Australis Dangles By a Thread


Sydney, Australia -- Beleaguered Australis Media faces yet
another deadline this month when its pre-Christmas $20 million cash injection from
bondholders runs out. But the company, which is involved in both direct-to-home and
wireless cable systems, continues to defy the odds.

Others in the troubled Australian pay TV industry are
making contingency plans in the event of Australis' demise. The Hollywood studios
that are partnered with Australis in program channels have cut a deal with Foxtel, the
cable-systems company that carries some of those channels. Under the agreement, Paramount,
Sony and Universal will directly supply Foxtel with programming in the event that
Australis becomes insolvent.

Now, those studios are taking Australis to court to try to
prove that the company is indeed insolvent -- the only action that will dissolve the
partnership and allow the studios to deal with Foxtel directly.

Australis claimed that it is not insolvent and that it will
'vigorously defend' itself against such accusations. The 'termination of
Australis' distribution agreement would significantly undermine the company's
ability to obtain additional funding,' Australis said in fund-raising documents
lodged with the Securities Exchange Commission. The company continues to negotiate with
bondholders for additional financing.

That legal challenge notwithstanding, Australis has reached
some small goals lately. In addition to the $20 million cash injection from bondholders,
the board has appointed programming director Peter Rose to the post of acting CEO. The
company was also successful, just prior to Christmas, in appealing a court decision that
prevented it from entering into a DTH satellite-infrastructure-sharing arrangement with
cable and telephony systems company Optus Vision, which was recently folded into a larger
Optus subsidiary called Optus Multimedia.

Foxtel, which competes directly with Optus, said it will
contest that decision in the High Court of Australia. But Optus Multimedia's newly
appointed head, Don Hagans, has said that Optus is exploring DTH satellite delivery for
its struggling service -- with or without Australis.

Australis also laid off another 57 staffers early this year
to 'preserve cash flows,' bringing to 350 the number of employees that have gone
since Australia's antitrust regulator blocked the merger of Australis and Foxtel.