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Telstra Open To Selling Down Stake In Foxtel Claims Chairman

Telstra is open to selling down its interest in Foxtel while maintaining a content relationship Chairman John Mullen, has told News Corporation a 50% partner in the pay TV Company.

The big telco who is set to have a second stab at relaunching Telstra TV shortly, has told the Australian that Telstra will maintain its access to Foxtel’s content under a new ownership structure for the pay-TV group.

Last week Foxtel whose revenues have fallen 2.2% to $1.62 in the six months to December 31, launched a major rebranding campaign along with a new subscription video on-demand service under the name Foxtel Now.

Total subscriber numbers fell 2.1 per cent to 2.822 million in the same period. Foxtel has 748,000 customers who subscribe to Foxtel through Telstra.

Mullen said Telstra was “very committed” to Foxtel and that whatever ultimate structural solution ends up being the appro­priate one, it will not prejudice Telstra’s access to content. “We will work together on content. That is the key,’’ Mr Mullen said.

“You don’t strictly have to own it all. I don’t see Telstra wanting to buy a Time Warner or something like that. But you have to have access to (Foxtel content), whether it is by joint venture, association, or whatever it is. That is going to be increasingly important.”

It’s also been revealed that all the parties have abandoned plans for a float of Foxtel on the Australian Securities Exchange or an outright sale of Telstra’s interest in the pay-TV company.

Last year Telstra was considering a spelldown of its Foxtel interest in an initial public offering that would have seen Telstra hold on to 19 per cent, News Corp 51 per cent and a free float of 30 per cent.

But the float was delayed by volatile equity markets and Telstra is said to be resolved to “re­positioning” the ownership of Foxtel and Fox Sports, which could be completed by the end of the year. “It is a really interesting space, every carrier realises you must have access to content and the method of delivery is changing rapidly,” Mr Mullen said of the burgeoning market for internet streaming.

Foxtel axed Presto, its loss-making video on demand co-­venture with Seven West Media, in January after it failed to gain traction with viewers against rivals such as Netflix and Fairfax Media and Nine Entertainment-backed Stan.

Telstra plans this year to launch a new version of its popular television streaming device, Telstra TV, featuring unique hardware and software custom-built by US-based video streaming device maker Roku.

Telstra remains bullish on Foxtel but the telco and the pay-TV operator could butt heads this year as Foxtel readies plans to release its own puck-style streaming device that could be a potential competitor to Telstra TV.

Foxtel has plans to launch its device in two stages.

The first will hit the market as early as July and hook into fixed-line broadband connections to offer consumers access to its Foxtel Play streaming service. It also will aggregate other streaming apps including free-to-air catch-up services and potentially streaming video services such as Stan and Netflix.

The second stage of the launch will happen early next year with the introduction of a more ­sophisticated device that will be equipped with a free-to-air ­broadcast tuner and be able to connect through satellite internet services. The respective strategies of Foxtel and Telstra in the popular streaming market are believed to have led to tension between the partners, but Mr Mullen downplayed any current issues. “I am not aware of any great difficulties,” he said.

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