Court rules against Murdoch's Oz cabler, public telco

SYDNEY — Rupert Murdoch’s Australian cabler Foxtel and public telco Telstra have lost another round in their yearlong court battle against Seven Network boss Kerry Stokes.

The ruling could profoundly change Oz’s often tumultuous feevee sector, which is grappling to prepare for the onslaught of digital TV.

An Australian Federal Court upheld and extended three previous decisions endorsing the validity of Australian Competition and Consumer Commission orders that Foxtel/Telstra open its cable and set-top boxes to competitors on fair commercial terms.

Foxtel has already sought leave to appeal to the High Court.

Built with taxpayer funds, Telstra’s A$3.5 billion ($2 billion) broadband cable has been used exclusively by leading feevee operator Foxtel, which is half owned by Telstra, with Packer and Murdoch’s News Corp. owning 25% each and the latter managing the service.

Ruling impact

The issue could see Foxtel facing hefty damage claims and alter the dynamics of sealing exclusive Hollywood programming pacts. Ruling could also ruin Foxtel’s attempts to lure the feevee rights to the all-important Australian Football League from Stokes, now that Stokes can secure feevee carriage for the game.

It also raises issues about the valuation of cable systems, with immediate repercussions: Last week, the U.K.’s Cable & Wireless admitted, after months of denials, that its $16.5 billion Oz feevee and telephony group Optus was for sale.

Optus’ feevee service has been in limbo for more than two years, never having quite recovered from bitter lawsuits and blistering spats between original shareholders US West, Bell South, Kerry Stokes and Kerry Packer.

It has little more than 220,000 subscribers in contrast to 650,000 for News Corp.’s Foxtel and 450,000 for UnitedGlobalCom’s rural operator Austar.

Optus suitors

For months, Optus has been talking to suitors about its cable and feevee unit, including Pacific Century CyberWorks, Packer, Stokes, Granada, NTL and Austar, which is keen to expand into urban areas and has just bid $15.4 million for government gigahertz spectrum.

Recently, Optus began talks with the likes of Foxtel and PanAmSat to sell its satellite interests, while telephony suitors are said to include Hong Kong’s Hutchison Whampoa and Japan’s NTT DoCoMo.

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