SYDNEY — The future of embattled Oz satcaster Australis Media’s Galaxy looked grim Thursday morning after it lost a battle for an expedited Federal Court ruling on government efforts to block its A$650 million ($460 million) merger with Rupert Murdoch’s cabler Foxtel.
A cash crisis, recriminatory lawsuits and a battle over Galaxy’s exclusive rights to Paramount, Fox, Universal and Sony product (which News Corp.’s Foxtel is desperate to secure) look likely.
The merger, which was to have been the first major shakeout of Oz’s feevee sector, which has lost more than $2 billion in less than three years, has raised the ire of antitrust watchdog the Australian Competition and Consumer Commission (ACCC), which is seeking to block the union, saying the merged entity would have overwhelming control of the feevee market and increase the telephony dominance of Foxtel shareholder Telstra.
Justice Graham Hill had hinted he was willing to hold an expedited trial from Nov. 24, but Telstra surprised News Corp. and Australis by telling the court it wouldn’t have its evidence ready by then. As a result, Hill opted for a Nov. 24 interlocutory hearing at which the ACCC must simply prove it has a case, after which the ACCC would gain an injunction against the merger until a full trial mid-1998.
Australis, which has less than four weeks’ cash left and sacked 25% of its staff to stave off insolvency, was locked in crisis meetings Wednesday night, and is expected to make an announcement later today.
Australis bondholders, who are owed about $630 million and have yet to agree to the merger, are furious at Telstra breaking ranks, and threaten to sue the telco.
In a strongly worded letter, Gotham law firm Wachtell, Lipton, Rosen & Katz, repping Australis noteholders, said the satcaster “does not have the financial resources to continue as a viable entity through this period. We assume that Telstra’s change of heart is accompanied by a firm commitment to finance Australis’ operations through the period of time it takes to resolve the ACCC issue.”