Repricing starts to pay off for Foxtel
Foxtel’s revenues were flat and pre-tax earnings in local currency grew by just two per cent in the quarter ending last December – but the repricing and repackaging initiatives are starting to pay dividends.
Subscribers numbers improved by 5% to 2.7 million, benefiting from the November 3 moves to slash the cost of the basic package from $50 to $25 per month, reorganise the channel tiers, and the launch of the BoxSets channel.
About half that 5% gain came from cable and satellite subscribers as opposed to digital subs, the first real growth in that segment in years, according to CBA media analyst Alice Bennett.
“Early signs from the repricing of Foxtel are positive,” Bennett says in a note to clients, reiterating the view that Foxtel’s repricing is a positive move.
Bennett tells IF she expects Foxtel will benefit from the introduction of the bundling of its channels with broadband and telco services.
She noted average revenue per subscriber (which was around $103 last year, among the highest in the world) is largely stable year-on-year, which suggests few existing customers have downgraded to cheaper packages.
In its quarterly results News Corp. said the disconnection rate among cable and satellite subs fell from 12.8% to 11.8%.
However Foxtel's revenues in US dollars for the quarter declined by $59 million to $680 million due to adverse foreign currency fluctuations.
News Corp reported equity earnings from its 50% share of Foxtel at $US16 million in the quarter and $41 million for the half year, up from $30 million the year before.