$27 million net loss and a value write-down of $297 million. Losses were blamed on Foxtel’s decision to turf Presto last year and increasing competition in the pay-TV space. Here are the details.
News Corp owns half of Foxtel; Telstra owns the other half. Today, News Corp released its financial results for the second quarter of its financial year, which showed that the group lost $287 million.
“This quarter’s results were impacted by non-cash charges because of a change in the carrying value of Foxtel and an impairment of the print-related fixed assets at our Australian newspaper business,” according to News Corp.
News Corp wrote down the value of its 50% stake in Foxtel by $297 million. According to News Corp:
“As a result of Foxtel’s performance in the first half of fiscal 2017, the competitive operating environment in the Australian pay-TV market and management’s revised projections, the [News Corp] determined that the fair value of its investment in Foxtel declined below its $US1.4 billion carrying value to $US1.2 billion.”
Foxtel’s net loss for the last six months of 2016 was $27 million. News Corp said the loss was a result of “Foxtel management’s decision to cease Presto operations in January 2017”.
The move to shutdown Presto was announced in October 2016. Presto was Australia’s third most popular subscription video streaming service. The problem was Foxtel had released its own digital streaming services including Foxtel Play and Foxtel Go, which left no room for Presto.
At the time, Foxtel said: “All Presto entitlements will be honoured; should any promotional entitlements remain after 31 January, Presto customers will be offered appropriate alternative content.”
Despite trying to keep up with the times with a rejig of the Foxtel Play subscription pricing structure, Foxtel as a company continues to face stiff competition in the form of Netflix, Stan and now Amazon Prime Video.
Foxtel’s subscriber numbers at the end of 2016 was over 2.8 million.
USD to AUD conversion rates in this article are accurate as of February 10, 2017.
Comments
10 responses to “Foxtel Loses Millions After Shutting Down Presto”
Are you sure about that, Spandas? Isn’t Foxtel still a partnership of 21st Century Fox and Telstra?
That implies Foxtel is fully owned which (as far as I know) isn’t the case.
In fact, Telstra has owned half since its formation and News Media (when it was called that) only 25% until it swallowed Consolidated Media Holdings for its 25% later.
EDIT: Sorry, just read the article again and saw this nugget.
I was under the impression Telstra owned a hair over half. My brother that works for them is supposed to try and sell it to people.
Hi WiseHacker,
Sorry it wasn’t clear enough at the beginning of the article! I did clarify it further down.
Just to avoid confusion, I’ve amended the article 🙂
Cheers,
Spandas
No need to apologise; I should have read the article a second time just to be sure (a lesson my old PhD supervisor drilled into me back in the day that has since gone lax at times).
But thanks for the update. There a lot of misconceptions about that partnership and ownership is one of them.
there can be a bit of confusion now as Sky News Australia is now 100% owned by News Corp where before it was a 25% split between, 7, 9 and BSkyB(news corp)
That only adds up to 75%. Who was the remainder?
sorry meant 33%, 7 and 9 were the major players in skynews
When pay TV was intro’d in Australia (IIRC), there were a handful of players offering the service under the guise of “competition”. Other players fell by the wayside and Foxtel reigned supreme. With that came the abuse of a monopoly who brought in things like ads that customers had the pleasure of paying to watch and tiered payment models geared at getting customers to spend more money just to get 1 channel they wanted to watch while paying a “premium” for a sh1tload of crap channels!
They got fat and lazy and thought their monopoly would last forever (because no way could anyone else muscle in as a direct competitor in the pay TV space). The only option available to consumers was not to buy in and live with FTA channels.
They are now reaping the rewards of years of not caring who their customers were. The one thing that Foxtel forgot was that unlike FTA where the main customers are the businesses willing to advertise and pay for the privilege, foxtel’s main revenue stream is the people watching their “service”.
Goodbye Foxtel, I hardly knew thee…
i really do miss Austar. they were the only pay tv company that cared about everyone outside of sydney and melbourne. The had excellent customer service and decent prices but alas they were the final company to brought out by foxtel and immediately i felt the effects of foxtels piss poor customer service
Yeah, we ditched our subscription recently.
You highlighted our main gripe – that we paid, yet were still served advertising. There’s also the kicker that Foxtel’s pricing is far higher than any other provider for comparable access to all their content.
The only Foxtel content we watched that wasn’t available (legally) elsewhere was Formula One and HBO shows. But to keep those isn’t worth $45 a month. Not to mention, afaik, Foxtel still only stream HD content if you have one of theirs or Telstra’s boxes.
That said I will miss watching AFL without a million bloody Harvey Norman adverts every game.
I have never entertained the idea of subscribing even one cent to Foxtel. As someone above said, monopoly pricing, ads, overcharging, etc, are show-stoppers for me. In 2014, or thereabouts, I subscribed to a DNS bending service that gave me access to Netflix, anywhere in the world, for $US10 a month. Then I bought into Hulu, and in 2015, HBO. Eventually Netflix was accessible in Australia and Netflix ramped up its geoblocking to render foreign access impossible, but Hulu and HBO worked. Then I bought Stan and Presto, and in mid 2016, I bought a retail Fetch TV (retail means it’s not a service sold [and crippled] by Optus, iINet etc. Now for $15 a month I get most of what Foxtel delivers for significantly more, (BBC First for example), plus I can record up to 6 channels in 4K if it’s delivered. Now I have Netflix, Stan, and since the demise of Presto, I have added Amazon Prime for $99 a year including Amazon Video, ad-free Amazon Music, Amazon Photos, and access to Amazon Prime prompt delivery. I have dropped Hulu (too many US ads) and HBO. Total cost, less than $AUD50 a month, and through Amazon, I can get streaming access (at a cost) to HBO, Showtime, Starz and more when I want to. Geo – unblocking is not illegal.