Content to share, Optus charges pay TV market

Optus said the deal would add around $30 million to EBITDA each year with Optus chief operating officer Paul O'Sullivan expecting the deal to add around $10 million to EBITDA this financial year, due to the late start. Optus believes the deal will be an important part of its goal to be cash flow positive by 2003-04.

The deal comes from a set of proposals given to the ACCC by Optus and Foxtel, under which Optus gains access to Foxtel content, with Foxtel taking on the responsibility for haggling with Hollywood studios over content price and subsequently providing it to Optus and other pay TV competitors.

O'Sullivan said the deal will rid Optus of $600 million in content liabilities.

Foxtel will also get access to Optus' satellite capacity.

Optus consumer and multimedia managing director Martin Dalgleish said with eight new Foxtel channels, Optus' basic "entertainment package" is the strongest in the market.

O'Sullivan said Optus will differentiate itself from Foxtel through bundling. "How we intend to use pay TV with this deal is to add it to our high speed internet access, to add it to our telecommunications offering to give you a compelling reason to switch," he said.

However, while Optus will be "coming out of the gate hard" with new offers following the deal, O'Sullivan could not offer an unqualified assurance that Optus would not exit the broadband internet, pay TV or local telephony markets as it had threatened to do if the ACCC did not approve the deal with Foxtel.

"We are committed to making this work. It is a competitive market, by definition, competition is uncertain, however we have a tradition of winning and doing very well and I am confident that we will do very well at this," he said. "I'm confident that we will make a success of this, but beyond that I don't think it would be reasonable to speculate," he said.