Foxtel license talks with U.S. majors fail

Paybox hurt since decline of Oz dollar value

SYDNEY — Negotiations between Australian pay TV platform Foxtel and four U.S. studios over license fees have hit a brick wall.

Foxtel has suspended talks after failing to agree to revised terms which would have extended its deal with the Premium Movie Partnership, backed by Paramount, Universal, Sony, 20th Century Fox and Liberty Media, from 2007 to 2012.

Foxtel has been trying to rework the U.S. dollar-denominated deal for the three PMP movie channels into Australian dollars for almost a year.

The paybox has been hurting since the Oz dollar plummeted against the greenback and its hedging insurance expired in 2001. The Oz dollar was worth around 74¢ when the deal was struck in 1998; it’s now trading at around 60¢.

While there’s no immediate impact on PMP’s movie networks, the impasse does raise questions about whether the U.S. studios will get space for more channels when Foxtel upgrades to digital early next year.

PMP CEO Jack Matthews declined to comment on negotiations. But he implied that renewing the pact with Foxtel was a separate issue to PMP’s ability to offer more channels when Foxtel goes digital.

“At the end of the day, whether we get extra space will be driven by our ability to persuade Foxtel that we have something to offer and that we deserve that space,” he says.

Foxtel is confident that expanding its lineup from 47 to 120 channels (including 30 screening near-VOD movies) will trigger a surge in the pay TV penetration rate, currently stuck at 23%. The company wants to lift that to more than 40%.

The stand-off won’t affect Foxtel’s ability to source movies for near-VOD, as those deals are being negotiated with each studio.

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