Murdoch, Packer pact on Australis

SYDNEY — Rupert Murdoch and Kerry Packer, rivals in the Australian pay TV business, unexpectedly have joined forces in a deal over struggling satcaster Australis Media.

Packer’s Publishing and Broadcasting Ltd. announced Friday it will share its economic interest in Australis with News Corp. and Telstra, which are partnered in cabler Foxtel.

PBL is selling its Australis bonds to News Corp. and Telstra but is retaining its shares in the satcaster. The agreement is a serious blow to cabler Optus Communications, which had been looking to merge with Australis after an earlier attempt to form a satellite co-venture with it was nixed by a New South Wales Supreme Court ruling obtained by Foxtel.

PBL’s new alliance with News Corp. further undermines Optus because PBL has a small stake in Optus, and it paves the way for a Foxtel-Australis merger.

PBL holds first rights on Australis’ key programming deals with the U.S. majors, through which Australis is contracted to provide movies and general entertainment to Foxtel for 25 years at a total cost of A$4.5 billion ($3.5 billion).

News Ltd. managing director Lachlan Murdoch said, “I am delighted that PBL will now devote its undoubted media skills to further improve” Foxtel.

PBL chief exec James Packer said, “I am personally excited about the prospect of working with Lachlan Murdoch and News toward creating commercial value in Australian pay television.”

Separately, PBL and Microsoft unveiled a co-venture to deliver on-line information and entertainment services in Australia. The unnamed entity will develop its own product as well as drawing on content from Microsoft and PBL’s Nine Network and Australian Consolidated Press titles. The Microsoft Network, its entertainment guide Sidewalk, financial service Investor and other Microsoft online products will come under the new banner.

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