Air turns blue over NTL's porn bill

WHEN a cable TV company starts receiving writs over not paying for its pornography, you know it's in real trouble. And that's exactly what has hit cable company NTL. The troubled group has come perilously close to a courtroom showdown with Playboy TV - all over a bill of just £120,000 for soft porn.

NTL subscribers seeking something rather more exciting than another rerun of Dukes Of Hazzard are offered tantalising trailers. Every evening, viewers are given a free five-minute preview in which scantily-clad lovelies invite subscribers to part with £3.99 for a few hours of steamy TV. But like some of its armchair punters, cash-strapped NTL has been desperate for the show to go on - but has had trouble paying for it.

A High Court writ was issued last month by Playboy TV - part of Hugh Hefner's bunny girl empire - which supplies two soft porn channels to the cable operator. It claimed that NTL had failed to pay for programmes since November.

NTL has plenty of problems. It is struggling to refinance £12bn of debts. And last week, Pace, the company that supplies set-top boxes, cast doubt on its credit-worthiness. So this new slap in the face for NTL from its sex channel supplier is an unwelcome development.

Playboy TV, based in Basildon, Essex, said it had resorted to the High Court as NTL had failed to pay despite letters sent on 17 January and 1 February. Playboy TV, part of Playboy Enterprises run by Hefner's daughter Christie, maintained its programming to NTL while it resorted to court. But it was hard-nosed enough to add costs and interest at the rate of £26 a day to its demand. And the threat of losing its two adult channels has been enough to force NTL to settle the bill.

Playboy, whose parent group has been going through its own problems because of a severe slump in advertising, would say only that the issue had been resolved.

Company executives refuse to comment on whether Playboy now intends to tighten credit terms for NTL, insisting on money as soon as its programmes are broadcast.

NTL this weekend claimed it was unaware of the Playboy writ. So happy were relations between the two companies, said a senior executive, that there was the possibility of launching more soft porn channels in future. And NTL, whose founder Barclay Knapp has described the company's massive refinancing as merely 'challenging', has hit back at Pace, which until now has been its only supplier of set-top boxes.

When Pace last week issued its third profit warning in seven months, chief executive Malcolm Miller claimed the group had been hit by having to stop deliveries of set-top boxes to NTL. Pace had been unable to secure credit insurance for the contracts - deals with insurers to cover the supplier in case buyers cannot pay.

NTL hopes to have its revenge for Miller's slight. It will announce a deal with the mighty Korean group, Samsung, to supply set-top boxes. And, says NTL, Samsung's boxes will have a higher specification and will be better serviced than those supplied by Pace. 'Samsung has a great reputation for providing quality and good customer service,' crowed NTL's managing director, Stephen Carter. 'Having two suppliers rather than one is great for our business.'

A second NTL executive added: 'This shows that it's business as usual. Samsung clearly doesn't have problems supplying us.'

He denied that other suppliers are putting a credit squeeze on the beleaguered cable company. The executive added: 'If invoices are presented in the right way, to the right person, they are being paid.'

But the fragility of NTL's financial position will be underlined this week when the group reveals its results for 2001. Executives will make much of the headline profit of about £485m and an average revenue of £480 per customer.

But these figures will be struck before the monumental interest charge the group has to pay on its £12bn of borrowings. That bill will put NTL deep in the red. That debt burden was amassed as NTL took on loan after loan and issued countless bonds to finance a frenetic buying spree that saw it acquire dozens of local cable franchises across Britain.

For now, NTL and its pornographer of choice seem to have made up their differences. But Playboy is unlikely to be the last to get twitchy over the cable company's finances.

Additional reporting by Jon Rees and Simon Fluendy