7 hours Ago By David Richards
Rupert Murdoch’s News Corp is looking for a buyer for their Australian based Foxtel shares, with no mention of the potential sale mentioned at last week’s Upfront 25 event in Sydney after Telstra said that they are happy to sell their 35% to a potential new owner, but one question that was running around the room was NRL rights and who will bid. Murdoch the majority shareholder in News Corp, has a canny track record of knowing when to get in and when to get out of a business, he once owned Sky in the UK, before they sold it to US media and content Group Comcast the architects of the new Hubbl software in 2018. Last week Comcast, reported an operating loss at Sky UK of A$435 million, widening from a loss of A215 million in 2022, according to accounts filed at Companies House, Com,cast are also struggling in the USA along with Paramount+ and Disney.
Foxtel CEO Patrick Delany Speculation has it that Comcast is one of the organisations that News Corp has held discussions with regarding a possible sale of Foxtel, which has recently restructured their media and streaming operations after walking away from OzTAM which is owned by the free to air TV networks which Foxtel is stripping share away from, as consumers move to streaming via a multitude of devices including PC’s mobile, tablets and TVs as well as set top boxes. Currently Foxtel is looking to control their costs in a difficult market with Smart TV operators Samsung and LG also looking to strip advertising dollars away from Free to air and streaming operators as they look to become content providers in their own right. Smart TVs are now the default device for TV viewership with 79% of households now owning a Smart TV according to several research studies, with owners using a variety of streaming devices including Foxtel iQ boxes, PC’s with OLED screens, Hubbl, Google Chromecast, Amazon Fire Sticks and Foxtel Now hubs, to access content with Foxtel Group the market leader.
Foxtel Media claim that retailers and brand marketers that use a comprehensive approach of streaming devices and mobile video ad formats achieve significant improvements in performance, including brand awareness, brand consideration, and cost per visit and that an investment Foxtel apps such as Binge and Kayo deliver a superior audience because consumers are actually paying for access to content with sport set to play a major role in future viewing. In Australia consumers are switching from the likes of Ten, Nine and Seven as well as the ABC and SBS because of free to air or linear TV fatigue and the perception that the like of Kayo that is seen to superior sports coverage, which can be viewed on multiple devices. In the UK where Sky is a dominant force the business is punting on Premier League Sport to deliver growth, this is an organisation that Foxtel was initially modelled on.
In Australia Foxtel is set to start a fresh round of negotiations with the NRL as free to air TV stations face revenue declines in the future. Overall profit at News Corp, which split from Murdoch’s Fox Corp rose 11% in the last reporting period. The review of the News Corp business “coincided recently with third-party interest in a potential transaction involving the Foxtel group”, CEO Robert Thomson said in a statement last month.
“We are evaluating options ...
with our advisors in light of that external interest.” A sale of Foxtel would relieve News Corp, which holds most of the Murdoch family’s print mastheads from more borrowings especially if the NRL rights come into play with the likes of Apple, Google, and Amazon who own Prime Video being urged by NRL management to bid. Foxtel started its own streaming service in 2020, alongside the set-top boxes and they have surged delivering millions in revenue.
Total Foxtel Group subscribers as of August 2024, were 4.776 million (4.690 million paid), up 1% on year-on-year.
Total streaming subscribers, including Kayo Sports, BINGE and Foxtel Now reached 3.305 million (3.221 million paid), up 5% year-on-year.
In the past Foxtel management has looked to Sky UK as a benchmark for the Foxtel operation in Australia, even Hubbl is a mirror product of the Sky Glass offering. Like Foxtel Sky is betting on sports coverage to give it a competitive edge after last year securing the rights to show the majority of Premier League football matches for a staggering A$9.2 billon.
Overall, Sky reported flat revenues of A$19 billion in 2023. Its direct-to-consumer business, which includes mobile, broadband and streaming, reported 1.5% growth in a struggling market.
The company said the increase was driven by the continued growth and higher prices of its mobile, broadband and streaming businesses, including Sky Glass, its smart television that comes with a subscription to its streaming channels, in Australia these TV’s that are sold at Harvey Norman are branded Hubbl. This growth was offset by declining sales Sky Q boxes, as the company pivots from satellite to internet streaming similar to what Foxtel is experiencing. Since its acquisition by Comcast, Sky has been accelerating a strategic shift away from satellite to digital services.
The resulting restructuring has led to job cuts in the UK, where Sky employs about 27,000 people. In an interview with the Financial Times late last year, Sky chief executive Dana Strong said the group was cornering the market for exclusive sports coverage in the UK with plans to show as many as 1,200 football matches a year. In Australia Foxtel is taking a similar stance with the business already dominating when it comes to 4K sports streaming, with the real possibility emerging that major overseas brands who have seen the problems in the USA do not stick their hands up to bid for NRL sports rights.
Currently Foxtel is reporting major increases in NRL games traffic, with free to air TV network Nine Entertainment, who hold the FTA rights and is currently facing major financial pressure following the network securing the Olympics contract which is already costing them profits, also keen to get the rights to streaming for Stan their streaming platform that also has the struggling Rugby Union rights which is failing to attract an audience. In the USA Amazon and Walt Disney, along with Apple have started scaling back investment in content, with NRL games seen as a niche sport that has limited global appeal. With free to air TV’s facing slumping revenues and profits with Nine Entertainment recently reporting a 31% fall in profits the NRL are facing a tricky situation with Foxtel seen as a key player in future negotiations.
As one observer said “If Rupert Murdoch still controls Foxtel there is no way that he will let Nine Entertainment take the streaming rights for Stan off him. The same will apply to the AFL streaming rights”..
