NDS, a News Corporation company, which is a leading technology provider for interactive and pay television, has announced its preliminary annual results.

Annual revenues were down from £237 million to £220 million, accounted for by a decrease in revenues from DIRECTV and the acquisition of MediaHighway. The company says that underlying revenues have increased by 19%. EBITA was £44.6 million, compared to £46.4 million for the previous year.

Commenting on NDS’s performance, Dr Abe Peled, president and chief executive officer, said: “Our successes this year included seven new conditional access contracts spanning three continents and four new XTV customers. We remain committed to ensuring that NDS and its customers are at the forefront of digital TV technology.”

Speaking to analysts, Dr Peled acknowledged that “The year started with a great deal of uncertainty and the prospect of losing our largest customer,” although these differences have apparently been resolved.

“We characterised this year as a year of transition and a year of investment,” added Rick Medlock, chief financial officer. “We have made significant investments in our resources and staffing, undertaken a major acquisition and continued our global expansion – all of which have strengthened the business. With the win-back of DIRECTV and the strong business pipeline, we enter the next financial year with great revenue and earnings momentum.”

It was also announced that Rick Medlock, who has served as chief financial officer will leave NDS at the end of September to join satellite provider Inmarsat.

Towards the end of 2003, the company acquired MediaHighway and says the integration of that business is now substantially complete. The company plans to offer customers a range of middleware, from basic to the most advanced, under the MediaHighway brand.

The company says it has a well-defined strategy for a ‘converged middleware architecture’ ranging from NDS core at the low end to MediaHighway at the high end, including support for MHP. It will result in a family of middleware with a common low-level interface to receiver hardware.

In March 2004, NDS signed a new six year contract with DIRECTV to supply conditional access services and has since resumed smart card shipments. NDS says it is pro-actively developing additional products which might be used to enhance the services offered to DIRECTV’s subscribers.

Although a contract deal has yet been finalised, NDS expects to see their middleware appearing in DIRECTV set-top boxes towards the end of 2004.

Other recent contracts include:

  • The provision of conditional access systems for CJ CableNet in Korea, its third win in the country. The companies will co-develop one of the world’s first OCAP compliant electronic programme guides.
  • Providing interactive games for the Cablevision iO: Interactive Optimum digital television platform serving 3 million households in the New York metropolitan area.
  • Supplying the NDS MediaHighway Advanced interactive TV platform to Euro I AG in Bremen, Germany. This combines MHP middleware with PVR capabilities, an HTML engine and broadband return channel.

NDS says it has also won another customer for the XTV technology that powers the Sky+ service, which it says represents a fantastic platform for future services and innovation.

“We’re very excited about the potential of XTV technologies over the next few years to tranform the way people watch television,” said Dr Peled. “We have been working on adapting the XTV technology to the DIRECTV platform, including a new interface which we believe we will see offered by DIRECTV in the first quarter of 2005.”

NDS believes that its offering has significant advantages over TiVo, including better integration with the EPG, the ability to push content to the box, strong content protection on the disk, and the fact that as a pure technology provider they do not have any claims to ownership of the subscriber relationship or usage data.

In June 2004 there were 44 million authorised smart cards containing NDS technology in use, up 9.6 million over the year. This is accounted for by growth at DIRECTV, Sky Italia (which is in the process of switching all its subscribers to NDS technology), ViaSat in Scandinavia (where NDS conditional access is being rolled-out to replace an incumbent supplier) and FoxTel in Australia (which launched a full digital service in March 2004).

Based in the UK, with development centers in Israel, France, China and India, the company now has over 2,000 staff, an increase of 245 over the year, together with 320 employees added through the acquisition of MediaHighway.