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The Age

Lights out for Galaxy

Author: KIRSTY SIMPSON
Date: 21/05/1998
Words: 523
          Publication: The Age
Section: BUSINESS
Page: 1
The insolvent pay TV group Australis Media was forced to switch off its 70,000 Galaxy subscribers last night after its receivers blamed regulatory constraints for their failure to meet yesterday's deadline to sell the company's assets.

The company's receivers, Ferrier Hodgson, said in a brief statement yesterday that "the regulations structure" prevented them from concluding talks - believed to be mainly with Optus - to sell Australis's 70,000 Galaxy-subscriber base and other assets.

The Australian Competition and Consumer Commission is understood to have vetoed the sale of any of Australis's assets to Foxtel, while Austar yesterday said it was not interested in buying Australis's subscriber base, leaving Optus as the only significant industry bidder.

The receivers said last night they had "failed to come to a satisfactory conclusion" about the sale of Australis's key operating segments because of regulatory constraints, but did not give a detailed explanation.

Australia's first pay TV company, Australis Media was ordered to appoint liquidators on Monday by the Supreme Court. The receivers, Mr Peter Walker and Mr Steve Sherman from Ferrier Hodgson, took over management of the company several weeks earlier but have so far been unable to reconstruct Australis as a viable business or offload the company's remaining assets.

Since then, the receivers have continued attempts to offload some assets, including the Galaxy subscribers, to raise money to pay out the group's creditors, but have so far failed to come to an agreement.

Optus is believed to have bid for the subscribers, but unspecified "regulatory issues" appear to be blocking progress.

Australis's creditors are owed close to $1 billion, but only a few are expected to recover any money.

After talks stalled yesterday evening, the receivers gave notice they intended to switch off the Galaxy signal, which was expected to leave subscribers with a blank screen and force Foxtel and Austar to make alternative arrangements.

"The receivers have given notice to Austar, East Coast TV, Optus and Foxtel that as from midnight (last night), Australis will no longer be in a position to transmit signals to Galaxy subscribers," they said.

But confusion mounted after Galaxy subscribers told The Age last night they had started receiving Austar's signal. Austar was unavailable for comment and the receivers said they believed all subscribers would be switched off at midnight.

However, Austar's 200,000 subscribers will be switched to an emergency programming supply while the company arranges a permanent supply. Austar, which transmits satellite pay TV to regional customers in most Australian states, is believed to be in discussions with both Optus and Foxtel.

Meanwhile, Foxtel also has an alternative agreement with the Hollywood studios from which it was receiving programming, via Australis, under a $4.5 billion 25-year deal. The new deal cuts the cost of supply to Foxtel by more than $4 a subscriber and is believed to allow it to take programming directly from the United States, once it stopped receiving Australis's signal last night, without a break in transmission.

Elsewhere in the pay TV industry, sources said Mr Kerry Packer's arrangement to "equalise" the stake of his listed company Publishing & Broadcasting with Foxtel meant it had an option to buy one-third of Foxtel, with joint owners Telstra and News Corp selling down equally.

 
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