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Are Telstra Shares Set To Fall This Week With Fetch TV Announcement?

He’s telling anyone who will listen that it was his decision to walk away from Telstra, now questions are being asked as to why Andy Penn the sacked CEO of Telstra, the man who lost the support of his board, actually contemplated the decision to buy Fetch TV.

The Australian newspaper claims that Fetch TV has been hawked to several parties since 2017 including Sky UK and still not found a buyer.

In the financial year to June 30, 2019, Fetch had total assets of $41.7m, liabilities are $134.8m.

Telstra own 35% of Foxtel Australia’s leading TV streaming Company, the rest is owned by managing partner News Corp leading to questions as to why Fetch TV and ant a deal with Foxtel.

Should Vicki Brady the new CEO of Telstra announce the acquisition of Fetch TV, there is the real possibility that Telstra shares could fall this week.

Under Penn Telstra shares have wobbled with the stock down 5% over the past five year. They are struggling in several no more so than in the fast growing content market.

Analysts are going to want a clear picture of how the acquisition of Fetch TV will generate revenue and growth for Telstra, when the market believes that overseas brands such as Netflix, Amazon Prime, Apple, Paramount + Disney + have not only content muscle but deep pockets when it comes to the acquisition of content.

Amazon Prime Video have already confirmed that they are interested in bidding for the Olympics, AFL and NRL the next time  the rights to these sports codes come up and they have deep pockets having grown their shopping network in Australia to close to $2 billion in threee years.

The most that Fetch TV can deliver is a click of revenue from overseas subscription sales, and some advertising.

In the past Fetch TV has not been in the content creation business, they sell a box called the Mini and Mighty via retailers such as JB Hi Fi and Harvey Norman.

They are also a key partner of Optus who insiders are claiming will continue using the Fetch TV box to deliver their Optus Sports offering which can also be accessed via an app which is now available via several TV brands.

If it’s click revenue Telstra is after they are also going to have to compete with multiple TV brands in particular Samsung and LG Electronics.

Both these two TV brands have changed their revenue models of late, Samsung now generates global revenue from both content and advertising by taking a share of revenue generated when a consumer signs up for a streaming service from the likes of Foxtel, Stan, Disney + etc.

LG Electronics after realising the global potential from app revenue, licenced their WebOS to third party brands such as Sharp, Bauhn whose TVs are sold at Aldi, Polaroid TV as well as Hitachi. This was a smart move which allowed the South Korean Company to provide free of charge a quality smart TV operating system and take click revenue from consumers signing up apps streaming services.

On February 17, Penn announced a 15 per cent drop in earnings for the six months to December 31, Penn said he had no intention of leaving the company – unless he was “knocked over by the proverbial bus”.

That bus came last week when the Chairman John Mullen who many claim is also set to leave the Telstra board broke the news to Penn that his days leading Telstra were over.

Fetch TV is owned by a company controlled by Malaysian billionaire Ananda Krishnan, it’s run in Australia by Scott Lorson who has not said whether he will join Telstra when the deal is done.

Telstra a major shareholder in Foxtel alongside News Corp Australia, the publisher of The Australian has in the past failed go get traction with their ow Roku box and dropped $500M when invested in Silicon Valley streaming service Ooyala.

Telstra said it was the “next YouTube.”

As the OZ said, ‘Talk about being hit by the proverbial bus’.

The News Corp owned Australia is also reporting that the highly anticipated public float of Foxtel has been delayed until later this year due to a range of domestic and international factors that have altered the media landscape in recent months.

Despite widespread industry speculation that an announcement regarding the timing of the float would be made by the end of this month – with a view to a possible public listing of the company before the end of this financial year – the potential deal now won’t proceed until the second half of 2022.

Foxtel has Blamed rising worldwide inflation, forecasts of multiple interest rate rise this year, and the ongoing war in Ukraine have all played a part in stalling the IPO, sources involved with the deal have told The Australian.

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