Trio Jostle For Position In Battle For Oz Pay TV

After many hiccups and delays, the Australian pay TV business finally is taking shape – and it’s a three-cornered fight.

Few people believe this market will sustain three stand-alone pay services.

The players are satellite operators Australis Media and XYZ Entertainment, the Optus Vision cable consortium and the News Corp./Telstra co-venture.

Behind the scenes there’s much maneuvering which may result in two of the rivals banding together to make life tough for the third.

The Optus Vision group is sticking to its plan to roll out a $A3 billion ($2.2 billion) broadband cable network after earlier threatening to pull the plug.

The co-venture between News Corp. and dominant telco Telstra, which will supply programming to Telstra’s fledgling cable system, is busy putting channels together under chief exec Mark Booth.

News/Telstra believes it has the unbeatable combination of a cable infrastructure that will roll out faster than Optus Vision’s, and the programming strengths and connections of the Murdoch empire.

That’s despite the fact that six of the seven majors (with the obvious exception of 20th Century Fox) have already aligned themselves with the other two contenders. “There are plenty of channels and programming available,” said one News/Telstra source.

Sony Pictures Entertainment, Universal and Paramount along with TCI Intl. (one of Australis’ biggest shareholders) have equity stakes in Australis’ movie and entertainment channels.

Warner Bros., Walt Disney Co. and MGM/UA have licensing and equity deals with Optus Vision’s two movie channels.

Australis began test transmissions of the Premier Sports Network Jan. 1 ahead of its official kick-off Jan. 26, and its other three channels will soon follow.

XYZ Entertainment last week confirmed a March launch for its four services: music, docus, children’s and general entertainment. They are being marketed jointly with Australis’ four channels in the Galaxy package for $A49.95 ($38.50) a month.

The prosaically named XYZ is owned by two U.S. companies – United Intl. Holdings and cabler Century Communications – and Aussie investor Continental Venture Capital.

To distinguish itself from Australis, XYV’s entertainment service will have a strong U.K. flavor. Negotiations are ongoing with all the major British suppliers, said a spokeswoman. She said the music channel would be 100% Australian produced, and talks on programming are continuing with the leading record companies.

Paul Melville, formerly a producer at the Ten and Nine networks, is XYZ’s exec producer. Head of programming is Paul Ridley, previously acquisitions chief at Television New Zealand.

Optus Vision execs said last week they are “a lot more comfortable” with the government’s regulatory plans after studying a draft proposal from Communications Minister Michael Lee which clarified an earlier statement.

Lee’s original declaration that the government would not allow closed cable networks beyond 1997, or at the latest 1999, prompted Optus Vision to threaten to abandon its cable plans and the Seven Network to withdraw from the consortium.

The draft proposal “goes some way toward allaying our fears” and provides for managed access rather than the “open slather” implied by open access, said an Optus Vision exec.

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