SRI NEAR PLAN FOR SMART FUNDING: FOUR NETS SET FOR LETTERS OF INTENT; NO OWNERSHIP IN NEW FINANCING DEAL

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With a relatively short time frame within which to obtain financing for a national rollout of its Smart TV audience measurement system, Statistical Research Inc. is in the process of obtaining a second round of letters of intent from networks after having presented them with a new funding plan.

ABC, NBC, Fox and Discovery Networks are said to be close to signing such letters. USA Networks has already done so, according to an executive with knowledge of the situation.

CBS is said to be evaluating the situation and has not made a commitment to sign yet.

A number of the broadcast networks, led by CBS, earlier had declined to fund a Smart rollout (AA, Nov. 9).

Executives at the networks either declined comment or could not be reached. SRI President Gale Metzger also declined to comment on any discussions surrounding the financing.

UNDER THE GUN

SRI is under the gun to obtain financial backing for the national rollout because current funds supporting the Philadelphia test of Smart run out soon. Mr. Metzger announced last week that he had started to shutter Philadelphia test operations and was beginning to make preparations for a national rollout.

In rethinking its financial plans, the executive familiar with the situation said the latest proposal eliminates any network ownership in Smart. One reason the networks have balked is because they don't want to own a stake, since advertisers and agencies might think the service's ratings would then be tainted.

Smart "is now asking for certain moneys that would be used to start up the service, which would be considered an advance against future services Smart would provide the networks once it gets going," the executive said.

Getting network support is essential if SRI is to find venture capital and a strategic ownership partner.

"It's a chicken and egg thing," the executive said. "The venture guys have to see that Smart has real support."

The letters of intent are non-binding, "but they spell out the financial commitments each player would have to make, and I don't see these networks signing them if they aren't intending to follow through to contracts," he added.

SEEKING HALF AS MUCH

SRI apparently is looking for about half the dollars previously sought. For example, each of the major broadcast networks are being asked to commit about $12 million to get Smart started.

The funds would be spent during the next two years, with the service fully activated in 2001.

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