Foxtel and Optus make Digital Peace

11 April 2005

After weeks of tense negotiations Australian pay-TV service Foxtel has reached agreement with telecoms firm Optus over their content sharing deal.

The new agreement will give Optus access to millions of potential customers outside its cable area network as it re-sells Foxtel's digital TV services.

In exchange Optus will invest around A$30 million ($23m, €17.8m, £12.2m) over the next two to three years to upgrade its pay-TV customers' set top boxes to receive Foxtel's full digital service. Foxtel has given Optus a larger share of revenues and allowed it to resell the pay-TV service via satellite for the first time.

The deal was the subject of bitter dispute between Foxtel's main shareholders Telstra, Kerry Packer's Publishing & Broadcast and Rupert Murdoch's News Corporation as they battled over the right strategy to turn around their firm's loss-making fortunes.

It is understood that Telstra opposed initial proposals by which Foxtel would have financed Optus' investment in digital pay-TV.

Says Optus ceo Paul O'Sullivan: "The real benefit is we now have a digital offer and have new economics which make it attractive to acquire new customers to bundle with our telephony."

Foxtel chairman Bruce Akhurst is equally happy: "This is a pro-competitive outcome that provides even more options for Australian consumers. And importantly, this deal is both commercially attractive and equitable for Optus and Foxtel."

Data sourced from Sydney Morning Herald; additional content by WARC staff