Foxtel subscriber growth eases but earnings on rise

SUBSCRIBER growth at Foxtel remained subdued and slowed over the past year as the News Corporation-controlled pay TV company posted an 8.5 per cent growth in earnings to $598 million.
Nanjing Night Net

The number of people who signed up for Foxtel in the year to the end of June grew by 1.3 per cent to 1.68 million.

Revenue was up 4 per cent to $2.2 billion and profit before tax $258 million – up from about $200 million this time last year. It does not release a net profit number as its tax bill is shared by its three shareholders, News, Telstra and Consolidated Media Holdings.

The result does not include the $1.9 billion merger with Austar in May, which brings its combined subscriber base to 2.3 million.

The full impact of the Olympics on the business will not be known for another two months, the company said.

Foxtel was a joint bidder with Nine for the rights to broadcast the Olympics to Australian viewers.

It split the $120 million bill for the summer and winter games between itself and the free-to-air broadcaster and has put on eight dedicated channels for round-the-clock coverage.

”We will be evaluating that in the next two months. We have seen a tick-up in subscriber numbers. I won’t say it is huge, but it is certainly noticeable. We have also seen an increase in the number of people who are taking our sports pack, which is encouraging,” a Foxtel spokesman said.

Foxtel gave the Olympics channels free to its existing subscribers – 80 per cent of them now take its sports package. Its churn rate – the number of people who choose to cancel its service, has dropped below 13 per cent.

The company said the ongoing savings from the Austar merger, which includes staff, back-office functions, real estate and executive salaries would amount to $40 million a year but it declined to detail the one-off costs associated with the transaction.

This time last year subscriber numbers grew 2.5 per cent for the 12 months to the end of June 2011 and profits rose 26 per cent off the back of a 6 per cent lift in revenues.

Last week News Corporation, which is a 25 per cent shareholder, cleared a regulatory hurdle to double its stake when the Australian Competition and Consumer Commission said it would not ”lead to any substantial lessening of competition in any relevant market”.

News wants to buy the James Packer-controlled Consolidated Media, which also owns a quarter of Foxtel.Foxtel paid Telstra a $108 million dividend, a figure revealed in Telstra’s results.

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