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Austar Drops Foxtel Ready To Pounce

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Less people watching Austar PayTV, according to new figures.

Austar United results for the year end 31 December 2011, released today, paint a worrying picture for the future of pay TV with the regional player losing 8,845 viewers in the past year.

Total subscribers fell by almost 9,000 (8,845) to 755,374 – compared to 764K a year ago, which Austar blamed on “growing competition in particular from the free-to-air”, which continues to impact churn rate.

However, aside from dwindling users numbers, Austar showed a decent set of financials with profit after tax increasing 21% to $120m, although revenues were “flat” which the company blamed on the loss $7m in revenues from its mobile business sold to M2 Telecommunications.

However, despite the net loss in subscribers MyStar service continues to gain “momentum” with net additions of 14,500 customers in Q4 2011, Austar said today.

MyStar, the digital video recorder (DVR) service now has a penetration rate of 43% of all pay subscribers.

Average revenue per user (ARPU) increased $3.56 to $88.64 compared to Q4 2010, thanks to “the MyStar phenomenon, along with other product and service enhancements,” the company said in a statement.

“MyStar continues to be a strong differentiator for us, with existing customers opting-in for its control and convenience” said AUSTAR CEO, John Porter.

The dip in the regional PayTV player’s fortunes comes as it faces increasing competition from cheap IPTV rivals like FetchTV sold by Optus, iiNet and Internode from as little as $10 a month and the advent of Smart TVs which offer streamed Internet TV content, movies and new release TV shows as well as free-to-air digital channels.

Just this week, SmartHouse revealed that Smart TV giant, Samsung, are to begin streaming BlockBuster movies content on its sets, its Galaxy smartphone and Tab devices and already offers similar content services via Quickflix.

Read: Samsung OZ Scores Major Blockbuster Movie Deal Here

Local analysts Telsyte also predict Internet TV will eat into PayTV market share thanks to the “credible services” via broadband like Telstra’s TBox and FetchTV, supplementing “mature” cable markets here.

In August, Foxtel said its subscribers grew 2.5%, to a total of 1.65m. With Austar under its belt its total user base would exceed the 2 million mark and it also hopes cost saving and synergy will come with the proposed merger with Austar, due to be approved soon.

“In the last half of 2011 we focused on controlling our expenditure. We did this very successfully, meaning we were able to deliver a pleasing financial result,” said Austar boss Porter.

“However, we did continue to invest in our customers and we are already seeing returns, with our AFL offering in particular resonating in our markets.”

Of the proposed $2.2bn merger with Foxtel, the regional cable provider said the court approval to postpone its shareholder meetings to approve the the proposed acquisition to 30 March will allow time for the competition watchdog, the ACCC, to finalise its review of the deal.

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