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Interactive Channel, Diva Forge Deal

Dallas -- Diva Systems Inc. will license technology from
Source Media's Interactive Channel to accelerate the deployment of video-on-demand on
digital set-tops, the companies announced last week.

In the deal, so far a memorandum of understanding, Diva and
the Interactive Channel will work as "preferred partners" in a nonexclusive
arrangement initially focused on service deployments made by Insight Communications in two

Tom Oliver, president of the Interactive Channel, said that
the Diva arrangement "is extremely significant." He said that Diva's plan to
license Interactive Channel's "VirtualModem" software gives Diva a leg-up on an
integrated solution to deliver VOD, "immediately expanding their digital

Michael Willner, president and CEO of Insight, said in a
statement that "the combination of Diva's service and the Interactive Channel's
LocalSource television is one of the key elements to growing our digital business."

Interactive Channel and Diva are also considering the
development of integrated, stand-alone applications that will run on General Instrument
Corp.'s DCT line of digital set-tops. That's in addition to agreements made for joint
marketing and business development, Oliver said. The two also plan to develop a joint demo
video to describe the combined service.