Just for a minute imagine this scenario, Telstra owns 35% of Foxtel, but despite the strength of Foxtel and the services they deliver, they choose to splash $50M buying a controlling stake in Fetch TV, which is a bouncing along the bottom set top box Company who struggles to compete with Foxtel.

Telstra’s arch rival Optus who is a key customer of Fetch TV is not happy, so they start talks to roll out Hubble, Foxtel Group’s hot new puck that is to entertainment and sports streaming what Spotify is to music you also get free TV aggregated into the app.

Then out of the blue News Corp announces that they have a ‘For Sale’ sign up on their Foxtel shareholding on the same day Optus announces that their Optus Sports app which has a solid block of soccer and European Football rights which are complementary to Foxtel Groups NRL, AFL rights is set to be available on Hubbl and Foxtel boxes.

According to sources the concept of Optus buying out News Corps shareholding is being Considered.

Foxtel is tipped to be worth over $1 billion or around $680 million US.

The sale was announced the same week that big broadcasters Warner Bros. Discovery and Paramount Global who own the Ten network in Australia had more than A$22.8 billion wiped off the value of their streaming networks.

 

Sone observers claim that the Singtel Owned Company is already running a ruler over Foxtel Financials which when it comes to entertainment and sport streaming, Foxtel Group already have assets in place that are will be the long-term future for TV broadcasting in Australia.

Another Company that could be in the frame to buy Foxtel is global communications Company Comcast according to sources.

Comcast who are one of the world’s biggest communication Companies were the builders of the new Hubbl platform, which includes access to both Kayo and Foxtel Groups entertainment app Binge as well as Free to air TV apps and the bulk of the world’s best streaming platforms.

Foxtel CEO Patrick Delany

Last week Foxtel management were guests of a Comcast subsidiary in Paris.

One of Foxtel’s strongest assets is Kayo which added 108,000 subscribers over April, May and June with their Kayo Binge app also delivering solid growth with some of that growth coming via the new Hubbl platform.

Overall Foxtel Group subscribers as of last month were 1% year-on-year, up with 4.776 million Australians using the service, and 4.69 million paying between $22 and $35 for their monthly feed.

Across the board Foxtel streaming subscribers was up 5% during the past quarter, with over 3.305 million, or 69% of all subscribers now getting their content via a Foxtel box or Hubbl app.

Year to date, Kayo Sports is up 14%, with 1.606 million subscribers (1.550 million paid), while BINGE reached 1.552 million subscribers (1.529 million paid), up 1%.

This increase in subscribers is delivering a big audience for advertisers.

According to Foxtel Media, digital advertising now represents more than 40 percent of their total advertising revenue and when you take into account that the Kayo subscription base grew by over 40% last year, the potential upside is looking good especially as Australia is taking in tens of thousands of immigrants every year, many who are followers of sport.

So, what would Optus get if they are the bidder?

Foxtel CEO Patrick Delany has already done a decent job of stripping costs out of Foxtel operation with installation and content for Foxtel boxes especially those that are still on satellite set to come down further as current customers move to boxes such as Hubbl and streamed sport over an IP network.

Opus would also get access to 1.452 million home, and clubs and sports bars broadcast subscribers, with home customers paying an average of $90 each month for an iQ box this adds up to $130.6M a month.

Then there is Hubbl which has got to be one of the world’s best aggregators of content, a bit like what Apple and Spotify do for music.
Launched in March 2024 Hubbl is a very clever, and easy to operate puck that brings together a world of streaming apps and free to air TV into one 4K device that can easily fit into a bag when you travel.

Hubble is now delivering a multitude of additional revenues, for Foxtel.

Apart from a click of the revenue when consumers sign up for the app, Foxtel Group Media are able to place more advertising in front of consumers who just happen to be some of the most affluent in Australia.

We also know that 75% of Hubbl customers who have paid a one-off fee of $79 for the puck purchase an additional Foxtel product.

Foxtel Media currently claim that they reach audiences of up to 8.4M a month across their multiple platforms that includes mobile phones, tablets, and TVs as well PCs attached to a large monitor.

These consumers are seen as high-value and hard to reach audiences which would benefit Optus.

Currently Foxtel Group assets are exposed across 71 premium subscription television channel brands, 117 digital publishers, Samsung Smart TVs plus streaming services Foxtel Go, Foxtel NOW, and Kayo.

If Optus got this platform, they could easily offer bundled deals with their NBN and mobile packages a move that could put a dent in Telstra revenues.
Research shows that a sizeable percentage of Foxtel customers are also Telstra, mobile, and NBN customers, some even got their Foxtel box via a Telstra package deal.

The downside
The downside is that Seven and Foxtel paid $4.5 billion between them to screen the AFL until 2031.

Back in 2021 Nine Entertainment signed a $650 million, five-year deal with the NRL.

Nine pay $115 million cash a year, with a further $15 million in contra and other services.

Foxtel is believed to be paying an additional 230M a year after securing a five-year extension of its deal with the NRL.

Now there is speculation that the NRL is set to hold fresh discussions shortly.

This is crucial for any buyer as NRL and AFL broadcasts are the glue that holds Kayo and the overall Foxtel Group content offering together.

Hovering in the background is the cash strapped Paramount who already own the Ten network as well as Amazon and their Prime Video network. Also bidding for sports rights is Apple who when combined with a free to air network in Australia could push the rights to NRL up to a new level.

Back in 2022 global streaming platforms Prime and Paramount both expressed interest in being part of the AFL’s broadcasting deal beyond 2024.
Both companies responded to a letter sent out by the AFL to gauge interest from prospective buyers, nothing came of it.

Then there is the issue of advertising from gambling operators.

Recently Communications Minister Michelle Rowland proposed extending a ban on gambling advertising to an hour before and after live sport, introducing a cap of two ads per hour on free-to-air TV until 10pm, and a blanket ban on ads on social networks and other digital platforms.

Advertising from gambling Companies is a key contributor to Foxtel streaming revenues especially as they dominate sports streaming spanning AFL and NRL games.

Earlier this month it was revealed that the Seven and Nine networks were so upset by the proposal that they lodged a demand for Free TV spectrum fees be slashed to offset a $40 million black hole from wagering firms pre-emptively cutting advertising ahead of a government crackdown on betting ads.

The concept has been rejected by independent and teal MPs as a “total cop out” and “betrayal.”

In late June, the Australian Communications and Media Authority found Foxtel’s Kayo Sports guilty of breaching advertising rules after it ran 16 different gambling ads across 267 live sporting events over six weeks outside the allowed times.

Foxtel claimed it was caused by 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 did not comply.
Advertising from gambling Companies is worth $238.6 million.

Now there is another game plan being played out after News Corp’s CEO Robert Thomson suddenly and without notice flagged a “third-party interest in a potential to buy Foxtel.

Whether that organisation is Optus, or a foreign Company is not known, what we do know is that Foxtel CEO Patrick Delany was in Paris last week meeting with NBC officials an organisation that is owned by Comcast.

It will also be the end of a pioneering era led by News Corp and Telstra who have overcome a lot of obstacles to get where they are today.

We could speculate endlessly but I suspect that a deal is in the making especially as News Corp were bold enough to flag a potential deal in their latest financials.