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Foxtel To Undergo Major Restructure, McKinsey & Co Called In

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Foxtel is set to undergo a major restructure following a $998 million dollar write down in the value of the Company by owners News Corp and Telstra.

ChannelNews understands that McKinsey and Co have been bought in at the expense of Bain & Co to undertake a major review of the subscription TV network who recently appointed Patrick Delaney the former head of Fox Sports as CEO.

Last week Foxtel chief executive Patrick Delany appointed Euan Smith, a former Fox Network Groups LA, Sky UK and Sky Deutschland executive, as chief operating officer. He had previous been consulting in operations for Foxtel.

Earlier this month Foxtel was celebrating after clinching cricket broadcast rights now the attention is on the rest of the network where the strategy of less is more could be applied resulting in several programs and departments being cut.

Subscriptions for Foxtel services reached 2.8 million subscribers at the end of March, with growth from on-demand streaming product Foxtel Now.

News Corp CEO Robert Thomson was bullish on the new sports schedule, having recently acquired the rights to cricket for the next six years.

He said this deal would help with the “summer lull”, a period of significant churn for Foxtel subscribers who were dropping off due to a lack of sport in the warmer season. Churn can be expensive for businesses who either must replace the subscribers or face declining revenue.

“[I am] confident the team will create a compelling summer package making Foxtel a year-round experience,” he said.

Overall Foxtel’s earnings fell 24 per cent due to lower revenues and an $18 million increase in sports programming costs, including AFL rights.

The Foxtel/Fox Sports team, headed by chief executive Patrick Delany, will focus on developing an Over-The-Top (video streaming) ospanning both sports, news and drama.

Delaney has admitted that he has a tough job ahead in restructuring Foxtel.

According to sources one area that is under threat is local drama with Foxtel banking on the success of the serialisation of Picnic at Hanging Rock.

Foxtel has also begun production of its next big budget epic, Lambs of God that will star The Handmaid’s Tale Emmy-winner, Ann Dowd, Miss Fisher’s Murder Mysteries favourite, Essie Davis, and UK actor Jessica Barden as three nuns locked away from the world, in a remote Australian convent, whose lives are turned upside down when a young priest [Sam Reid] arrives to explain the Church has sold their dilapidated home to developers.

Based on the novel by Sydney author, Marele Day, the series will begin filming at Fox Studios from this week.

If it fails to deliver a return on investment the whole division under Brian Walsh Executive Director, Television could be restructured with new people bought in to deliver content that attracts subscribers said one source.

News Corp CEO Robert Thomson said, “Starting with the fourth quarter, the combination of digital real estate services and cable TV businesses will account for significantly more than half our profits,” News Corp chief executive Robert Thomson told investors on the company’s earnings call on Friday morning.

“The Foxtel, Fox Sports Australia consolidation is also expected to make circulation and subscription revenues the biggest revenue stream for News Corp for the first time. This should give us more protection against the vicissitudes of a volatile advertising market.”

In other moves, Foxtel is set to change the way subscribers receive their Foxtel service with hundreds of thousands of homes set to get their pay TV service over Satellite.
The subscriber TV Company who is currently expanding their Internet delivery-based services, is set to transition from traditional network cable to satellite delivery a move that will save them millions claims observers.

What it means is that anyone that wants to sign up to Foxtel now, will have to install a satellite dish a move which some say is visual pollution for tens of thousands of homes.

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