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Broadcasters Eye Content Over Spectrum

Posing more broadband competition for cable operators, 12
major television groups plan to launch a national network that will use the
digital-broadcast spectrum to deliver music, video, games and software to PC owners.

The companies announced the formation of iBlast Networks
last week. Set to launch early next year, the company said it has deals with stations in
place that cover 80 percent of U.S. homes.

Initial investors in iBlast are Tribune Co., Gannett Co.
Inc., Cox Broadcasting, Post-Newsweek Stations, E.W. Scripps Co., Meredith Corp., Media
General Inc., Lee Enterprises Inc., The New York Times Co. Broadcast Group, McGraw-Hill
Broadcasting Group, Smith Broadcasting Group Inc. and Northwest Broadcasting Inc.

The company's business model will be to charge content
providers fees for delivering content, but to offer the service to consumers
free-of-charge, iBlast president Ken Solomon said. Content providers will also subsidize
the cost of small digital antennas, expected to cost $20 each, he added.

"We think of what we're building as a cable MSO,
only a national cable MSO that's comprised of broadcast spectrum," said Solomon,
former president of Universal Studios and USA Television.

While the service will only be available through PCs when
it launches, the company may eventually expand to delivering broadband services to the
television, Solomon added.

Broadcasters that have signed on agreed to dedicate a
portion of the digital spectrum to the service. The stations will have enough digital
spectrum left over to deliver one high-definition channel and two or three multiplexed
standard-definition channels, Solomon said.

None of the ABC Inc., CBS Corp., NBC or Fox Broadcasting
Co. owned-and-operated station groups have signed up for the service. "One of the
philosophies behind the company is, 'Broadcasters unite,'" Solomon said,
noting that iBlast has had discussions with the "Big Four" station groups.

By the time iBlast launches, the company expects to have
deals with stations covering more than 95 percent of U.S. homes.

In addition to dedicating a portion of their allocated
digital spectrum, the station groups invested cash and guaranteed marketing commitments in
exchange for equity stakes in the company. So far, iBlast has raised between $30 million
and $50 million, Solomon said

The company is similar to Geocast Network Systems Inc.,
which is backed by a variety of communications companies, including station-group owners
Hearst-Argyle Television Inc. and A.H. Belo Corp.

Last week, Geocast announced that it raised $74 million in
a second round of financing from Allbritton Communications, Royal Philips Electronics and
venture-capital firms Mayfield Fund, Kleiner Perkins Caufield & Byers and
Institutional Venture Partners. Liberty Media Group invested $15 million in Geocast in
December.