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Murdoch plays hardball on Oz’s Foxtel

Australian Competition & Consumer Commission investigating proposal

SYDNEY– News Corp. honcho Lachlan Murdoch has threatened to pull the financial plug on ailing feevee Foxtel if the Australian government and regulators nix its programming alliance with fellow pay TV giant Optus.

In press interviews Thursday, he strongly hinted that News Corp. and Foxtel’s other shareholders, Telstra and Kerry Packer’s Publishing & Broadcasting Ltd., would be unwilling to invest the A$490 million ($260 million) to upgrade Foxtel’s network to digital.

Foxtel, in which News Corp. owns 25%, is losing $52 million per year. It’s seeking approval to become the dominant provider of movies, sports and general entertainment in an arrangement with cable rival Optus that would start in November.

Murdoch, News Corp.’s deputy chief operating officer, said Foxtel shareholders would question investing more capital in the company when they could get better returns elsewhere.

“It’s not a rationalization that will create a gold mine, but a business that can move forward and continue to provide a premium service to subscribers,” he told Murdoch-owned newspaper the Australian. “Why would anyone invest in a new technology when it’s clear that competition and diversity and choice is not appreciated in this country?”

The Australian Competition & Consumer Commission is investigating the proposal.

Murdoch also said he did not hold out much hope that the government’s proposed changes to the cross-media and foreign ownership laws would be passed by parliament. The legislation would enable News Corp. to buy an Australian TV network and permit companies to own newspapers and TV and radio stations in the same market. “We are not holding our breath,” he said.

Separately, Arts & Communications Minister Richard Alston has enraged Foxtel execs by urging Foxtel to give Seven Network’s sports channel C7 access on its basic tier.

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