Numbers mixed for Foxtel

Rose Major

Australian pay-TV platform Foxtel reported its yearly operating results on Thursday, and while the news was generally good, there were some poor – and some impressive – figures.

Total subscriber numbers rose by 90,000, or less than 6%, to end June on 1.63 million subscribers. Foxtel managed subscribers increased by 110,000, or 8% over the previous year. But indirect subscribers – those coming through Optus and Telstra cable services – fell a not-insubstantial 15%. Last year that loss figure was just 2%. While direct subscribers are those Foxtel really wants, the platform needs to be careful not to let a valuable source of revenue slide too much.

Churn remains steady at 13.3% (13.4% in the previous year) but churn levels among managed subscribers is better, improving in the second half of the year to 12.9% compared with 13.3% in the same period the previous year.

The highlight of the results, however, was Foxtel’s PVR product, iQ, which showed strong growth during the year, with 43% of managed subscribers now taking iQ or the high definition iQ2 (including three-quarters of all new subscribers). That helped Foxtel’s revenues to grow by 11% to reach A$1.84 billion. “Notwithstanding that there was only a minimal price increase during the year, ARPU grew soundly as a result of high penetration of Foxtel’s iQ and multi-room services,” the company said in a statement.

The HD+ product has proved a little harder to shift, however, with around 125,000 subscribers – less than 8% - paying extra for the high-definition package, despite its launch a year ago in June 2008.

Subscription TV revenue increased from A$1.43 billion to A$1.56 billion, an uplift of 9%, while other revenues grew 21% to A$0.28 billion reflecting, in part, said the company “the ongoing growth in advertising revenue despite the difficult advertising environment.”

EBITDA grew 16% to A$406 million from A$351 million with net profit at A$135 million, down from A$157 million the previous year, reflecting the impact of the significant uplift in iQ penetration, with the associated lift in depreciation and amortisation charges.

Chief executive Kim Williams cautioned that “while there are some welcome signs that the economy is starting to rebound, conditions still remain economically challenging with unpredictable outcomes for business and this will clearly provide Foxtel with some challenges in maintaining its growth momentum - especially with potential increases in unemployment and the unpredictability in the positive movement in consumer sentiment.”

Over the next 12 months, at least 25 channels will launch, plus additional interactive and high definition services and a new broadband offering which will allow subscribers to watch pay-TV shows on their computers. The extra channels will be beamed from Optus’s new D3 satellite which will co-locate with the satellite that currently services Foxtel subscribers after launch on August 22.

Foxtel is owned by Telstra (50%), News Corp (25%) and Consolidated Media Holdings (25%).