Report: News Corp, Telstra could sell Foxtel unless it sees turnaround

There has been speculation today that News Corp and Telstra might consider selling Foxtel if it is unable to deliver new growth.

The Australian Financial Review quotes Goldman Sachs analyst Kane Hannan, who met with a number of media players, including News Corp.

“[News Corp] believes it has 12-18 months to turn Foxtel around, but that revenue growth and traction from its over-the-top (OTT) platform will be required before considering the previously flagged Foxtel IPO,” Hannan relayed to clients.

“However, if it fails to gain sufficient traction, [News Corp] stressed that it did not want another [News and Information Services] division, and that it has previously shown a willingness to make the tough decisions – i.e. selling Amplify.”

Sources said Foxtel was no by means an unprofitable business, and Hannan said News Corp was confident it could invest to transform Foxtel and stabilise earnings.

News Corp owns 65% of the combined business and Telstra holds 35%.

News Corp declined to comment.

29 Comments:

  1. I have just seen a recent article that the UK local broadcasters have published an open letter in which they urge the UK government to support local networks to compete with international streaming services, the signatories want their local productions given greater prominence by these global streaming giants. I suppose the same argument could be made for protecting local broadcasters here and also by Foxtel which is an Australian company, this smacks of shameless commercial protectionism, apparently needed mostly because of the lack of business nous and technological foresight shown by these established broadcasters and the local media in general, but that’s politics I guess.

  2. “The sale of Sky in Europe is not a good indicator for the health of the Foxtel brand in the future.” – curious about this. Wasn’t there an auction between Disney and Comcast to pay big, big money to buy Sky?

    • After Presto, I wonder about the name being the issue. I think you’re onto something with the marketing bit. Foxtel Now seems neglected in their marketing. Curious on when they might make some announcements with that. Seems like the current CEO has very different ideas from the previous one.

      • I don’t think Presto had an issue with the name. I thought the marketing was also lacking quite a bit on there but not to the extent that Foxtel Play and Now have endured. People are more likely to think of Foxtel as expensive. If they want to market a cheaper streaming service I think it would be best to drop the Foxtel name from a new one if they were to do it.

        • People seem OK with paying extra for HD with Stan and Netflix. Never understood why it seems different for Foxtel. The extra satellite bandwidth required is much more expensive than what Stan and Netflix are up for with streaming (Foxtel Now doesn’t charge extra for HD though).

          I was looking through the comments on another article on this site and someone complained that Foxtel 4K users aren’t charged more than standard HD users.

    • We thought HD wasn’t working when we added it to our Foxtel subscription. You could barely tell the difference. Figured out that’s because it’s interpolated, not true HD. It’s crap compared to the quality of HD on Netflix.

  3. Hey guys – get rid of the ads, go to the full streaming model, change your pricing structure, and you may see a turn around! It would certainly get my interest.

    • There are around 3.5 million people who’ve chosen satellite (and cable) via Foxtel & Foxtel from Telstra, but never mind their choice – you say go streaming so obviously they should do what you say. People on satellite NBN, congested NBN fixed wireless, or slow FTTN connections (not to mention those still waiting on the NBN) may miss the satellite choice, but never mind them losing the satellite option, but never mind them.

      It does seem the current CEO has decided to market the product as a premium one, priced accordingly. It’ll be interesting to see the financial results over coming quarters to see if the market agrees. It’ll also be interesting to see what they do with Foxtel Now and the streaming side. That service will never be a cheap as the competitors given the live channels and high cost sport content they have.

      On ads – I’ve seen a quote from a Foxtel exec, here or on…

    • Foxtel does continue to split its business between satellite 4K set top boxes which it hopes will be a carrot for some new subscribers and SVOD which keeps the brand updated with the tech giants which have the global reach. Without a larger subscriber base Foxtel cannot sustain its investment in an expanding competitive market and ultimately Foxtel will need to invest more in all its content as it cannot rely solely on Fox Sports to survive. The sale of Sky in Europe is not a good indicator for the health of the Foxtel brand in the future.

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