Pilsworth has also written two most amusing articles for previous editions of Aimzine. Here are links to these articles: The Essential AIM Guide for 2009 and A Christmas Ghost Story.

profitable by the end

of 2010

classic penny share

Written by Michael Crockett, Aimzine

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