SYDNEY — Australia’s two metropolitan pay TV carriers, Foxtel and Optus, have inked a deal that will see their programming delivered across both networks.
The deal, which will come into force before the end of the year if approved by competition watchdogs, will establish dominant carrier Foxtel as the chief content provider and Optus as a key service provider, especially via satellite, over which it has a monopoly.
The government has applauded the move, saying it will give customers greater choice and boost pay TV penetration in a market that has struggled to top 25%.
By making its content available to the 270,000 Optus subscribers as of November, Foxtel will gain bargaining power with content providers such as the Hollywood studios, which supply movies for their high-rated Premium Movie Partnership channels Showtime and Encore.
Foxtel channels provided by XYZ, a joint venture between Foxtel and regional satcaster Austar, have so far not been confirmed as part of the deal. Channels formerly exclusive to Optus, of which the Movie Network is the only significant one, will become available to Foxtel’s 785,000 subscribers.
The 10-year agreement was welcomed by telco Telstra, which owns 50% of Foxtel (News Corp. and Publishing & Broadcasting each own 25%). The telco now will be able to bundle pay TV, cell phone, Internet and telephone services. Optus introduced bundling in 2001 and claims that 80% of its 1,700 new customers each week sign on for more than one service, usually TV.
The parties also extended their agreement for Optus’ satellite service to carry Foxtel to subscribers who cannot be reached by cable for another 15 years. Upgraded satellite services will be active from the end of 2002.
“Subscription television costs have long been an economic burden for Optus — in many ways hindering the rollout of local telephony and other new services,” said Optus’ CEO Chris Anderson. “The implementation of this deal will give us a much stronger foundation for growth.”
Australia’s third feevee player, embattled regional satcaster Austar, considered merger talks with Foxtel and Optus in recent months but received a stay of execution last week with an extension of its line of credit.
That reprieve and Optus’ agreement with Foxtel scuttles the possibility of a merger for Austar, but Optus’ strategy and business development topper Warren Hardy refused to rule out “other commercial opportunities between Optus and Austar.”