Profit plunge spins Galaxy into dangerous territory

SYDNEY — Embattled Oz satcaster Australis Media’s Galaxy TV appears to be headed for another fight for survival if third quarter financial statements, released late Friday, are anything to go by.

Galaxy reported a A$199.5 million ($151.6 million) net loss for the nine months to March, including an abnormal $29 million loss from the termination of a technical services agreements with Lenfest Communications. The figures put Galaxy on course for a full year loss of about $167 million and accummulated losses of about $450 million.

Sales revenues increased 155% to $68.2 million. But the good news ends there, as the horror results come less than a week after a surprise court ruling nixed a potentially life-saving joint venture with cabler Optus Vision (Daily Variety, June 3).

Financial setback

That setback, which Galaxy is appealing, robs the satcaster of a $20 million cash payment and about $116 million worth of savings.

Galaxy has admitted it will require “significant additional capital or other funding” if the joint venture doesn’t proceed in the face of “a material adverse effect on the company’s liquidity and, therefore, a significant impact on the company’s ability to continue as a going concern.”

While Galaxy continues intense talks about merging with cablers, observers say Galaxy’s estimated $610 million worth of debt makes a merger difficult. But Galaxy has strategic value as it holds the exclusive Oz rights to movie product from Universal, Fox, Columbia TriStar and Paramount, the cable rights to which it sells to Rupert Murdoch’s Foxtel cabler. That deal is a vital source of revenue for Galaxy.

Losing steam

By June 30, Oz’s feevee sector will have lost about $1.5 billion, having collectively signed up about 625,000 subscribers. Galaxy has 105,000 subscribers, falling into fourth place behind cablers Foxtel (185,000) and OV (185,000) and rural paybox Austar (135,000).

OV is expected to lose about $243 million for the year, while Foxtel could be $150 million in the red.

Because the market closed Friday, and Monday was a public holiday in Oz, Galaxy shares stayed steady on 10.6¢.

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