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.
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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.
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.
If price is one lever Foxtel can pull, cutting costs via a major restructure is another. Since the end of the 2020 financial year, Foxtel has slashed more than 28 per cent of staff, reducing employees from 2177 to 1558, according to its corporate filings. It has cut some engineering staff recently. There is more to come.
Outaide the top streaming players such as Netflix, Amazon Prime and Disney+, the second tier players are regularly talking. Sources close to these platforms say News Corp has periodically discussed partnerships between Binge with Stan’s owner, Nine Entertainment (which owns the Financial Review). Nine chief executive Mike Sneesby has met with Paramount+ executives.
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?
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