Minus Australis, Aussie Pay TV Rationalizes

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Sydney, Australia -- A few more missing pieces in the
puzzle of how to make financial sense of the Australian pay television market came to
light last week.

On one front, a court ruling declaring the beleaguered
Australis Media company insolvent sparked a yard sale of that company's valuable pay
TV assets, and released the Foxtel systems company from an onerous programming contract.
On another, two of the industry's major players joined forces on a national
direct-to-home (DTH) platform.

At press time Australis receivers had turned off the
company's signal and were negotiating a sale of the company or its assets, including
its Galaxy DTH service's 70,000-strong subscriber base, digital-satellite and
broadcast and transmission facilities, customer-service and subscriber-management systems,
shareholdings in several channels, supply company leases and other holdings.

The major winners out of the Australis fray will include
the United International Holdings Inc.-backed regional wireless operator Austar, cable
system competitor Optus Communications Ltd. and, to a lesser extent, the News
Corp./Telstra-backed Foxtel cable system.

Last year Foxtel negotiated an agreement with the Hollywood
partnership that supplies movies and general entertainment to Australis and Foxtel. Terms
of the agreement guarantee Foxtel access to the partnership's movie channels Showtime
and Encore at the same price Australis was paying. Analysts say Foxtel stands to save
around $50 million a year from the agreement, which was predicated on Australis'
insolvency.

At the same time, UIH's Austar has negotiated direct
supply of movies and sports channels from Foxtel, and it has also cut a new deal with
Optus for selected Optus channels including Movies and Disney Channel. The agreement
represents the move to nonexclusive programming across all the major pay TV platforms in
Australia.

Austar and Optus are also 50-50 joint-venture partners in a
new company that will own and operate the digital-satellite platform for Australia, taking
over Australis' role as the country's DTH gatekeeper. It is unclear yet whether
Australis' satellite assets are part of that deal.

The position of Century Communications Corp.'s East
Coast Pay Television in a rationalization is unclear. Mike Fries, UIH Asia/Pacific
president and CEO, noted that Australis' demise meant that Austar was no longer
prevented from marketing its services to East Coast's 750,000 household territories.
East Coast has been up for sale and was to have been folded into Australis in the most
recent Australis restructure.

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