BigPond may struggle to stay a big fish in net

Critics say BigPond, the ninth-biggest website in the country, with a monthly unique audience of 5.4 million users, would struggle to retain its outright dominance as an internet service provider and an online publisher of sports and entertainment content without the effective subsidies from owning the distribution networks.

Telstra has stunned media companies in the past with the large sums it has paid for internet rights to sporting content such as the NRL, AFL, horse racing, V8 Supercars and the rights to Hollywood entertainment and music catalogues.

"I know a lot of those early deals were not commercially viable," said John Butterworth, the chief executive of the Australian Interactive Media Industry Association.

"Some of them were not terribly great because Telstra didn't know what it was doing but saw content as a great opportunity and it had loads of money. I hope BigPond gets to operate unshackled as a media company in its own right. It has some really interesting media assets.

"I personally don't see why it shouldn't be able to operate as well as other publishers on its own."

Paul Budde, the managing director of telco advisory BuddeComm, said the ideal scenario would be for Sensis and BigPond to merge to form a digital media company in its own right. "My view is Telstra should divest itself of Foxtel and put Sensis and BigPond content together as a digital media company to compete," he said.

Rival online publishers, who did not want to be named, said BigPond would struggle. "It looks very ugly for them without the infrastructure subsidies," said a senior executive at a rival online publisher.

"I would think they would be very, very worried."

Mr Butterworth said BigPond would have to renegotiate many of its content deals and some of the content owners' "gouging" in previous Telstra deals would go.