Foxtel reborn as customers ‘cut the cord’

News Corporation’s quarterly financial results show that the number of Foxtel paid subscribers rose by 12% year-on-year to 3.314 million in the three months to December.

However, there was significant changes in the make up of Foxtel’s subscriber base, with the total number of customers on its traditional broadcast cable service falling to around the 2 million mark. The rest are customers on streaming services like Kayo Sports and Binge, which are collectively growing quickly.

Specifically, Foxtel shed 267,000 cable customers over the 2020 calendar year to 2.001 million. This is well down from the 2.8 million broadcast subscribers Foxtel had at the end of 2016.

By contrast, Foxtel’s newest streaming services, Kayo and Binge, experienced explosive growth in 2020. Kayo’s subscriber base grew by 78% to 624,000 paying customers, whereas Binge added 431,000 paying customers in its first 7 months of operation in 2020.

However, Foxtel’s oldest streaming service, Foxtel Now, shrunk in 2020, with its paying subscriber base falling from 334,000 to 258,000 – a loss of 76,000 (23%).

The overall increase in paying subscribers to Foxtel was also matched with an increase in profitability, with News Corp noting that “Foxtel’s revenue trends have been better than anticipated in the first half of fiscal 2021, with higher ARPU offsetting higher churn”.

News Corp CEO Robert Thompson also noted that Foxtel now has a diverse portfolio and “much momentum”, and its recent growth has allayed concerns about its reliance on its traditional broadcast business:

“In the past, there had been scepticism about whether we could transition from our reliance on traditional broadcast, but those concerns have proven unfounded and Foxtel is now a company with a diverse portfolio and much momentum”.

This time last year, Foxtel’s future was looking precarious. But thanks to significant cost-cutting and its successful pivot into streaming, the company’s fortunes have been turned around.

Unconventional Economist
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  1. master of toilet paper

    video rental stores were better than netflix and all streaming services. one of the most fundamentally important things about being entertained is that there has to be some amount of effort/sense of rarity involved in its acquistion, or it becomes less enjoyable. the ability to binge watch virtually anything you want on command at any time you want it devalues how much you enjoy what you’re watching. actually having to drive down to the video store and find a tape then bring it home to watch it increased the psychological value of the experience. same with movies on t.v, it was a rare/enjoyable experience when a movie you hadnt seen in ages came on tv. now you can just watch whatever via a streaming and you don’t care at all anymore.

    streaming services were a gargantuan mistake, and they all suck now anyway because there’s so many of them and you have to pay about as much as you did for them all to get about the same amount of content as you did paying for cable tv.

    • MOTP, I usually VPN onto sites that have torrents and try to find whatever my mates say I should watch, eg Mando etc. This way it is to me like visiting a video store and having to peruse through hundreds of titles to find something useful. I agree those sites that have everything eg Netflix, I have never been interested in joining, if I had kids at home, no doubt things would be different. The upside is I save a small fortune In subscriptions.

    • YMMV as always

      What about those in regionals. Driving 15-30 mins to a video store? Nope.

      Streaming doesn’t devalue the experience for me, it dramatically improves it.

    • darklydrawlMEMBER

      Whilst that might work for you, I suspect you are largely alone with that opinion. The data suggests streaming is hugely more popular than the ‘old’ way of using VHS cassettes or Free to Air TV.

  2. No mention of Telstra’s decision to discontinue LivePass/AFL for TLS mobile customers, instead offering Kayo for $5/mo for 12 months, reverting to $15 after that. That includes access on Smart TVs etc. I view that as a great deal – cycling, AFL, golf, MLB, NBA, NHL etc.

    That should underpin customer growth, notwithstanding those on LivePass complaining about it/”I’ll never support Murdoch” etc.

  3. Good. I just bought a bunch of shares in NWS today. Their 61% interest in REA still represents more than 3/4 of the company market cap so the rest of the business is being sold cheaply on around 4.5 times ebitda. An absolute bargain given some of the crazy valuations around today.