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Media giant News Corp has confirmed it has settled a case in which it was
being sued by US bondholders of the defunct Australis satellite TV network for
$6 billion.
The company says that terms of the settlement are confidential. However, a
source close to the US bondholders has told the Herald that Rupert Murdoch's
company which earlier dismissed the case as ``utterly wild" and ``a try-on"
had agreed to pay out $US30 million ($51 million).
Australis collapsed in 1998, less than three years after it launched Galaxy,
Australia's first pay-TV operation. Investors including Australian and US
shareholders and bondholders and creditors lost more than $1 billion when it
went.
The case was settled in ``early January" but News Ltd made no announcement
to the markets or in the media until Monday, after Saturday's Herald carried an
extensive report of allegations made by the bondholders in their claim filed in
New York's Supreme Court.
In the wake of the outcome of the claim, the Australian superannuation
industry which lost tens of millions of dollars of its members' retirement
savings in the collapse is considering the unprecedented step of taking legal
action against one of Australia's largest public companies.
Mavis Robertson, spokeswoman for organisers of the industry's annual
conference, to be held in Hobart next month, said that a team of lawyers from
the US firm which ran the case, Milberg Weiss Bershad Hynes and Lerach, had
agreed to travel to Australia to consult superannuation fund managers and
address the conference.
``Up until now the funds have been very nervous about taking this sort of
action," Ms Robertson said.
``However, a number of the larger fund managers are now taking a harder line
on proper corporate governance and if there is any prospect of recovering even
part of the money by way of legal action either in Australia or the US it will
be given serious consideration."
The claim filed in the US alleged that News Ltd precipitated the collapse of
Australis by ``tortious interference" with the network's contract with four of
the seven major Hollywood film studios which provided Galaxy with the stream of
movies and dramas which it needed for its three channels.
Mr Murdoch had teamed up with Telstra Kerry Packer came on board later to
form Foxtel, Galaxy's major rival. As part of that deal, Telstra provided the
lines down which the cable channel was piped into households, and Mr Murdoch was
to provide the content.
However, because Australis and the third cable TV player, Optus, had tied up
all the product available from Hollywood, Mr Murdoch was over a barrel and was
forced to buy programming from its rival, Galaxy. That was one of the great
deals of modern movie history the contract tied Mr Murdoch into a 25-year
contract worth an estimated $6 billion.
The writ claims that at a meeting in Vancouver in December 1997, Lachlan
Murdoch, Rupert Murdoch's son and then head of his operations in Australia, met
executives of the four Hollywood studios and they signed an agreement under
which they would do everything ``practical and lawful" to sabotage Galaxy's
contract with the studios.
``As part of this campaign," the claim said, ``News employed a multitude of
predatory practices against Australis, some of which News has previously used to
eliminate other rivals in other major media markets."
News newspapers ran anti-Galaxy stories, its agents tried to sabotage the
company's bond raising by spreading ``misleading and disparaging information",
and News went to court to block a merger proposal by Australis and to prevent a
new bond raising.
Five months after the Vancouver meeting, Australis went into receivership,
and Australia's first pay-TV network went off the air.
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