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The Sydney Morning Herald

Foxtel pulls off coup in battle for pay TV

Author: By ANNE DAVIES in Canberra
Date: 03/06/1998
Words: 467
          Publication: Sydney Morning Herald
Section: Business
Page: 31
Foxtel has secured a major strategic advantage in the battle for control of the loss-making pay TV industry, announcing last night it had agreed to acquire Australis Media's network of 50,000 satellite dishes and decoders in former Galaxy subscribers' homes.

Foxtel's chief executive, Mr Tom Mockridge, said it bought the 50,000 decoders in subscribers' homes plus a further 15,000 units in storage from the Australis receivers. The plan was to provide an interim Foxtel service to former Galaxy customers, he said. No decision had yet been taken to offer satellite services to new customers.

Foxtel is half-owned by News Corp and half by Telstra.

As well as giving Foxtel an immediate 50,000 boost to its subscriber base of 280,000, it also will potentially allow Foxtel to offer service to people not passed by Telstra's cable, using the technology which News Corp appears to prefer internationally.

The Australian Competition and Consumer Commission approved the deal.

"We told the receiver the set-top boxes should go to the highest bidder," ACCC chairman Professor Allan Fels said.

"We do not consider that the sale of the set-top boxes raises any competition issues," he said.

In the past two years, the ACCC twice refused to allow Foxtel to take over Australis, arguing it would have an adverse effect on competition in the telephony market by stifling Optus Communication's chances to establish its local call service.

But with Australis in receivership and open access to the satellite now permitted, the ACCC has taken a more relaxed view on who can purchase the remnants of the pay TV pioneer.

It is unclear whether Foxtel will use the new customer satellite network to deliver only its programs. Talks with Optus are continuing on ways they might co-operate.

Optus has advocated the creation of "Content Co" a company offering programs drawn from both companies so they could pool their rights and offer much stronger line-ups.

"It's another step along the way to rationalisation," an Optus spokesman said.

Optus still has a number of bargaining chips. Mr Mockridge acknowledged last night that Foxtel's capacity to offer an immediate satellite service relied on gaining transponder capacity on Optus's B3 satellite.

Optus has been negotiating with Australis receivers to buy the Australian licence of the Irdeto encryption system, critical to running the Galaxy network.

Foxtel can't help Galaxy's 20,000 microwave customers unless they switch to its cable.

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