Foxtel dies of the virus

As we know, the widespread cancellation of sporting events across the globe has dealt a serious blow to Foxtel’s viability, whose only competitive advantage rests with televising live sporting events.

In particular, the cancellation/postponement of the 2020 AFL and NRL seasons has been particularly devastating for Foxtel, given these are the jewels of the company’s live sports offering and the key reasons why many subscribe to the network.

The cancellation of live sports also comes at a particularly bad time for Foxtel, given it was already drowning in some $2.3 billion in debt and had bled subscriber numbers in the quarter before the coronavirus outbreak. Specifically:

  • Subscriptions to Foxtel’s traditional cable broadcast declined to 2.268 million as at 31 December from 2.326 million the quarter prior;
  • Subscriptions to Foxtel’s dedicated Kayo Sports streaming service declined to 370,000 in February from 402,000 in November; and
  • Subscriptions to streaming service Foxtel Now fell to 334,000 as at 31 December, down from 375,000 the quarter before.

Now global media and sports director, Colin Smith, believes “Kayo in particular could lose 50 per cent of its subscribers… it’ll be a significant drop”.

So on the face of it, Foxtel is facing a dire situation, stuck between an impending collapse in subscriber numbers and revenue alongside mounting debts that need to be repaid.

It is also facing increasing competition from cheaper online streaming platforms, which continue to grow their offerings in Australia as well as gradually stripping Foxtel of its exclusive content.

For now, Foxtel’s CEO Patrick Delany is putting on a brave face, exuding confidence about the company’s future:

“You’d have to be living in la-la land if you thought there wouldn’t be some effect [on subscriptions] given the lack of live sport but we feel secure because we’re very strong in other genres like movies, drama and lifestyle,” Mr Delany said. “We’re known for sport but the number of customers that take only a sports package are a minority compared to those that take sport plus things like entertainment and drama.”

Foxtel has moved to shore up its subscriber base by opening up its content library to Foxtel Now subscribers until 31 May, alongside offering 15,000 hours of on-demand sporting content such as replays of live games, documentaries and sports entertainment programs.

Whether these measures will prove enough to stem the loss of subscribers remains to be seen as Foxtel battles for its very survival.

Leith van Onselen

Comments

  1. The next few months are going to be an interesting test of how much we love sport. If/when AFL/NRL starts again, there could be a massive fluffy of subscriptions (maybe to Kayo at least). If not, then maybe if shows that we’ve moved on to other things and then Foxtel really has no future.

      • tragic traderMEMBER

        No Peach we actually do love sports. Maybe you dont which is fine. But there are many millions of us who love all sports.

      • ‘Some people think football is a matter of life and death. I assure you, it’s much more serious than that.’
        Also wrong, look at the evidence. Concur Peachy.

  2. my bet is on Scumo’s turd stimulus package to safe Foxtel. Rupert is an essential service – to push Scumo’s narrative to the masses.

    • Overpaid sports players, empty stadiums. It doesn’t add up really, foxtel pumped up the rights to all these sports and created a nice little bubble for themselves with debt to boot. Going to be interesting watching all these overpaid boof heads get a reality check soon.

  3. two plus twoMEMBER

    Only a 50% subscriber hit to kayo? Given the amount of professional sport likely to be played in the near future and the lack of lock-in contracts, I’d expect a lot more to hit that cancel button (I have…).

  4. Charles MartinMEMBER

    Received an email from Foxtel saying that they have given me 3 packages (doccos, kids and enetrtainment) for free until the end of May to help with social distancing. Nice of them.

    • Disney Channel has now been fully taken back by Disney Co. – all that content is now on Disney+.

      Not much left on Foxtel now – will give them a call this week when working from home and push for some discounts if I am to keep it.

  5. surflessMEMBER

    This gives time for ESPN to get infrastructure together and pounce on sports rights as all codes will be in Financially ruined state.

  6. robert2013MEMBER

    They have to lower the price to the same as Netflix, Stan et Al. They’re not a premium enough service to justify the extra.

  7. PalimpsestMEMBER

    I note that Fox have excluded movies from the giveaway. Maybe they can hold on. I try to be rational, but I also try not to let a cent of mine go towards supporting Rupert, so I wouldn’t be disappointed if they go away.

    I really don’t understand how Sport became such a business, but it is. If we try to extrapolate from the previous great depression, where sport was an important distraction, it doesn’t quite relate, because of the added disease isolation component. Moreover, sport became financialised in the interim, with outrageous payments and costs. Maybe this is one industry where we see a “V” recovery. The counter argument is that all discretionary spending will come under household scrutiny so the right hand side might not get back to where it was.