News Corp has dropped a bombshell when reporting their full financial year earnings report overnight, with the news that the company is looking into options for the sale of the Foxtel Group “in response to third party interest”.
Foxtel is a giant of the Australian TV landscape and has been for a long long time, but that landscape is changing – fast.
In their financial reporting, the company says “We are confident in the Company’s long-term prospects and are continuing to review our portfolio with a focus on maximizing returns for shareholders. That review has coincided recently with third-party interest in a potential transaction involving the Foxtel Group, which has been positively transformed in recent years. We are evaluating options for the business with our advisors in light of that external interest“
Following on from that, “In response to third party interest, the Company is assessing strategic and financial options for the Foxtel Group, including its capital structure and assets. There is no assurance regarding the timing of any action or transaction, nor that the strategic review will result in a transaction or other strategic change.“
So, they may not sell, but they have to be public about the fact it’s on the cars because firstly if the word got out without them saying it – it would be a huge story. Additionally, this drums up potential competition for the sale.
Here’s how Foxtel sits right now – over 4.6 million subscribers.
That is broken down across Foxtel’s residential and commercial subscribers as well as Kayo, BINGE and other streaming services.
As of June 30, | ||
---|---|---|
2024 | 2023 | |
(in 000’s) | (in 000’s) | |
Broadcast Subscribers | ||
Residential | 1,210 | 1,341 |
Commercial | 242 | 233 |
Streaming Subscribers – Total (Paid) | ||
Kayo | 1,606 (1,550) | 1,411 (1,401) |
BINGE | 1,552 (1,529) | 1,541 (1,487) |
Foxtel Now | 147 (142) | 177 (170) |
Total Subscribers – Total (Paid) | 4,776 (4,690) | 4,723 (4,650) |
Subscriber numbers, and revenue, hugely important statistics for a modern media company.
Foxtel Group spent $51 million launching the Hubbl device, and the direct success of that has not been outlined in these financial results.
Well, your guess is as good as mine. But let me hypothesise for a little bit.
Foxtel Group is 65% owned by News Corp, and 35% by Telstra. Telstra is now the owner of Fetch TV, which many people see as a direct competitor to Foxtel and certainly to Hubbl.
So, here’s a few possible buyers for Foxtel in my mind.
Globally, Telcos are far less than just communications businesses any more. They own media, streaming, sports the whole bit.
Optus going back to the Optus Vision days of the 90’s was Foxtel’s biggest competitor at one time – duelling HFC networks and sports rights bids.
With the launch of Optus Sport some years ago Optus dipped far more than just a toe in the water.
So it goes to a logical end that they might now consider gobbling up Foxtel Group taking Telstra out of that mix.
Strategically it would be a massive, massive win.
My money would be here if forced to bet.
The Nine media group is huge, owners of the old Fairfax papers, the Nine Network and the Nine Radio Network.
Adding Foxtel in there could be a pain, but could also consolidate their spot as the biggest media business in Australia.
Kayo and Stan Sport might need to become one as one separate app, but as a business heading into the AFL, NRL, Supercars and F1 among other sports, it’s a huge deal to sign one big contract and have both PayTV and FreeTV covered.d
Seven doesn’t have the Subscription sport arm to it’s business, so I can totally imagine Kerry Stokes looking at the bank balance to consider a potential Foxtel Buy out – for the same, if not more valuable reasons than Nine.
While it seems strange, buying out the News Corp stake could allow Telstra to rationalise the “Set top box” Market.
With Google killing off the cheap Chromecast, a set top box offering that goes “Hubble” (Affordable), “Fetch Mini” (entry multi-room), “Fetch Mighty” (Recording and Multi-Room), and “IQ5” (the old-school Pay TV box) would be a strong rationalised offering from one media brand.
Pair back that Sky Link and make Hubble a Google TV operating System, powerful, open platform, a great box!
Kill Foxtel Now and simply make it a “Satellite or Streaming” option – you get an IQ box or you get Hubbl. Simple.
I have more thoughts, available on consultancy fees to the new owner:)
Trev is a Technology Commentator, Dad, Speaker and Rev Head.
He produces and hosts two popular podcasts, EFTM and Two Blokes Talking Tech. He also appears on over 50 radio stations across Australia weekly, and is the resident Tech Expert on Channel 9’s Today Show each day and appears regularly on A Current Affair.
Father of three, he is often found down in his Man Cave.
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