Rupert bails out Foxtel

By LAURIE PATTON | 15 May 2019

Rupert Murdoch’s News Corporation has had to lend its 65 percent owned Foxtel $300 million, with the likelihood many more millions will need to be pumped into the business in coming months. Once a jewel in the crown of his local empire, Australia’s only surviving Pay-TV service is in trouble, with a dwindling subscriber base and flatlining revenues. Belatedly, Foxtel is moving to a new business model, with products such as its new sports streaming service Kayo.

In 1991 Ken Auletta‘s book “Three Blind Mice” described how the US television networks were slow to react as cable TV took hold. Likewise, Foxtel failed to adapt to the imminent arrival of online services such as Netflix and Stan. For years a belligerent management hiked prices in a strategy designed to maximise ARPU (average revenue per user) at the expense of market penetration.

Ironically, Foxtel’s major shareholder – in particular its national masthead The Australian – has run a hardline campaign against the National Broadband Network, the very platform Foxtel is now reliant on for its online-dependent rescue plan to counter the effect that streaming services and the free-to-air digital multichannels and their catch-up services have had on the availability of new viewing options.

More than nine million Australians have subscribed to SVOD (subscription video-on-demand), and the global trend is towards BVOD – broadcast video-on-demand. The ABC led the field here with its highly popular iView. All the networks now have ‘catch-up’ services requiring an Internet connection.

Sadly, the fate of the NBN has become mired in party politics. Opponents of the project have been egged-on by the Murdoch press. Now some chickens are coming home to roost.

For years Murdoch propped up The Australian despite mounting financial losses. The question is, will he do the same for Foxtel and keep pumping money into a business his co-shareholder Telstra seems to have abandoned? Telstra declined to contribute anymore funding. 

Alternatively, perhaps Murdoch’s minions will rethink their attitude to the NBN. Whoever wins the elections on Saturday will need to find a fix for the beleaguered network. A bipartisan approach would make sense. The support of New Corp would see this a more likely outcome.

Postscript:

I’m often asked if 5G mobile will make the NBN redundant. The short answer is no.

(Laurie Patton is a former television journalist/producer and media executive and CEO / Executive Director of Internet Australia. As the executive in charge of news and current affairs at the Seven Network he was a member of the Sky News Australia board, before Seven sold its share and back when it was “a proper news channel”.)