Showdown over scandal of satellite TV licences

PAY-TELEVISION hasn't gone on air in Australia yet. But when it does, it will be hard-pressed to match the entertainment on offer from what has become known as the pay-TV fiasco. Sex, drugs, financial scandals - this story has it all. Yet when local TV magnates Rupert Murdoch and Kerry Packer combined with Telecom and the Seven and Ten networks to bid for one of the two satellite pay-TV licences up for tender, and American media giant Time-Warner announced a bid for the other, there was little hint of the saga that was to unfold. It was generally assumed those consortia with the experience and the money to buy a licence and put up the A$500 million (HK$2.7 billion) which experts say is needed to deliver the service would win. So when on April 30 the winners were announced as two unknown Sydney-based companies with bids of more than double industry expectations, reaction was amazement. But as more became known about those two companies, Hi Vision Ltd, which bid A$212 million, and UCOM Pty Ltd, which bid A$177 million, amazement turned to outrage. David Hill, chairman of the Australian Broadcasting Corporation, was one of the first to voice the doubts of many: these unknowns had paid ''extraordinarily high prices'', they had no experience, they wouldn't be able to raise the money. It was a ''blunder'', he said. A week later, with the Communications Minister Senator Bob Collins and his junior minister David Beddall fighting for their political survival and an independent inquiry into the tendering about to begin, the correctness of Mr Hill's assessment is being proved. Hi Vision, comprised of five companies, has an issued capital of just A$100. By May 1, its lawyer Bruce Dennis was admitting: ''We have to work out how to raise the money.'' In one day its chairman Ian Wright, a Queensland-based electronics buff who learned about communications in the navy, wore out four mobile phone batteries as he scoured the world for finance, but institutional investors have dismissed both bids as unviable. Links between the two companies which ''shared information'' to get their bids underway were revealed and Hi Vision director Bruce Taylor, whose official address was that of his Melbourne parents (but they didn't know where he was), was revealed as having run a pornographic video business. But for Mr Taylor, who has now stood down as a director, the most damaging revelation was that eight years ago he jumped bail in the Philippines on charges of cocaine possession - charges he denies. He claims narcotics agents planted it on him. Meanwhile UCOM, a two-week old company when its bid was accepted, was having its own director troubles. By May 4, Graeme Harrison, the man listed as its chairman on the masthead of its bid documents, was saying he had never held that post and threateninglegal action against the other directors. Two days later, with no explanation, UCOM announced another director was ''no longer required''. But while UCOM took the bold step of appointing video distributor Danny Mackay as its director of programming - though he has since revealed he's not on the full-time staff - and had him front a press conference where he was mauled by reporters wanting to know where the money was coming from, the real action centred on Canberra. The two successful tenderers have only had to put up a A$500 application fee so far - no deposit was required by bidders. SENATOR Collins, the man with whom the buck stops, did not notice the omission of a deposit requirement when he signed the pay-TV tender rules but he has put the blame for this omission squarely on his department. On May 4 he announced a departmental inquiry into the tendering process. Just two days later, as Mr Beddall contradicted Senator Collins, the Opposition claimed Mr Beddall twice misled Parliament and a senior bureaucrat in Senator Collins' department stood aside, he announced an independent inquiry. Meanwhile the Government has rushed in legislation requiring a five per cent deposit, payable within three days of being asked to present their case to the regulatory authorities, from the next highest bidders. Those bidders will be called on if Hi Vision and UCOM fail to pay within 30 days of a 45-day Trade Practices Review of their suitability. Trouble is, insiders believe the next highest bidders are interests associated with Hi Vision. What's more the two winners have apparently lodged up to 17 of the approximately 50 bids. The whole pay-TV saga has been complicated by a dispute over a non-satellite form which used microwave. The Government intervened to stop the tendering for microwave licences when it was revealed a system of that sort could be underway well before satellite TV. In doing so it opened itself to court challenges and to allegations of intervention in what should have been an ''arms-length'' process. Court action has forced it to reopen those microwave tenders although it is still saying it will legislate to prevent it heading off satellite pay-TV. But that alternative system could provide a way in for those big players who missed out on satellite licences - especially as the satellite to be used doesn't reach large chunks of Australia, so microwave will be needed to relay pay-TV to them anyway. Some feel it is the Government's insistence on remaining at ''arm's length'' to the satellite licence tendering after the microwave debacle that has led to the mess it is in today. Others doubt that theory, with commentators divided as to whether this adds up to a conspiracy or just a very large ''stuff up''. Either way Mr Keating has been conspicuous by his absence as the recriminations fly, leaving Senator Collins and Mr Beddall to take the flak. Meanwhile, as Hi Vision vows to float its company and start broadcasting on May 1 next year, the Australian Broadcasting Authority is still considering whether the two companies are suitable licence holders. Its scrutiny has intensified, with UCOM directors and officials being ordered to answer questions about the preparation of its bid and links between the two winners. Hi Vision is in line for the same treatment. The Trade Practices Commission, too, has both under its microscope and in the end it may be the Government's regulators rather than their own shortcomings that end the ambitious plans of Australia's would-be pay-TV pioneers.