Skypix Technology May Help Rxl Cut Price Of Interactive Broadcasts

DOWNTOWN

When the public relations firm The Rockey Co. was asked to represent SkyPix Corp. affiliate Northwest Starscan, the overture was met with great skepticism.

SkyPix, after all, is in Chapter 11 bankruptcy. Its founders, and the controlling partners in Northwest Starscan, Frederick and Richard Greenberg, have been the target of lawsuits, a Securities and Exchange Commission investigation and accusations by creditors and former employees that the Greenberg brothers cheated them.

But Skypix's nascent digital broadcast entertainment network, originally started in Kent with backing by local investors, had more to offer than controversial clients with a public image to clean up; it had a digital compression technology that seemed to be months ahead of the competition.

Now, RXL Communications, a joint venture between Rockey - based downtown - and a media company, is close to buying up to $2 million in SkyPix technology to use in an educational satellite television network.

RXL, which broadcasts classes in science, math and languages to 700 schools in 14 states, could offer more services at less cost to schools with the SkyPix technology, says Dennis Bracy, RXL president and a Rockey senior vice president.

"We've been kicking the tires and had engineers kicking the tires," says Bracy. "I'm convinced that this technology will make (RXL) very successful."

Bracy says he's compared the SkyPix digital compression

equipment with technology being developed by other companies, such as Compression Labs Inc., and found SkyPix to be a generation ahead of its competitors. RXL will conduct more field tests, but Bracy is bullish on the promise of SkyPix technology.

SkyPix may allow RXL to broadcast more data, in the form of digitized video, audio and text signals, over less radio bandwidth. Compression squeezes data so that information that takes 120 to 150 megabytes to transmit can be sent in two to three megabytes.

RXL spends about $500,000 a year to lease time on satellites to beam its educational programming. The SkyPix system could reduce that cost significantly by requiring less signal space on satellites.

"This system makes more efficient use of the satellite," says Robert Kniskern, Adaptive Microware president. "The economics are quite tremendous."

Adaptive Microware, of Fort Wayne, Ind., has been developing SkyPix technology independent of the SkyPix bankruptcy. Money for the development has come from GTE Spacenet, which has the rights from a SkyPix affiliate to sell SkyPix systems for educational and business TV.

Much of the money from the SkyPix affiliate, Northwest Starscan, has come from Seattle-area investors. Northwest Starscan was the original investment vehicle for SkyPix set up by the Greenbergs and is not involved in the SkyPix bankruptcy.

"Our funding was never put on hold by the bankruptcy," Kniskern says.

Kniskern, answering questions via a digital TV broadcast from his Fort Wayne office yesterday, says GTE has sold SkyPix systems to the Rite Aid Corp. drugstore chain, which will use the system for its in-house TV network. Ford Motor Co. is also interested in the technology for a similar system, he says.

SkyPix equipment is now being manufactured and GTE has placed orders for thousands of systems, Kniskern says. GTE officials could not be reached for comment yesterday.

RXL, formed in 1988, is a joint venture with Morgan-Murphy Broadcasting, a Duluth, Minn. owner of television and radio stations, magazines and a newspaper.

RXL operates broadcast studios in Spokane, Seattle, Bellevue and Portland, where teachers conduct interactive classes for live broadcast.

Students watching the TV classes can call in questions over the phone and talk directly with the teacher they see on the TV. Homework and papers are scanned by computer at the schools, downloaded by RXL into its computers, corrected by teaching assistants and sent back to the schools' computers within 24 hours usually.

Teachers and teaching assistants are available until 10 p.m. on weeknights on an "800" number students can use to answer coursework questions.

The network is funded by the Satellite Telecommunications Educational Programming network, a public/private venture that began in 1986. RXL got involved in 1988; it set up the studios and produces the educational programming. Federal funding from the Star Schools project allowed the network to expand.

The Seattle school district is now the largest user of the system, receiving the TV signals via cable rather than satellite. Spanish and Vietnamese-speaking students use the programming to learn English.

The network also offers language courses in Japanese and Russian and plans to air programming on astronauts and the environment next year, with live broadcasts from the space shuttle, the top of Mount St. Helens and the Olympic Rain Forest.

The system costs schools an annual fee of $3,000, plus about $400 a year per student attending the TV classes. But the SkyPix technology should allow RXL to offer more interactive educational broadcasting at cheaper prices, Bracy says.

So what does all this mean for SkyPix and the Greenbergs? The Greenbergs are scheduled to submit a reorganization plan for SkyPix March 16 in U.S. Bankruptcy Court in Seattle. Bracy says the plan will probably refocus SkyPix's business strategy on educational and business TV, rather than the grand entertainment network the Greenbergs originally envisioned.

When it was based in Kent, SkyPix was developing a network that promised to give users a choice from dozens of pay-per-view movies and other entertainment, sports and news broadcasts.

But SkyPix ran out of money and was forced into bankruptcy after several former employees and creditors petitioned the bankruptcy court last fall.

Bracy says the Greenbergs have four to five investors, each willing to commit between $25 million and $50 million to take SkyPix out of Chapter 11. The Greenbergs will choose one of those investors to back their plan, he says.

Rockey was first approached to represent the Greenbergs by several local Northwest Starscan investors.

SkyPix's troubles have been well publicized and Rockey officials were skeptical of representing clients with so much negative baggage, Bracy says.

"We didn't want to represent people we didn't trust," he says.

But since examining the SkyPix technology and meeting with Fred Greenberg, Bracy and Rockey have warmed up to their new clients. The Greenbergs' legal problems will not affect RXL's use of the technology, Bracy says.

"I think they let their enthusiasm get ahead of them. I have a sense (the bankruptcy) has forced them to slow down," Bracy says.