$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.