The_Wookie
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article way too big for the 1000 char limit, its slightly abridged. read the whole thing if you need to at the link
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Foxtel need a helping hand. Where on earth will they find the money?
Fox overpaid for cricket and fumbling and is now paying the cost. Fine by me. How this affects us is all that mattersI missed this last week, sorry if already posted
Foxtel faces its streaming apocalypse
Once the country’s most profitable media group, Foxtel is losing subscribers and is facing a mega-sports rights bill. Will it make it through?
Sam Buckingham-Jones Media and marketing reporter
Apr 25, 2024 – 7.00pm
It’s hard to believe now, but Foxtel was once Australia’s most profitable media company. A decade ago, the cable television broadcaster reached nearly one in every three households in the country. Its annual earnings were close to $1 billion.
But over the past decade, Foxtel has been forced to massively reinvent itself for the Netflix era – walking a tightrope of building a new, low-margin streaming business like Kayo and Binge while keeping as many people as possible paying for its high-margin set-top boxes. It is a balance becoming more and more difficult.
The company’s earnings are set to shrink by a further $150 million over the next three years to $390 million in the 2026 financial year, analysts forecast. A company once feted for a $2 billion valuation and a public listing now faces an uncertain future.
Some time next year, likely before the end of March, it is expected that Warner Bros Discovery will launch its own streaming platform, Max, in Australia – stripping Foxtel and Binge of immensely valuable HBO content such as Succession, Game of Thrones and Euphoria. Likewise, wrestling entertainment empire WWE, also on Binge, signed a $US5 billion ($7.8 billion) global deal with Netflix that the US streamer says will soon include Australia. Binge’s managing director, Amanda Laing, has resigned.
The end of these deals will put some money back into Foxtel’s pockets. But the AFL’s record $4.5 billion broadcast deal with Foxtel and Seven West Media kicks in next year, adding about $100 million more to Foxtel’s annual bills. Meanwhile, its sports subscriber numbers on Kayo have flatlined.
Foxtel has 3.1 million streaming subscribers across Kayo, Binge and Foxtel Now. But those streaming customers each add very little revenue. They make up 66 per cent of Foxtel’s “customer base”, but just 23 per cent of its revenue. Foxtel’s 1.5 million set-top box customers contribute 63 per cent of its revenue.
When Foxtel and Seven signed a $1.5 billion deal with Cricket Australia last year, Delany said it was worth every cent. “We maintained those top five tier one sports,” he said at the time. “We’ve got significant momentum, and we intend to keep it up.”
The deal worked out to be $140 million a year for seven years, a jump of almost $20 million a year on the previous six-year deal.
The mammoth agreement it signed with the AFL months earlier, however, was worth a lot more.
From 2025, Foxtel will pay, on average, an extra $111 million a year more for the AFL rights than it has paid for the past five years – from an average of $307 million to $418 million. This is not money that is lying around.
Foxtel’s key commercial sports executive, Rebecca McCloy, told The Australian last month that it had signed 175 deals with 120 different sports partners and agents over the past 12 months.
Macquarie analysts estimate Kayo generated $454 million in revenue for the group last year, compared with $1.7 billion from traditional Foxtel customers. The price of the Kayo Basic product jumped 17 per cent to $35 in February, although those kinds of increases are hard to pull off repeatedly.
Delany says the deal with the AFL is different from next year. “The super Saturday is quite different. For eight to 10 weeks at the start of the season, the only place you’ll be able to watch live AFL in the country will be via Kayo or Foxtel. It’s almost double that for Melbourne. And so that was part of the trade.”
After the football seasons end, some people cancel their Kayo subscriptions. Kayo has fallen every December quarter since its launch. The summer cricket slate has a big impact on cancellation numbers – if England or India are playing Australia, churn is far lower. This past summer, it was Pakistan and the West Indies.
Over the next year or so, the NRL will tap broadcasters to begin to renegotiate its own deal, extended during the pandemic and worth about $220 million a year to Foxtel. In other words, for three years, the NRL – which some argue is more valuable to a broadcaster – will be paid hundreds of millions less than the AFL. It will expect a similar sized deal to its rival football code.
“Given they are lucrative at $85 a subscriber, this is unlikely to be recouped via Kayo and Binge,” Macquarie’s Darren Leung says. “This ultimately leads to a vicious cycle where lower revenue means more cost out – and likely in content (we colloquially call this cutting at the bone). That means fewer subscribers because the content isn’t attractive, which leads to more cost out.”
Kayo appears to have hit a ceiling with a subscriber base of 1.2 million to 1.4 million people. “You can see this with flat year-on-year subscribers. It moves quarter-on-quarter mainly due to seasonality associated with sports,” Leung adds.
Foxtel faces its streaming apocalypse
Once the country’s most profitable media group, Foxtel is losing subscribers and is facing a mega-sports rights bill. Will it make it through?www.afr.com
That's their problem. At some point NRL may simply become a loss leader to prevent a massive subscribe churn.
Kayo sucks ball bags.
I don't think it will be a hit on the NRL, STAN have made no secret they want NRL and paramount will also likely bid.
Nrl is the only product that matters for pay tv
For the 10000000th time, Stan is VOD.
If they pick up 1m subscribers at $35 per month x 8 months is $280m plus advertising and 9 are showing 3 games a week I think there would be money to be made ( I think a million subscribers would be on the low end could be closer to 1.5-2m for 9 games live a week
So why is Kayo shitting the bed with 1.2 to 1.5M subs?
I would like the NRL to get their worth so they can spend more on juniors and expansion. If AFL are getting an extra $150-200m to keep spreading there cult we will be in trouble, might not be tomorrow. So if that means 9 getting everything then I will put up with it but we can’t keep getting underpaid and expect to catch up
No argument there, I just worry about 9s product and its propensity to shit talk our game.
Union was already dead before it went there and nrl would still have fta coverage , not hidden behind a pay curtain. We have generational support and a long season that keeps fans consuming the product until their team is out of the running, then we have hardcore fans like most on here watching 6-8 games per week. 9 talk shit to generate clicks as the old saying goes any publicity is good publicity. Hopefully if they have the whole product they will feel the need to invest in it with good commentary and positive coverage , but that would all be 2nd to market value.
Pubs and clubs would follow the nrl (in naw qld and Canberra)
