Foxtel Subscribers Revealed, Call For Total Reset Of TV Sports Rights By News Corp

Foxtel has 2.2 million subscribers in Australia despite a hit from the closure of pubs and clubs and the shutdown of sport globally which affected their Kayo streaming service.

News Corp executives the major shareholder in Australia’s #1 streaming service has called for a “reset” of sporting rights in Australia a move that if successful could see a significant reduction in costs at the NSW based operation.

Foxtel CEO Patrick Delany has spent the past few months stripping operational costs and “dead” content from his network. This content is set to be replaced with new content from HBO and WarnerMedia after the US Studio’s chose Foxtel over Nine Entertainment and Stan.

As of the start of April and after sport had been shut down in Australia and overseas Foxtel had 408,000 paying Kayo subscribers and 317,000 paying Foxtel Now subscribers.

By May 2, Kayo’s paying subscribers fell to 272,000 however management are confident that they will get these numbers back as the NRL and AFL attempt to get their seasons back up and running.

Earlier today parent Company News Corp has reported an 8 per cent decline in revenues compared to the same quarter last year on the back of a particularly difficult advertising market and a negative impact from currency fluctuations, showing the early impacts of the COVID-19 outbreak The Companies EBITDA was $US242 million, a 2 per cent decline compared to $247 million in the prior year.

CEO Robert Thomson foreshadowed a “fundamental reset” of sports rights a move that archrival Nine Entertainment is also trying to engineer.

“There obviously needs to be a fundamental reset, the idea that things will return to normal this season is absurd.

“It’s not just the quantity of games it’s the quality of experience and that has obviously been diminished. And that reset has to apply longer term to us in Australia.”

The NRL and broadcast partners Foxtel and the Nine Entertainment are hoping to finalise a reduced broadcast deal for the 2020 season this week.

ChannelNews understands that for Foxtel to be in a position to compete they have to make further overhead cuts while rolling out new products such as their recently confirmed movie content service Binge which is tipped to attract a high take up as consumer hibernate in their homes due to restrictions at pubs, clubs and restaurants due to COVID-19 restrictions.

As of February Foxtel, employed about 2500 staff these numbers have already been cut due in part to Delany inheriting a business that some analysts claim was “fat” in unnecessary personnel.

Recently Foxtel secured a crucial content deal with US entertainment giant WarnerMedia earlier this week which includes the rights to HBO programs including Game of Thrones, Succession and Big Little Lies and Warner Bros shows such as The Big Bang Theory and Friends.

The 8% fall in News Corp revenues was announced along with a major write down in News Corp assets such as the former News America Marketing business. This has led to a US$1 Billion-dollar loss.

It was also confirmed that executive chairman Rupert Murdoch, would forgo bonuses.

“Pay reductions will be led by our executive chairman, Rupert Murdoch, who is voluntarily forgoing his entire cash bonus for the current fiscal year, and as chief executive I will forgo 75 per cent of my annual cash bonus. The collective cuts in bonuses and other cost initiatives will have a positive impact on profitability and our cash position.”

“We are operating in a different, difficult time,” he said. “Every business and family are facing challenges and our thoughts, in particular, are for those who are suffering deeply and personally from the impact of COVID-19.”

The third quarter result also reflects a $US14 million, or 6 per cent, negative impact from foreign currency fluctuations. Adjusted total segment EBITDA actually increased 1 per cent.

Digital subscribers at News Corp Australia’s publications surged, led by The Australian, with the subscriber base growing to 613,000 from 493,000 at the same time last year.

Digital subscriptions at The Australian were up 24 per cent in the third quarter and growing substantially more into the current quarter.

The company’s Australian publishing business, which also includes metro mastheads, The Daily Telegraph and Herald Sun, experienced revenue headwinds from a soft advertising market.

The News Corp CEO also welcomed the decision by the Australian government to instruct the Australian Competition and Consumer Commission to force Google and Facebook to come to a revenue sharing agreement with Australian media companies.

“It is absolutely crucial that more be understood about the character, the power and the potential manipulation of algorithms and data,” Mr Thomson said.

During the past six months media companies including News Corp, Seven West Media and Nine Entertainment have lost as much as 50 per cent of revenue during the pandemic due to falling retail sales and low spend from advertisers.

Despite this the Government funded ABC is asking for more than $100M in additional budget despite having made no cuts or reduced salaries due to the COVID-19 epidemic.