Trans World to shed 400 internet jobs

UP TO 400 jobs at the UK studios of internet content provider Trans World International are under threat after Hong Kong's Pacific Century Cyber Works terminated a contract to use the company's output on its struggling site Network of the World.

TWI had built up the UK operation under a 10-year deal signed in 1999 to supply NoW with content in English. Richard Li, 35-year-old chairman of PCCW, today warned that a significant number of jobs at the studios could disappear following the early termination.

The entertainment content produced at state-of-the-art studios in west London was costing PCCW about £2.1m a month but demand for NoW did not reach forecasts made when it was launched in 1999.

PCCW, which runs Hong Kong's major fixed-line telephone service, will have to pay about £8m to cancel the contract with TWI, including projected redundancy costs.

The internet provider will carry on supplying other content to NoW, including sports programmes. TWI will lease the studio from PCCW for £3.1m a month, and has an option to buy the facilities in 2004 or 2005.

The NoW project had been hailed by PCCW as a major breakthrough in cyberservices, combining television and internet content. Last year the company announced it was scaling back its operations to concentrate on Hong Kong.

Losses racked up by NoW have not been broken out of PCCW's figures, but the company said when it slashed the service that it would hold losses at £135m in 2001.

Under the new deal, PCCW will obtain and produce Asiafocused sports content, aiming to cash in on the expected demand for sports in the runup to the World Cup soccer finals in South Korea and Japan this year, as well as the 2008 Olympic Games in Beijing. The company also expects the moves to beef up its Hong Kong broadband service.

PCCW will have a 10-year, non-exclusive royalty-free licence to use sports archives and programming owned by TWI and will fund the content deal by issuing 175m new shares, or 0.765% of its enlarged share capital, to TWI at HK$2.15 each.

PCCW has also agreed to take a 10% stake in TWI subsidiary Leverlake, which will provide online and TV games, with an option to take that to 40% by May 2004.

PCCW shares on the Hong Kong stock market last year lost 57% to HK$2.15, at which price they were trading today.