At a stroke, the Australian pay TV battle has rationalized itself from a commercially high-risk, three-cornered battle into a more viable two-sided contest.
The field narrowed March 9 when the News Corp.-Telstra co-venture, newly christened Foxtel, announced a 25-year programming and equity pact with satellite operator Australis Media, trading as Galaxy.
That means a straight shoot-out between the News Corp./Telstra/Australis troika and rival cabler Optus Vision, a consortium comprised of telco Optus, U.S. cabler Continental Cablevision and Kerry Packer’s Publishing & Broadcasting.
In Hollywood terms, it pits 20th Century Fox, Paramount, Universal and Sony (all partnered with the News Corp. group) against Warner Bros., the Walt Disney Co. and MGM/UA.
At a news conference, Telstra CEO Frank Blount and Ken Cowley, chairman and chief exec of News Corp.’s Australian company, said Telstra will build a fully digital broadband network. That gives it the jump on Optus Vision, which is using analog set-top decoders. However some analysts believe the issue will be decided more on programming strength than high-tech capabilities.
Foxtel aims to launch in the third quarter of this year, by which time Telstra expects to have passed more than 600,000 homes in Sydney, Melbourne, Brisbane, Queensland’s Gold Coast, Adelaide and Perth.
“We’ve embarked on one of the biggest and fastest rollout programs attempted anywhere,” said Blount, noting Telstra is passing 3,000 new homes every day.
The Australian stock market reacted positively to the announcement, marking up Australis’ shares by 30%, while News Corp. also gained. “This is a company maker for Australis: It’s fully viable now, and it’s a good deal for News,” said Macquarie Equities analyst Alex Pollak.
But Pollak isn’t writing off Optus Vision, saying, “They still have (good) programming, and if it all sticks together, they could have a business.”
The digital network gives Foxtel capacity for 120 pay-per-view channels, with 20 movies playing every day, and will accelerate the introduction of interactive services.
Mark Booth, the co-venture’s CEO, told Variety, “This is a technological leap by global standards.”