Pricing, sport codes under review as Foxtel refinances

Foxtel is “reviewing the pricing of its various programming packages, including potential price increases for certain tiers” according to documents lodged with the ASX as it seeks refinancing for Foxtel debt totalling $US1.68 billion.

The Sydney Morning Herald reports the pay TV giant made a financial loss of $417 million in 2018.

EBITDA fell $US29 million in the quarter, compared with the same quarter last year, to $US98 million.
Most of that fall, about $US25 million, was because of rising sports rights and production costs related to cricket coverage, according to News Corp.

The company has flagged a cut to its spending on “non-marquee sporting content.” Yesterday it dropped two NRL entertainment sports shows, Queenslanders Only and The Greatest, but added The Matty Johns Podcast. Meanwhile media sources believe rights to Super Rugby and Wallabies tests, which expire in 2020, and soccer’s A-League competition, could be among codes impacted.

By the end of the three months to March, total Foxtel subscribers, including Kayo and Foxtel Now, were 2.896 million. Those numbers are bound to boost from April with the return of Game of Thrones. Following a strong start for Kayo Sports, News Corp’s chief financial officer, Susan Panuccio, said sports broadcast churn was just 6 per cent in the quarter. Overall broadcast subscriber churn increased to 17.7 per cent in the quarter, up from 15.6 per cent in the December quarter.

“The strategy is to strengthen the core which we’re going hard on,” CEO Patrick Delany said. “We’re getting back the trust of our customers, giving them more value, making sure they’ve got much better equipment to find our content, invest in the content – that’s big.”

In 2017 Foxtel was granted $30m from the Turnbull government for women’s sports, but it was a move questioned by observers and political opponents.

A News Corp spokesperson said: “We are proud of our commitment to supporting women in sport – both on air and on the field – and will continue to do so.”

Last week, it emerged News Corp, which owns 65 per cent of Foxtel, handed the pay TV subsidiary a $300 million lifeline to cover debts maturing in April. Telstra, which owns the remaining 35 per cent, did not put any money in.

Foxtel last raised prices in September last year.

Source: Sydney Morning Herald, Australian Financial Review.

27 Comments:

  1. Foxtel could reduce some cost by reducing the number of people they have on their NRL coverage. They have 3-4 in the studio and then 4 – 5 at each game. It’s overkill. They could easily host the coverage for the day from the stadium that has the last game of the day without the need for the studio and reduce the coverage for each game to a play by play, a good analyst and a sideline reporter. The NFL on NBC do it brilliantly with Al Michaels and Cris Collingwood and Michelle Tafoya on the sideline. Less is much more. I assume AFL is the same and there are probably other opportunities. Obviously they need to save a lot more than that, but it is some low hanging fruit IMHO.

  2. To some extent Foxtel are paying the price for not recognizing changing trends in viewing TV entertainment, streaming analyst Convivia revealed a 72% increase in streaming hours from analysis of 3 billion streaming apps in 180 countries, the era of set top boxes and yearly contracts are just about over, viewers can now pick and choose as new streaming apps arrive, then the onus is on the streaming services to cap their prices or lose customers to the competition, Foxtel is fast facing a critical choice about its future, whether it should fully adopt streaming or sell the business and content rights which obviously Fox Sports will be a major attraction.What this will mean for future TV rights and funding of major sports is anyone’s guess as Optus for example is very limited with its own sports services, professional sports could take a major hit especially rugby union.

  3. A few points here.
    – Sports packages need to be more flexible. Not going to pay $25 a month to watch 1 sport maybe once a week if I’m lucky. Break it down into different sports packages – like one for NRL, one for AFL, one for cricket, etc at say $10-12 per month or $25-30 for the lot.
    – It’s 2019, not 2004 – HD should not be extra fee – it should be the standard. Yes, Netflix and Stan charge extra because in their case HD and 4K use additional bandwidth to deliver. With Foxtel the satellite signal is already there to receive so it is no extra cost for them
    – Repeats. Some shows are repeated excessively, some are not at all or once – especially new content (not counting GOT though!). I often use repeats to avoid recording clashes. Victoria BBC First was classic example – was repeated only once 6 days after new episode aired.

    • HD & 4K both require extra satellite bandwidth, which costs extra.

      Interesting that while both Netflix and Stan charge extra for HD in their streaming services, Foxtel in their Foxtel Now and Kayo services does not.

      • True, but the point is that the HD channels are broadcast to everyone – only if you pay for them do you receive them whereas with streaming it is supplied at the resolution you chose or are limited to.

      • Or to put another way – Foxtel already pay the cost for the satellite bandwidth for HD – it doesn’t matter if 1 person watches it or 2 million watch it, the cost to Foxtel is still the same.

