Foxtel Has ‘For Sale’ Registration, So Who Are The Bidders, Comcast Optus? – channelnews

Imagine the following scenario for a moment: Telstra owns a 35% stake in Foxtel, but despite the strength of Foxtel and the services it offers, decides to spend $50 million to buy a controlling stake in Fetch TV, a company that is at the bottom of the list of set-top box manufacturers and is struggling to compete with Foxtel.

Telstra’s archrival Optus, a key Fetch TV customer, isn’t happy, so it’s in talks to launch Hubble, Foxtel Group’s hot new product that’s to streaming entertainment and sport what Spotify is to music – plus you get free aggregated TV in the app.

Then, out of the blue, News Corp announces it has an offer for its Foxtel shares. On the same day, Optus announces that its Optus Sports app, offering a solid block of football and European football rights to complement Foxtel Group’s NRL and AFL rights, is to be available on Hubbl and Foxtel set-top boxes.

According to sources, the concept of Optus buying out News Corps shares is being considered.

Sone observers say Singtel Owned Company already has an advantage over Foxtel Financials, and when it comes to streaming entertainment and sport, Foxtel Group already has assets that will underpin the long-term future of television broadcasting in Australia.

Another company that may be interested in buying Foxtel, according to sources, is global telecommunications company Comcast.

Comcast, one of the world’s largest communications companies, was behind the new Hubbl platform, which includes access to Kayo and Foxtel Group’s Binge entertainment app, as well as free-to-air TV apps and most of the world’s top streaming platforms.

Last week, Foxtel executives visited the Comcast subsidiary’s headquarters in Paris.

One of Foxtel’s biggest strengths is Kayo, which gained 108,000 subscribers in April, May and June, while its Kayo Binge app also saw solid growth, with some of that growth coming from its new Hubbl platform.

Foxtel Group subscriber numbers rose 1% last month compared with a year earlier, with 4.776 million Australians using the service and 4.69 million paying between $22 and $35 for monthly access to channels.

Foxtel’s streaming subscriber base grew by 5% in the last quarter to 3.305 million, or 69% of all subscribers who download content via a Foxtel set-top box or the Hubbl app.

Year to date, Kayo Sports has grown by 14% to 1.606 million subscribers (including 1.550 million paid subscribers), while BINGE has reached 1.552 million subscribers (including 1.529 million paid subscribers), up 1%.

The increase in the number of subscribers provides advertisers with an increasingly larger audience.

According to Foxtel Media, digital advertising now accounts for over 40 per cent of their total advertising revenue, and when you consider that Kayo’s subscriber base grew by over 40 per cent last year, the potential growth looks promising, especially as Australia welcomes tens of thousands of immigrants each year, many of whom are sports fans.

So what will Optus get if it makes the offer?

Foxtel CEO Patrick Delany has already done a lot of work to reduce Foxtel’s operating costs through the installation and delivery of content to Foxtel decoders, especially those still connected to satellite. Costs will now need to be reduced even further as existing customers move to decoders such as Hubbl and stream sports over IP.

Opus will also gain access to 1.452 million home subscribers, clubs and sports bars. Home customers pay an average of $90 per month for an iQ decoder, totaling $130.6 million per month.

Then we have Hubbl, which is probably one of the best content aggregators in the world, a bit like Apple and Spotify for music.
Launching in March 2024, Hubbl is a highly intelligent and easy-to-use drive that combines a world of streaming apps and free-to-air TV into one 4K device that easily fits in your bag when traveling.

Hubble now brings a host of additional revenue streams for Foxtel.

In addition to the clicks that generate revenue when consumers sign up to the app, Foxtel Group Media can show more ads to consumers who are among the wealthiest in Australia.

We also know that 75% of Hubbl customers who pay the one-off $79 per disc fee go on to purchase an additional Foxtel product.

Foxtel Media currently claims to reach an audience of 8.4 million per month across its various platforms, including mobile phones, tablets, televisions as well as computers connected to large monitors.

These consumers are seen as valuable and hard to reach, which would be beneficial for Optus.

Foxtel Group assets currently include 71 premium subscription TV channel brands, 117 digital content publishers, Samsung Smart TVs, as well as the Foxtel Go, Foxtel NOW and Kayo streaming services.

If Optus were to acquire the platform, it could easily offer bundles that include NBN and mobile packages, which could cut into Telstra’s revenue.
Research shows that a significant percentage of Foxtel customers are also Telstra, mobile and NBN customers, with some even purchasing a Foxtel decoder as part of their Telstra package.

Defects
The downside is that Seven and Foxtel paid a combined $4.5 billion for the opportunity to broadcast the AFL until 2031.

In 2021, Nine Entertainment signed a five-year contract with the NRL worth $650 million.

The Nine are paid $115 million annually in cash and another $15 million in contras and other services.

Foxtel is understood to be paying an additional $230 million per year after securing a five-year contract extension with the NRL.

There is now speculation that the NRL intends to hold fresh talks soon.

This is incredibly important for any buyer as NRL and AFL coverage is the glue that holds Kayo and the entire Foxtel Group content offering together.

In the background is Paramount, which already has a limited budget and owns Ten, as well as Amazon and its Prime Video network. Apple is also bidding for the sports rights, which, in combination with a free-to-air network in Australia, could take NRL rights to the next level.

In 2022, global streaming platforms Prime and Paramount expressed interest in participating in the AFL’s broadcast deal beyond 2024.
Both companies responded to a letter sent by the AFL to gauge interest from potential buyers, but this yielded no results.

Then there is the issue of advertising by gambling operators.

Recently, Communications Minister Michelle Rowland proposed extending the ban on betting advertising to the hour before and after live sports events, introducing a limit of two adverts per hour on free-to-air television until 10pm, and a complete ban on advertising on social media and other digital platforms.

Gaming advertising is a key component of Foxtel’s revenue due to the company’s dominant position in sports broadcasting, including AFL and NRL games.

Earlier this month it was revealed that Seven and Nine were so incensed by the proposal that they had demanded a cut in their Free TV bandwidth fees to make up for a £40m hole in the budgets of bookmakers who had preemptively cut advertising ahead of a government crackdown on betting adverts.

The concept was rejected by Independent and Teal MPs as “complete cowardice” and “betrayal”.

In late June, the Australian Communications and Media Authority found that Foxtel-owned Kayo Sports had breached advertising laws after it aired 16 different sports betting ads outside permitted times during 267 live sporting events over a six-week period.

Foxtel says the cause was a system “code error”.

ACMA ordered Foxtel to hire external auditors to assess its operations and warned it could face fines of $626,000 a day if it fails to comply.
The value of advertising by gambling companies is $238.6 million.

Now, after News Corp. CEO Robert Thomson suddenly and without warning signaled “third-party interest in a potential purchase of Foxtel”, another action plan has been put into action.

It is not known whether this organisation is Optus or an offshore company. However, we do know that Foxtel CEO Patrick Delany was in Paris last week, where he met with representatives from NBC, an organisation owned by Comcast.

It will also mark the end of a pioneering era led by News Corp and Telstra, companies that overcame many obstacles to reach their current position.

We could speculate forever, but I suspect a deal is already in the works, especially since News Corp. was bold enough to hint at a potential deal in its latest financial reports.