Optus overhauls delas to cut fees to majors

Reorg to save $40 mil

By MARK WOODS

SYDNEY -- Loss-making Australian feevee operator Cable & Wireless Optus is close to saving about $40 million a year by reworking its cripplingly rich programming deals.

Optus is poised to ink fresh deals with Hollywood majors Warner Bros., MGM and Disney, and Oz's Village Roadshow that could shave up to 40% off the sum it pays for subscribers it doesn't have. At present, Optus pays the studios $6.50 per subscriber per month on minimum subscriber guarantees of 750,000, which was due to rise to 900,000 in July.

But after two years of inert marketing and boardroom battles, Optus has just 210,000 subscribers and is said to have cut its guarantees to something in the range of a more realistic 400,000.

Non-exclusive pact

To get the studios to agree to the cut, Optus agreed to end exclusivity and allow the studios to offer their Movie Network to Rupert Murdoch's and Kerry Packer's rival urban cabler Foxtel.

Optus refused to comment.

"It appears Optus managed to get those deals down while keeping all the studios in there together by agreeing to let them go non-exclusive," a source said.

Meantime, Packer chalked up an $89 million profit from selling the last of his small stake in Optus, while Kerry Stokes Seven Network reaped an $85 million profit on selling two-thirds of its 3.3% Optus stake.