News Corp pulls plug on funding Australis take-over

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SYDNEY -- The financial troubles of satellite pay-TV operator Australis Media Ltd deepened November 5 when Rupert Murdoch's News Corp refused to commit to further interim funding and Telstra Corp, Australia's major telecommuni- cations company, seemed likely to follow suit.

NewsCorp and Telstra are joint owners of national cable pay-TV network Foxtel, which is proposing to take over Australis and merge its Galaxy network into Foxtel.

The $460m merger is being opposed by Australia's watchdog Competition and Consumer Commission in what is developing into a lengthy court battle.

Australis, which says its day-to-day operating cash will run out by the end of the year, has been exploring all funding alternatives, including help from a range of U.S. institutions such as Hollywood studios, bondholders and shareholders, until the court decision is known. On November 5, it abruptly sacked half of its 530 staff.

Both NewsCorp and Australis have told the court the hearing must take place as soon as possible to ensure the merger is sewn up before Australis is forced into liquidation, but Telstra last week - in a split with NewsCorp - sought a delay.

Australis bondholders have threatened to sue Telstra if Australis is forced into receivership because of the communication giant's decision not to seek a speedy trial.

Copyright November 1997, Crain Communications Inc.

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