Foxtel-Optus pay TV deal gets watchdog nod

A proposed program-sharing deal between Australian pay television operators Foxtel and Optus has finally got the go-ahead from the Australian Competition and Consumer Commission, after the two companies revised the terms of their deal. The deal is hoped to turn around the fortunes of the Australian pay-TV industry, which has yet to turn a profit.

Foxtel is owned by Publishing & Broadcasting (25 percent), Telstra Corp. (50 percent) and Rupert Murdoch's News Corp. (25 percent). Foxtel is Australia largest pay-TV company with more than 805,000 subscribers. Optus is owned by Singapore Telecommunications.

The commission has previously rejected the alliance on anti-competitiveness concerns, but the companies have provided new undertakings to allow access to programs for all pay-TV operators, including regional operator Austar, at fair and commercial terms, as well as access to Telstra's cable network and Foxtel's set-top boxes.

The companies have also committed to spend more than U.S. $335 million (A$600 million) digitizing the sector.

"Pay-TV operators will now have access to a more comprehensive range of programming, enabling them to offer pay-TV consumers a broader range of programmes, including popular movies and sports," commission Chairman Allan Fels said in a statement.

Optus said the pay-TV deal with Foxtel would enable it achieve a previously stated target of lifting earnings by $16.8 million per year, while the lease of C1 satellite capacity to Foxtel would generate annualized revenue of around $22.4 million per year. The Optus C1 Satellite is scheduled to launch in early 2003.

"The content-sharing agreement is a breakthrough for Optus," Chris Anderson, Optus chief executive, said in a statement. "All the very best subscription television content -- in movies, sport, general entertainment and other genres -- will now be seen on Optus Television. In turn, this will significantly strengthen Optus's bundled offerings of telephony, Internet and subscription television -- because we will now have more appealing subscription television content to bundle with our telephony and Internet products."

"The new arrangements are good news for our customers, for Optus and for the Australian pay television industry," Anderson said.

In a separate statement, Foxtel Chief Executive Kim Williams also said the decision would help create a "sustainable industry framework that will encourage investment and competition and deliver enhanced services for consumers."

(All figures in U.S. dollars unless otherwise indicated.)