Telecom and News Corporation Launch $3.5 Billion Pay TV Plan in Australia

Strategic Insights -

Telecom and News Corporation have thrown down the gauntlet to their pay TV rivals with a $3.5 billion plan to provide cable to most of Australia over the next four years. Telecom will sharply accelerate its existing cable plan to service four million homes, more than two-thirds of all TV homes, by 1999. The joint venture with News Corp will run a pay TV service on Telecom's 64-channel network, beginning early in the new year.

Key Takeaways:

  • Telecom's cable plan will service four million homes, exceeding Optus Vision's plan to build a $3 billion aerial cable system passing 3.4 million homes over the next four years.
  • The joint venture with News Corp will initially be capitalized at $300 million, rising to $500 million over five years.
  • The venture will provide a range of programming, including movies, news, sport, music, children's, and ethnic channels, relying heavily on News Corp's extensive library of content.
  • Telecom and News Corp have set a goal to be cash-positive after four years and are considering expanding the venture to Asia.
  • The Communications Minister has received a report on Optus Vision's plan, but will withhold releasing it until receiving a report on the Telecom-News venture.

Statistics:

  • The Telecom-News venture will be capitalized at $500 million over five years.
  • The venture aims to service four million homes by 1999.
  • Telecom's existing cable plan will pass 3.4 million homes over the next four years.
  • News Corp's library of content will be relied upon for programming.
  • Telecom began laying its Visionstream fibre-optic and coaxial cable network six months ago.
  • The joint venture will provide a range of programming, including:

+ Movies

+ News

+ Sport

+ Music

+ Children's channels

+ Ethnic channels

Sources:

  • "Telecom and News Launch $3.5 Billion Pay TV Plan in Australia" (Telecom press release)
  • "Optus to build $3 billion cable system" (Australis Media press release)
  • "Australis Media Planning Pay TV Service" (Australis Media press release)
  • "Telecom to Pay TV: We're in It to Win It" (Rupert Murdoch, News Corp CEO)