Sony at NextLevel

Giant buys stake in digital TV-top box co.

Sony Corp. became the latest major "convergence" corporation to become enamored of digital TV-top box technology, as the hardware/software giant announced Tuesday it was acquiring 5% of NextLevel System Inc., one of the most notable manufacturers of such devices, for nearly $190 million.

The deal, rumored around Silicon Valley and Wall Street as the year was turning, calls for Sony to pay $25 a share (more than a third above its Monday closing price on the New York Stock Exchange) for 7.5 million shares of NextLevel's stock. The deal is about who will distribute NextLevel's set-top boxes in North America and, eventually, the world.

Monday's deal with NextLevel also fits in with Sony's stated corporate goal of building a seamless digital arch from studio to living room; set-top boxes, which have become 1998's entry point of choice into homes by content providers and manufacturers, was one niche in which Sony did not, as yet, have a significant presence.

'Important gateway'

A Sony spokesperson Monday confirmed the deal and added, "We think the digital cable set-top box is going to hold an important gateway role for the home network of the future, and (NextLevel) is the major player in the U.S. cable TV manufacturing industry."

For its part, NextLevel -- which is in the process of trying to become the dominant American set-top device manufacturer -- gains access to Sony's immense global distribution and (perhaps more importantly) marketing presence, plus one of the more active electronics engineering R&D outfits in Japan.

The Hatboro, Pa.-based company has already struck a number of impres-sive deals over the past 12 months. Just last month it sold options on at least 15 million next-generation set-top boxes (newer models with far larger data-processing grunt than those on the market now) to cable giant Tele-Communications Inc. for $4.5 billion over the next three years.

And NextLevel executives have been engaged in discussions with software behemoth Microsoft Corp. (which has its own set-top box agenda, having bought out WebTV in 1996) to spin off as much as 25% of its stock for as much as $800 million in cash or, perhaps, in quasi-golden Microsoft stock.

NextLevel is indeed getting so big it is outgrowing its name; it is in the process of metamorphosing itself into General Instrument -- which used to be its name before the corporate iconographers got to its directors in 1996.