SYDNEY — The financial bloodbath that is Oz’s fledgling feevee sector took a dire turn late Thursday, when it was learned that industrywide losses are heading north of A$3 billion ($2.2 billion).
Cable & Wireless-controlled telco Optus has booked a loss of $84 million on Optus Vision (OV) for the three months since it integrated the cabler into its telco biz in April (prompted by a series of bitter lawsuits between former shareholders Kerry Stokes, Kerry Packer and US West’s Continental Cablevision), bringing losses for the year to June 30 to $291 million.
Then there was a $24 million abnormal charge for integrating OV into Optus and pinkslipping 600 staffers, and a $293 million writeoff of Optus’ $638 million investment in feevee. Optus warned the hemorrhaging feevee biz may continue to erode its strong earnings from its core mobile and long distance telephony units, which themselves are expected to come under pressure owing to the newly deregulated telephony environment, which has introduced competition for the existing duopoly of Optus and government telco Telstra.
Worse, paybox subscription numbers have dipped 3,000 since March to 180,000, while local telephony (once touted as a core plank of OV’s marketing plan) has mustered a mere 12,000 subscribers a year after launch.
The feevee mess sent Optus $308.5 million into the red (in contrast to the telco’s profit last year of $45 million), which may pose further problems for Optus’ already twice-delayed IPO.
Also, there is speculation that Chris Anderson, who recently quit as chief exec of Kiwi broadcaster TVNZ, has been tapped as Optus’ fourth chief exec in two years, replacing Peter Howell-Davies, who was temporarily installed by Cable & Wireless after it became Optus’ controlling shareholder by buying Atlanta-based BellSouth. Howell-Davies is expected to remain at OV until later this year for a transition period.
Meanwhile, Telstra is expected to post its results late today, including a $600 million write-down on its investments in 50% of Rupert Murdoch’s Foxtel cabler, which itself announced losses of about $159 million for the year.