Companies Merge to Work on Interactive Television.

With the participation of a Beverly Hills-based technology incubator, Steeplechase Media Inc. and EyeScene Inc. have agreed to merge and work on the next stages of interactive television.

Privately held Steeplechase, a Santa Monica-based company that sells production services that combine the Internet and television, took control of Tel Aviv-based EyeScene, a research and development company working on interactive television in exchange for a 25 percent stake in Steeplechase.

"The merger with EyeScene gives our company the technical support needed to create the tools to build a platform for interactive television," said Larry Namer, chairman and chief executive officer of Steeplechase.

Financial terms of the deal, which was brokered by entertainment technology incubator EnterTecGroup LLC., were not disclosed. EnterTec will also become a minority shareholder in Steeplechase.

Namer said it was the first deal that involved giving up an equity stake in his company, which will retain the Steeplechase name.

In addition to strengthening another player looking to enter the interactive television market, the deal also represents another in the pipeline of Israel-L.A. technology ventures, including Irvine-based Broadcom Corp.'s acquisition of chip maker VisionTech Ltd. and Jerusalem-based ASP Virtual Communities Inc.'s recently opened L.A. office.

"The deal is a great opportunity to catapult EyeScene into the entertainment industry mainstream." said Brad Scherick, a managing partner with EnterTec Group.

Scherick said Namer, who co-founded E! Entertainment Television Inc., will remain as chairman of the merged entity. Offer Kohen, president of EyeScene, will become chief creative offer.

Kohen will oversee the integration of Steeplechase's "television.com" service with EyeScene's Buzzshow application. Both services focus on personalized television, from TV listings and video previews to personalized viewing.

Kohen will also head up creative efforts to build "virtual niche networks," a number of services designed specifically for deployment on the new digital set top boxes and other broadband distribution platforms.

The sewing channel, for example, would offer 20 minutes of programming a day, but would be available whenever the consumers wanted to watch the channel, explained Namer.

A growing market

"Within three years, there will be 20 to 30 million homes in the U.S. with the capability of interactive television," Namer predicted, "We will have built the infrastructure for 12 to 15 of these virtual networks, which will be designed to run on all broadband platforms."

Steeplechase has been involved in the interactive television business since its creation in 1995. Its clients have included Microsoft Corp. and several television companies and networks.

Despite the opportunity presented by a market that's expected to grow rapidly, analysts said that in order for Steeplechase and other iTV companies to be successful, the industry still must set standards and make the financial commitment to marketing products.

"I still see a lot of confusion over platforms -- whether it's Web-TV, PowerTV or Liberate Technologies," said Gerry Philpott, president of E-Poll.com, an online research company in Encino. "If I'm confused, I can only imagine how confused the viewers are."

Philpott said for interactive television to be successful there needs to be more consensus within the industry, because each company has different needs and business models.

"We need to standardize the industry as much as possible," he said.

Richard Fisher, president of San Francisco-based RespondTV, agreed and urged companies to make the financial commitment to market interactive television nationwide.

"The technology works and there is a revenue stream," he said. "The industry has to promote interactive television. It is inevitable that they will. The question is, how long will it take for iTV to become a more viable form of entertainment?"

Unlike previous deals, Namer explained that the Steeplechase transaction would help change perceptions about the company within the iTV community.

"A lot of people see us as people from the business side of television, even though for the past five years we have been deeply involved in the production of content for the Internet," he said. "This deal allows us to bring in a heavy duty technology company and prove that we can be both creative and tech savvy."

Steeplechase has also worked with Big Ticket television, now part of Paramount TV, to provide the interactive version of the "Judge Judy" television show for Web-TV owners and cable subscribers with settop boxes using the Liberate Technologies operating system.

The interactive version of the popular show enables viewers to vote through their sets about how Judge Judy should rule on a certain case.

The merger is scheduled to close Jan. 15, and the new company will be headquartered in Santa Monica, with research and development efforts as well as most production operations remaining in Israel.

"Steeplechase and EyeScene were both created to serve the new television user," noted Namer. "By joining the energies and talents of these two companies we have the potential to change the way people find out about television and watch television around the world."