C7 becomes casualty of pay TV deal By Cosima Marriner May 8 2002
Seven Network finally shut its troubled C7 sports pay TV channel yesterday, claiming it was no longer financially viable in the wake of the Optus/Foxtel program sharing deal.
The writing has been on the wall for C7 since pay TV operator Optus failed to renew its programming supplier agreement, which expired at the end of March. Optus chose not to renew the contract after Seven relinquished the free-to-air and pay TV AFL broadcast rights last year to a consortium involving the Ten Network and Foxtel shareholders News Ltd, Publishing & Broadcasting and Telstra.
Seven has threatened to sue Optus over the termination of the C7 contract. Optus told Seven it would not renew the contract just days before its program sharing deal with rival Foxtel was revealed in early March. The C7 channel has become superfluous to Optus now that it can resell the more attractive Fox Sports channels - featuring the prime winter sports of AFL and NRL - to its subscribers.
Industry players and fund managers described the closure of C7 as another political manoeuvre by Seven Network chairman Kerry Stokes as he seeks to realise his broader pay TV ambitions. Despite four years of negotiations, Seven has yet to agree with Foxtel on a price to gain access to the Telstra cable to broadcast Seven-developed pay TV content.
Seven new media and investments chief Steve Wise described yesterday as a ''disappointing day" for C7. ''The delays to date in securing access have caused considerable damage to our subscription television business and the closure of C7 as a competitor in the pay television market in Australia," Mr Wise said.
Foxtel claims the delays have been of C7's own making, accusing it of making ''no attempt" to start a pay TV service using the Telstra cable and Foxtel set-top box.
Seven claims C7 would be profitable if it was broadcast on the Foxtel platform. It is estimated Seven has lost around $35 million on C7 since it started in 1997. The closure of the channel will have no impact on this year's financial result and will be earnings positive in 2003, saving the company $5 million to $10 million a year. Seven shares fell 13c to $6.10 yesterday.
Seven has been winding down C7 operations since it failed to retain the AFL rights. With the exception of Soccer Australia, Seven's pay TV agreements with various sporting bodies end next month. Seven will continue to broadcast soccer matches on free-to-air and will work with Soccer Australia to secure a new pay TV agreement with Foxtel
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