Streaming switch pays off for Foxtel
THE Foxtel Group has outlined an ambitious growth strategy as the media company continues its transition to a streaming-led future.
Briefing investors at the Foxtel Group’s strategy day, the company’s chief executive Patrick Delany said the development of streaming services Kayo Sports, Binge and the soon-to-launch Flash represented a dramatic pivot in the evolution of subscription TV in Australia.
“Our strategy briefing highlights today’s Foxtel Group is a very different company to the one-product Fox
tel of three or four years ago,” Mr Delany said. “The business has been repositioned as a technology-led streaming company with multiple sources of revenue growth from streaming, a strengthened Foxtel Retail offering and growth in digital advertising.”
Mr Delany said the company was on track to reach more than five million subscribers and $3bn in annual revenue within the next three years, with the cornerstone of the business being “growth through streaming, and to win with world-class content and technology”.
“Importantly, we have high cash generation, sup
porting investment and returns,” Mr Delany said.
Responding to speculation surrounding a Foxtel IPO, Mr Delany said it was “a matter for our shareholders”.
“We want to make sure the investment community understands the value that we have delivered and the transformative journey that we are on,” he said. Asked what the company might look like in three years, Mr Delany said: “We’ve got to go where our consumers want to go.”
Mr Delany spoke of the company’s ongoing investment in technology, which was highlighted by the recent introduction of the cable-less
iq5 plug-and-play IP set top box. This transition will be further developed in coming months with a software update that will allow the iq4 set top box to be Ip-only, without the need for satellite.
Foxtel’s chief financial officer Stuart Hutton said Foxtel’s transformation would continue to “ease the capex burden” on the company – as more Australians shift to streaming, installation costs per subscriber are falling sharply, which reduces capital costs and boosts cashflow.
Mr Delany also revealed that 53 per cent of Foxtel’s subscribers have signed up to the company’s streaming ser
vices, and that number is on an upward trajectory.
Morningstar analyst Brian Han said Foxtel’s perceptual value had increased dramatically with its pivot towards streaming services. “What the move into streaming has done is announce to investors ‘Do not mistake us for a onetrick pony’,” Mr Han said.
“The company is heading in the same direction as the technologies, and is positioning itself as a multi-platform sports and entertainment provider of the modern day.”
Foxtel is 65 per cent owned by News Corp, publisher of this newspaper, and 35 per cent owned by Telstra.