Liberty Digital Net Has Travel Theme

Liberty Digital Inc. will team with Discovery Communications Inc. to develop a channel dedicated to leisure-travel transactions, the first in what will be a batch of long-awaited interactive-TV services.

Last week, Liberty Digital and DCI said they had reached an agreement to explore creating a commerce-based, interactive digital-TV channel aimed at the online travel sector, a market expected to reach $25 billion by 2003. Both companies will develop a business plan for the ITV service, the first of more than a dozen that Liberty Digital plans to create for AT&T Broadband.

The goal of the new channel-which will be enhanced by narrowband and broadband technologies-is to permit consumers to browse destinations around the world, request information, book trips and purchase travel-related items such as tour guides and accessories. This interactive "commerce" channel is envisioned as complementing DCI's "entertainment" service, Travel Channel.

"The Travel Channel is an entertainment programming brand," a DCI spokesman said. "This [interactive channel] is strictly commerce, a QVC of travel. You can shop for trips and travel accessories, at bargain prices."

While Travel Channel's programs depict dream places to visit, the interactive travel channel "will be about all about destinations you can book," said Liberty Digital president and CEO Lee Masters.

For example, it will air short segments, of maybe five minutes or so, detailing travel packages for such destinations as Paris. A viewer could then hit a remote-control button and order the trip.

The ITV travel channel may include video clips in its presentations, according to Masters. To that end, the service will most likely repurpose some programming from Travel Channel's library, he added.

The model for the interactive travel channel is TV Travel Shoppe, a United Kingdom network that has enjoyed much success in selling travel packages on TV, effectively acting as a travel agent, Masters said in an interview.

Liberty Digital's interactive transactional channel has already received a cable berth from at least one MSO, AT&T Broadband. The operator last year agreed to give Liberty Digital control of a 6-megahertz channel on its cable systems.

Liberty Digital is part of AT&T Corp.'s Liberty Media Group programming arm. Liberty Media is also DCI's largest shareholder.

Over the course of several years, Liberty Digital plans to create 12 to 15 interactive channels for its 6 megahertz of AT&T Broadband bandwidth.

"The significance of this [travel-commerce channel] is that it's the first one they're talking about developing from the ground up," said Doug Shapiro, an analyst with Bank of America Securities. "And basically, this is the vehicle that will clarify the specifics of the terms-of-access agreement [for Liberty Digital to get the 6 megahertz of bandwidth on AT&T Broadband]. Before, there was no reason to clarify those details."

Liberty Digital is looking at "verticals," or content and topics that would be strong candidates for transaction-oriented, electronic-commerce networks. Among the other categories under consideration: music, the home, gadgets, financial services, and the Generation X and Generation Y demographics.

Liberty Digital holds an ownership stake in a retailer that caters to teens, and could sell apparel to that group via an interactive channel, according to Masters.

"They're looking at a spectrum of channels, from those that are largely programming with some interactive overlay, to those that are mainly transactional channels," Shapiro said.

Liberty Digital has already made a move with respect to traditional programming channels that employ an interactive element.

By the end of the month or early January, Liberty Digital will close on its deal to acquire 50 percent of Game Show Network from Sony Pictures Entertainment Inc. for $225 million in cash and $50 million in Liberty Digital stock. That deal will mark Liberty Digital's first investment in a cable network.

Liberty Digital will not only increase GSN's interactivity, it will also broaden its content from game shows to games in general, Masters said.

"Game shows will remain part of the schedule, but the channel will represent games of all sorts," Masters said. "We're hoping to attract a younger demographic."

As a result, GSN's name may be "modified" to reflect its broader content, games in general, according to Masters.