Cable TV Services Renegotiates Deal with Telecom over Delays

Strategic Insights -

Cable TV Services, an aspiring pay-TV company, has had to renegotiate its 21-year contract with Telecom's cable arm, Visionstream, due to delays in filing a cable tariff. The delay has put the planned capital raising of $42 million in jeopardy, with the company now aiming to commence test transmissions in September and commercial transmissions in October in Melbourne and Sydney. The renegotiation also follows negotiations with the Canadian broadcaster CanWest to take a strategic stake in the company.

Key Takeaways:

  • Cable TV Services has renegotiated its deal with Telecom's cable arm, Visionstream, due to delays in filing a cable tariff.
  • The company now aims to commence test transmissions in September and commercial transmissions in October in Melbourne and Sydney.
  • The renegotiation also involves negotiations with the Canadian broadcaster CanWest to take a strategic stake in the company.
  • Australis Media, another pay-TV player, has also suffered delays and expects to launch two channels early next year and the full 10 channels by the spring of 1995.
  • Cable TV Services' draft prospectus predicts the company will gain 150,000 subscribers from the first 1.1 million homes passed by 1996.
  • The forecast predicts losses of about $40 million in the first two years of operation, break-even in 1997, and profits of about $15 million in 1998 and about $30 million in 1999.

Statistics:

  • $42 million: The planned capital raising for Cable TV Services.
  • 21 years: The duration of the contract between Cable TV Services and Telecom's cable arm, Visionstream.
  • 1.1 million: The number of homes expected to be passed by Cable TV Services by 1996.
  • 150,000: The number of subscribers forecast to be gained by Cable TV Services from the first 1.1 million homes passed by 1996.
  • $40 million: The forecast losses for Cable TV Services in the first two years of operation.
  • 1997: The year in which Cable TV Services forecasts breaking even.
  • $15 million: The forecast profit for Cable TV Services in 1998.
  • $30 million: The forecast profit for Cable TV Services in 1999.

Sources:

  • "Cable TV Services has to renegotiate" by Ben Potter, Sydney (exact date of publication not specified).
  • Draft prospectus for the issue of 65 million shares at 65 cents apiece (no date specified).
  • Arthur Andersen investigating accountants' report (no date specified).