MB has warned repeatedly that Foxtel was fighting for its life to stay afloat in the subscription television market. Over recent years, Foxtel has faced a declining subscriber base as cheaper online streaming rivals like Netflix, Stan, Amazon and Disney have undercut it and poached customers:
Many subscribers that have remained with Foxtel have also shifted from expensive cable television packages to cheaper streaming options, thereby crushing the company’s margins.
Meanwhile, Foxtel is literally drowning in debt, owing $2.3 billion to its creditors.
The death knell sounded with the arrival of the coronavirus pandemic, which has shuttered sporting events across the globe, including Foxtel’s prized AFL and NFL 2020 seasons. With its only competitive advantage being in live sports, and Australians struggling financially, Foxtel has seen a tidal wave of customers seek to cancel their subscriptions.
The myriad of issues have now come to a head. Foxtel has responded to the coronavirus-induced downturn by retrenching 200 employees, with CEO Patrick Delany telling staff that the pandemic has forced the company to accelerate a “transformation” of its business due to digital disruption.
Another 140 employees who work in Foxtel’s sports production division have also been stood down until the end of June, with Delaney noting that it is uncertain as to when live sporting events will resume:
The job cuts were confirmed in an email sent to staff late on Wednesday by Foxtel chief executive Patrick Delany, who said the company had to “act now” to ensure it remained strong in the long-term… “The government COVID-19 restrictions are… seeing major challenges for us including the broadcast and streaming of live sport,” he added. “And looking ahead, the economic outlook for Australia is deteriorating and our continued transformation will become even more important”… “We need to be prepared for a scenario in sport where season starts are delayed further. It is clear all codes are struggling with significant financial challenges and we should anticipate that the future shape of sport in Australia will be very different,” Mr Delany said.
The writing was on the wall for Foxtel as soon as Netflix and Stan entered the Australian market in early 2016. These are the types of desperate actions a dying company takes before its inevitable collapse.
