FOXTEL yesterday announced a jump of 5.1% in subscription revenues for the six months to 31 December 2011. This result was off the back of solid improvements in the take-up of FOXTEL products by FOXTEL customers including FOXTEL’s iQ, multiroom and high definition digital offerings. This is a good result for FOXTEL in a tough retail environment and lays the foundations for strong growth this year as FOXTEL prepares to launch a number of new channels and content.
FOXTEL recorded an EBITDA of $280 million, while profit before tax stood at $107 million over the period.
Some other key numbers of FOXTEL’s current performance include:
- 40% of FOXTEL customers have a multiroom product
- more than 75% of subscribing households have iQ boxes; and
- nearly 40% of subscribing households have FOXTEL HD.
Whilst the churn rate (number of customers canceling FOXTEL services) is on the higher side at 13.4%, FOXTEL’s total subscriber base (including wholesale subscribers) climbed past 1.66 million. New FOXTEL CEO Richard Freudenstein said,
“There are really two stories in FOXTEL’s results. Existing customers love our product and are taking more and more of it. But as retail and consumer services companies are finding across Australia, it remains a tough environment in which to win new customers.”
The results come as FOXTEL is about to embark on a year where it should experience strong growth due to its heavy investment in new content. This includes launching new entertainment and factual channels such as FX and A&E. However the biggest driver of new subscribers this year should be sport. On the back of a new broadcast deal with the AFL signed last year, and its LONDON OLYMPICS broadcast rights, FOXTEL will no doubt be hoping this new content will entice new subscribers in this increasingly tough retail market. Whilst sport has traditionally always been the top rating programs on FOXTEL, in the last twelve months sport has especially been a strong performer on subscription-TV. Examples that come to mind include breaking new pay-TV ratings records for Super Rugby, International Rugby and Big Bash League cricket coverage.
FOXTEL will share its new AFL rights with Seven, and in a first for the subscription platform, they will be able to deliver all nine weekly games LIVE and in HD, even when Seven are the Host Broadcaster. Such is the importance of these rights to drive new-subscriber growth for FOXTEL, the platform has appointed FOX SPORTS to produce a new dedicated-AFL FOX FOOTY channel (the new channel will be included in the existing sports package). FOX FOOTY will launch on 17 February for its coverage of the pre-season NAB CUP.
The other major weapon to drive new-subscribers to FOXTEL is the LONDON OLYMPICS. This will be FOXTEL’s first Summer Olympics coverage under its current IOC broadcast deal (the Nine Network is the free-to-air broadcast of the Games). FOXTEL is the Official Subscription, Internet and Mobile broadcaster of the games in Australia. Whilst specifics of the broadcast are yet to be announced, FOXTEL has announced it will cover ever Gold Medal LIVE in HD on eight dedicated channels.
With pay-TV penetration in Australia only at around 30% of households this new content should help push FOXTEL’s subscriber base higher, despite increased competition from IPTV providers, Freeview and a continuing unstable retail environment.
The advantage for FOXTEL in competing against new and existing IPTV providers is that it is not only a subscription-TV provider, but its iQ set-top boxes are IPTV ready. With new changes coming to the already existing FOXTEL On Demand service this year, FOXTEL has a strong platform in order to weather the current conditions and continue to grow, in an increasingly difficult and competitive environment.
FOXTEL will also be hoping its proposed merger with regional pay-TV operator AUSTAR is approved by the ACCC this year, after already receiving approval from the Federal Treasurer late last year.
Would you subscribe to FOXTEL for the new Fox Footy Channel and its extensive London Olympics coverage?
References
FOXTEL Announces Solid Results In Face of Tough Consumer Environment