        • Yes, the HD channels use extra bandwidth, which Foxtel pay for, in addition to the bandwidth for the SD versions of those channels. So, Netflix, Stan and Foxtel have additional costs for the extra bandwidth needed for their HD streams/broadcasts. Foxtel charge extra for HD from their satellite broadcasts, Netflix & Stan charge extra for HD (and again for 4K) in their streams, Foxtel does not charge extra for the HD streams on their streaming services (Foxtel Now & Kayo).

          • Foxtel don’t offer an SD service on Kayo or Foxtel Now so there is no service to price differently. You pay $10 more on Kayo for an extra screen and extra on Foxtel Now for more channels but there is no quality difference service and therefore no quality difference pricing.

          • cnrmlj – yes, for the one charge you get HD. For the other services if you want HD you have to pay extra. That is the point.

  4. Foxtel too much?
    for Sport and HD I’m paying $39 a month….
    foxtel, however is 99% crap – if it wasn’t for Cricket and NRL I wouldn’t have it.

    I turn it on once a week to watch my team play, and the rest is either netflix, or stuff off my plex server.

  5. I’m not sure this is 100 percent accurate, Patrick: “We’re getting back the trust of our customers, giving them *more value*, making sure they’ve got *much better equipment* to find our content, *invest in the content* – that’s big.”

  6. This news doesn’t surprise me after having been asked recently to complete an online survey by Foxtel covering many channel package scenarios, add-ons, and pricing options, giving my answers to what I would choose and pay for it.
    Being an overpriced service with too many commercials, poor channel package options, too many repeats, and a surcharge for HD, Foxtel really needs to lift its game.

    • Both Stan and Netflix charge extra for HD, and more again for 4K. If I was an SD subscriber (and there are many of them, I’d be unhappy about paying the same for my service as those getting HD. I’d be happy Foxtel dropped the charge.

      The satellite service will always be expensive. Satellite access isn’t cheap for them, then there’s the costs of the satellite installs, set top units and support for both.

      Repeats are an interesting subject. When Foxtel first started, repeats was one of the selling points. For me, there are times where I see a bunch and wish there weren’t so many, then there are times where I stumble on shows I haven’t seen before and am glad they have them. On other forums, you do see a lot of people asking when various shows will be repeated, so there’s demand for both more and for fewer ads. They can’t please everyone.

      • now with the IQ boxes, and being able to record something you wanted to when its on, you don’t need to repeat it 50 times.
        show it 2 or 3 times and let users record it on their IQ boxes.
        job done.
        there is soo much content that foxtel (and other providers) do not show in australia.
        start showing that, rather then showing the same dribble for the 99th time, and people might watch more

        • Not everyone has IQ boxes though. People who have been with Foxtel from before IQ boxes existed, might still have those old boxes. I have a pre-IQ box that works just fine!

    • outside of movies, most content is designed with ads in mind.
      assuming foxtel could, if they stopped all ads and showed episodes without ad’s, you have have simpsons episodes running 22 minutes long, and you would end up having start times and finish times not on the half or hour mark, and there would be complaints about that.

      ad’s aren’t a problem – your paying for the privilege of accessing content the general FTA does not / will not show.

      • The Comedy Channel has been doing this recently with The Big Bang Theory. Few ads during the program means the show finishes 23 minutes into the hour, which is then followed by 7 minutes of continuous ads, until the next program starts at the half-hour mark.

  7. The price is already too high with all the repeats and ads. If the price goes up again I will likely cancel Foxtel and just stick with Stan and maybe get Netflix back. Stan already has more new shows I watch and they are available hours after the US and without ads.

    • As a platinum customer of 15+ years, our household has never been closer to dropping Foxtel. If it weren’t for sport and Sky News, we can get all the other shows elsewhere through Netflix, Stan and Hayu for about 1/6 of the price.

      The biggest death-knell for Foxtel will be if Disney and WarnerMedia remove their content from Foxtel if they launch their respective streaming services in Australia next year (both launch late this year in the US). The loss of HBO, Warner Bros films, Disney films, Disney kids shows, Marvel and DC shows, plus the Warner Bros and Fox (now owned by Disney) back catalogue of dramas and sitcoms would be devistating for Foxtel.

      • I think the Foxtel app allows you to watch Sky News without even being logged in. It’s the only channel that will work logged out, I believe.

          • The PC program doesn’t work any more, but the mobile app is still the supported standard for viewing Foxtel on mobile. That allows you to watch Sky News without logging in.

          • number – when I load the Android Foxtel Go app, I’m presented with a splash screen with a Log In button. Can’t see how you view anything without logging in?

  8. How many more times can you keep increasing prices in a single year before people get fed up and jump to online streaming services?

    Also, worth noting that $30 million grant from Turnbull had no contracts or documents attached to it – so Foxtel was legally allowed to spend it on whatever they want.

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