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OZ FEEVEE WAR GETS UGLY

It’s been a frenzied time for feevee Down Under, with two cablers announcing their launch dates and a bevy of programming deals, while trading insults. Meanwhile, the first-to-air satcaster, Galaxy, reports red ink and low subscription numbers.

There are three major feevee players in Australia: Galaxy, a 14-channel microwave and satellite system owned by Australis Media and Tele-Communications Inc.; News Corp. and public telco Telstra’s cable operation Foxtel, which has allied itself with Galaxy by agreeing to retransmit its eight-channel launch package on cable and taking a 9% stake in the group; and Optus Vision, a cable co-venture of Continental Cablevision, telco Optus, Kerry Packer’s Publishing & Broadcasting Ltd. and the Seven web.

Foxtel announced its launch for Oct. 23, and will start with around 20 channels, including movie channels Showtime and Encore, CNN, Asia Business News, BBC World and Premier Sports Network.

OV responded quickly, saying it would be the first signal to air – on Sept. 20 with about 12 channels, including two sport services and two movie services (supplied by Warner Bros., MGM/UA, Disney, Village Roadshow and New Regency), plus CNN, TNT and Cartoon Network.

Martin Hannes, Asia/Pacific managing director of Continental Cablevision, told Variety that OV will expand to “20 or 30 channels” down the road, but the focus of marketing campaigns will be OV’s combined feevee, telephony and interactive services. OV chief exec Geoffrey Cousins revealed OV’s cable rollout is expected to pass 250,000 homes by December, and eventually will pass 3 million.

Foxtel chief exec Mark Booth contends Foxtel will have the edge on OV, thanks to Telstra’s programming and faster rollout (passing 1 million homes by the end of the year and 100,000 homes a month thereafter). He claims Foxtel has superior brands in BBC World and in The Discovery Channel, that its movie channels are superior and that the sports services are comparable.

But OV is the only operator showing a commitment to Australian brands, Cousins replies, criticizing Foxtel’s relaince on a bevy of foreign channels. “Too often we see quantity, not quality; we are not just packaging international channels and popping them up.”

Indeed, Discovery’s Nov. 1 bow Down Under on Galaxy (and retransmission on Foxtel) comes at the expense of soon-to-disappear local channel Quest. Discovery is being supplied to programming company XYZ Entertainment, which packages services for Galaxy and recently was 50% acquired by Foxtel. Since the acquisition, XYZ’s services have braced themselves for shake-ups.

Fellow XYZ/Galaxy music channel Red, for instance, is on the chopping block, with rumors abounding that Red will be replaced by OV, drawing on Rupert Murdoch’s Hong Kong-based Star TV channels.

In contrast, OV has invested in a 24-hour local channel, securing exclusive feevee rights in the process. Bowing in February, the Nature Study Channel is produced by the Global/Leisuretime Media Group with the Zoological Parks Board of New South Wales, U.S. space org NASA and global wildlife conservation groups. OV also will retransmit four hours daily of the service’s educational material on its Schools Channel.

But XYZ is not the only service supplier caught in distribution storms. Australian Information Media (AIM) apparently ran out of bargaining chips in its quest to get its news service on cable, after an outburst by Cousins announcing OV had terminated negotiations.

AIM, a subsidiary of pubcaster Australian Broadcasting Corp. with co-owners Cox Communications and the Fairfax publishing group, had been in tortured negotiations for months with OV and Foxtel. A deal between AIM and Foxtel was all but signed when it was nixed in July by Murdoch.

The developments leave AIM’s News Channel with little breathing space, the last hope being satcaster Galaxy, which, sources said, is close to a deal to air the $74 million channel with 100 staffers. Booth maintains that even if Galaxy does a deal with AIM, it will not be carried on cable, as the Foxtel/Galaxy deal covers Galaxy’s original channels only.

But Foxtel has linked with the other pubcaster, the Special Broadcasting Service’s Pan TV, a joint venture with Seven web chairman Kerry Stokes and Tony O’Reilly’s Australian Provincial Newspapers. Foxtel just inked a deal for nonexclusive carriage of Pan’s World Movie Channel, but for all the fanfare, it seems the public has yet to take an interest. Galaxy has mustered only 31,000 subscribers since its January launch, while parent company Australis revealed Aug. 24 an operating loss of $90 million for the year ended June 30.

Galaxy needs 200,000 subs to break even, which managing director Neil Gamble claimed was achievable by April, bolstered by the September launch of the much-delayed satellite rollout that will make Galaxy available to 90% of homes (5.5 million). The service, which has had to rely on line-of-sight microwave technology for transmission, has 50,000 subscribers on a waiting list for satellite decoders, Gamble says.

Galaxy has lavished almost $300 million to establish the service for little in return, but that’s not deterring the two upstart cablers. Galaxy is making its own last-ditch scramble before the cable rollouts. The tab for the threesome’s marketing grab is estimated at anywhere between $48 million and $74 million.

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