News

Aussie Pay TV Players Set DTH Expansion

6/21/1998 8:00 PM Eastern

Sydney, Australia -- Australia's two leading
cable-television operators are now picking over the remains of bankrupt Australian
wireless pay TV operator Australis Media, in a move to extend their businesses into the
direct-to-home satellite field.

Foxtel, which is owned by News Corp. and Australian telco
Telstra, and Optus Communications, which is backed by Cable and Wireless, have both
purchased Australis assets and confirmed plans to enter the DTH market. They will join
existing operators Austar and East Coast Pay Television Pty. Ltd. in targeting
Australia's 6.4 million TV households.

But, as in terrestrial pay TV, it appears that consumers
could have just two competing platforms to choose from, with Optus, Austar and East Coast
transmitting on the Optus B3 satellite, while Foxtel conducts trials using capacity on
PanAmSat Corp.'s PAS-2 satellite, which has an Asia-wide footprint.

Foxtel shareholder Telstra is an existing PanAmSat
customer, using PAS-2 to transmit data, voice and broadcast services to rural Australia.

Optus' outgoing head of multimedia, Don Hagans, has
for some months been vocal about the company's need to use satellite for its pay TV
and multimedia services. Last month, the company started trials of pay TV transmissions on
Optus B3 to 40 households. That trial will be extended to Internet, multimedia, data and
voice services over the next six months, Hagans said.

Foxtel has purchased 65,000 digital set-top units from
Australis Media, and it has started trailing a satellite service using capacity on Optus
competitor PanAmSat's system.

The set-top boxes were already in use by Australis'
50,000 Galaxy DTH service customers on Optus B3. The purchase gives Foxtel a ready-made
DTH subscriber base of more than 50,000 -- if those Galaxy subscribers choose to stay with
Foxtel.

The potential subscribers would give Foxtel double the
number of customers of rival Optus. (The other 15,000 Australis set-top boxes are being
held in storage.) Foxtel has yet to come to a carriage agreement with Optus for B3
transponder space, and industry sources said the PanAmSat trial could extend to a full
contract, with the existing satellite subscribers switched from Optus to PAS-2. Foxtel
would not comment on the PAS trials.

Industry sources said Foxtel will initially have to provide
an unencrypted signal, as Optus has purchased the Irdeto conditional-access system that
Australis used. Eventually, Foxtel is likely to put News Corp.'s News Datacom
conditional-access system in place when it provides the Foxtel service via satellite.

Foxtel DTH customers will receive fewer channels than
Foxtel's cable customers due to limits on satellite capacity. Cable customers receive
28 channels, while satellite customers will initially be limited to 20.

And as the pay TV war moves to the skies, the demise of
Australis fostered new programming alignments between operators and the resurgence of
Century Communications Corp.-backed East Coast, which had been up for sale.

East Coast will carry Optus programming to its 10,000
current subscribers and ramp up operations and marketing to its 750,000-home franchise in
eastern Australia, while Austar has long-term program-supply agreements with both Foxtel
and Optus.

East Coast CEO Patrick Delaney also confirmed that with
Australis' demise, the company is no longer for sale. He said the removal of
"onerous obligations" under franchise agreements with Australis now leave East
Coast with more room to expand and to work to increase its subscriber base.

Century will also retain its 25 percent stake in programmer
XYZ Entertainment Pty. Ltd.

While East Coast's programming lineup has yet to be
finalized, its subscribers will immediately see Optus' sports and movie channels and
MTV: Music Television, as well as XYZ's five channels -- Arena, Channel [V],
Nickelodeon, Discovery and Lifestyle Channel.

In addition, Delaney said, East Coast satellite
subscribers, which account for around 20 percent of its subscriber base, would receive the
full Optus lineup and the XYZ channels. East Coast will also build its own
subscriber-management system, Delaney added.

Want to read more stories like this?
Get our Free Newsletter Here!
September
October

VR 20/20

The Times Center, New York, NY