Paul McIntyre: Packer sees new dawn of convergence

James Packer was out spruiking a new deal this week between his Publishing & Broadcasting (PBL) media assets and Australia's number-two telco, Optus.

It was the new dawn of convergence, he said, although the Australian Competition and Consumer Commission is giving plenty of thought to whether media conglomerates saddling up with big telcos might block new media competition. This week, though, Packer seemed oblivious to the ACCC's posturing, instead talking up his new partnership with Optus.

The content-sharing arrangement will be delivered through Australia's biggest online portal, ninemsn, and will see TV-style content coming through mobile phone handsets with access to email and instant messaging.

"For the first time, a large telecommunications player will be working with a leading media company to deliver services and new products," Packer said of the deal, which will also see PBL magazine content available to nearly 7 million Optus mobile phone customers and 350,000 broadband subscribers.

"This deal is bigger than the amounts of money involved in the sense that it's the first truly convergent media model we will see in Australia," he said. "We see dramatic increases in both web traffic and viewer readership when we link together our web, television and magazine properties."

The interesting thing here, of course, is that the multimedia deal was not struck with Telstra, a joint shareholder with PBL in pay TV group Foxtel.

"Telstra has historically had a build-it mentality, whereas Optus had one of partnering with the best-practice, specific-expertise players," Packer said.

"So it hasn't been the way Telstra has intended to go historically. We continue to have a relationship with Telstra in the Foxtel business but this is going to be a convergence play."

Interesting timing, really. Just as word gets around about Telstra going full-throttle in the past 12-18 months developing IP TV infrastructure capabilities and acquiring content rights to Hollywood movies, TV programmes and so forth in a "build-it" strategy Packer talked about, the whole Telstra content push could unravel at any moment under its new North American chief executive, Solomon Trujillo.

Since taking on the gig two weeks ago, Trujillo has indicated he's not a fan of allocating Telstra resources to build and source content internally, which basically means he was inclined to do more of what Optus has just done with PBL.

And Optus chief executive Paul O'Sullivan was out to make the most of his deal this week.

"The reason we don't see a lot of these services today is because they are too complicated," O'Sullivan said.

"We will deliver a very simple, fast and convenient one-click experience that will mean that you can access any content you have downloaded to your PC from your mobile phone and vice versa."

O'Sullivan said the partnership with ninemsn would see Optus become an "integrated hub for people's connections to the information world", regardless of the "access method, fixed or mobile".

The content-sharing doesn't kick-in until later this year, by which time we'll know whether Telstra's Trujillo has bagged the current plan to create and manage its own broadband and IP content offer or let others do it hiring Telstra's network.

The latter scenario would keep the ACCC chairman, Graeme Samuel, off Telstra's back.

Although he said this week the regulator was not investigating the deal between Optus and PBL, Samuel told the Australian Financial Review the ACCC had "a constant eye on this area. We have flagged our possible concerns over the aggregation of exclusive content, be it sporting content or other forms of content".

"The PBL-Optus deal is not on our radar screen, but convergence will open a whole new area of competitive dynamics."

Which is exactly how ninemsn's chief executive, Martin Hoffman, put it - ninemsn is a 50-50 joint venture between the Packers and Microsoft.

* Paul McIntyre is a Sydney journalist