A Pennsylvania-based cable company, the Lenfest Group, looks set to become the cornerstone of bidding for two Aussie satellite pay TV licenses.
Executives from the Lenfest Group are expected to visit the country next week for discussions, according to exec Albert Hadid of UCOM, a little-known entity that has been seeking a pay TV franchise from the Australian government.
American cable giant Tele-Communications Inc. is a major shareholder in Lenfest, and the two companies are partners in French cable channel Videopole, a joint venture with Electricite de France (Daily Variety, March 11).
Lenfest reportedly has about 700,000 subscribers in the U.S., primarily in Pennsylvania and New Jersey. It also has systems in Northern California.
UCOM and New World Telecommunications last week emerged as the first bidders to come up with the required 5% deposit on licenses (Daily Variety, Aug. 31).
The snag is UCOM and New World have identical directorships and shareholdings , and Australian law prohibits cross-ownership of pay TV licenses above 2%.
However, the two companies “have indicated that (the situation) will change as the ownership structure is finalized so as to conform to the Broadcasting Services Act and the Trade Practices Act,” junior communications minister David Beddall said when he announced receiving the $ A10.7 million ($ 7.2 million) deposit check.
The deposits are refundable, however, should New World or UCOM fail to satisfy Trade Practices Commission requirements on ownership and proper competition.
UCOM has bid $ A97 million ($ 65 million), New World $ A117 million ($ 78.4 million), and some industry analysts say that this is still too much to pay for the licenses.
Hadid said Lenfest “will have a significant interest in one of the two companies.”
Thus after six attempts to finance the deposit on their previous bids, Australia’s pay TV aspirants finally fixed on a figure slightly more than half the extremely high original $ 280 million offered back in April by UCOM and HiVision, the other entity which originally got the nod from the government but couldn’t muster the finances.
Some media analysts say that even $ 143 million is too much to pay for the licenses.
In addition to the balance of the license fees, due Nov. 14, both companies still need to raise some $ 200 million-$ 275 million to establish a satellite pay TV operation.
While New World plans to re-sell its license to other Australian and overseas media investors, UCOM has convinced the minister it can raise the necessary equity.
Both companies are being advised by media gadfly Malcolm Turnbull, a high-profile, local investment banker-lawyer and former associate of Oz media tycoon Kerry Packer. Turnbull’s prior involvement in newspaper and television launches has been swift but lucrative. Turnbull Partners actively seeks to interest major Australian and overseas investors in New World.
Among the foreign investors rumored to be sitting on the pay TV sidelines are Time Warner and Continental Cablevision. While both have maintained a close watch on the pay TV picture Down Under, neither has committed to investment.
Whatever the outcome, still to be decided is the crucial appointment of a subscriptions management service, a significant subject for investment bankers following this week’s Sydney satellite launch of Rupert Murdoch and News Corp.’s New World Order for international telecommunications.