The Future of Foxtel: Evaluating Options and Third-Party Interest
News Corp CEO, Robert Thomson, recently announced that there is “third party interest” in Foxtel, an Australian cable service owned by the company. While he did not disclose the source of the interest, some U.S. media analysts speculate that it may be from private equity groups. Thomson stated that News Corp is evaluating options for the business with advisors in light of this external interest. However, he also made it clear that the company has no imminent plans to sell Foxtel.
Despite the interest from potential buyers, News Corp remains confident in the long-term prospects of Foxtel. Thomson reassured shareholders that the company is focused on maximizing returns for them and is conducting a thorough review of its portfolio. He highlighted the positive transformation of the Foxtel Group in recent years.
Foxtel, which is 65 percent owned by News Corp and 35 percent owned by Telstra, has undergone significant changes in its offerings. In addition to the pay TV service, Foxtel has launched Hubbl, a platform that integrates local streaming services like Kayo Sports, Binge, Flash, Lifestyle, as well as WatchAFL and WatchNRL services in international markets. Hubbl aims to provide a seamless user experience by bringing together content from both free-to-air providers and paid subscription services.
The shift towards streaming has been evident, as two-thirds of Foxtel’s predominantly Australian customers now stream its content. The company has 4.6 million paid subscribers, with Binge and Kayo reporting 1.5 million subscribers each. While Foxtel’s revenues for the March quarter saw a five percent drop year-on-year, this was primarily due to foreign currency fluctuations.
However, News Corp’s overall performance remains strong. The company posted fourth-quarter revenues of $3.9 billion, a six percent increase from the previous year. This growth was driven by higher revenues from the ASX-listed REA Group, an online real estate listing service, as well as book sales and continued growth of the Dow Jones service.
If Foxtel were to be sold, it could potentially impact future sporting rights sales. The platform’s attractiveness to subscribers was demonstrated by its recent multi-year deals with the cricket boards of South Africa, England, and India. These deals made all competitions and tours exclusively available for Australian cricket fans on Foxtel and Kayo Sports.
In conclusion, while News Corp acknowledges the third-party interest in Foxtel, the company is focused on maximizing returns for shareholders. The transformation of Foxtel through the launch of Hubbl and the increasing shift towards streaming highlights the company’s commitment to adapting to changing consumer preferences. Despite the challenges faced by the cable service industry, Foxtel remains a valuable asset with potential for future growth.
