James Thomson Editor

James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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Howzat! Ashes underlines wisdom of James Packer’s pay TV sell-off

Published 15 July 2013 09:11, Updated 16 July 2013 07:29

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Howzat! Ashes underlines wisdom of James Packer’s pay TV sell-off

England beat Australia by only 14 runs in the first Ashes Test in a dramatic series opener, but anti-siphoning rules mean that pay TV providers can’t have exclusive broadcast rights to the series. Photo: Getty Images

I’m not sure whether James Packer would have stayed up to watch the tense conclusion to the first Ashes Test last night, but if he did, he would have had two choices: tune in to the Nine Network’s digital channel GEM or catch the action on Fox Sports.

And therein lies one of the big problems for the owners of Australia’s pay television networks, led by News Corporation (or more specifically, the newly created new News Corp) and Telstra.

According to a report in The Australian Financial Review , Foxtel will post subscriber growth for the 2013 financial year of 3 per cent, taking the number of connected homes to about 2.4 million people.

As the Financial Review reports, while the increase appears to be reasonably strong, the outlook is complicated by the fact that many new subscribers are signing up to a lower-cost Foxtel product available via Telstra’s T-Box product, which costs $15 per month, compared with current average revenue per user of more than $95.

Foxtel remains a very handy little business, of course, and a key plank of the new News Corp group. Indeed, it has the important role of producing a solid stream of earnings to offset the falling earnings from Rupert Murdoch’s old media assets.

But you can’t help feeling that the Ashes underlines the great handbrake on pay television in Australia: the anti-siphoning laws that mean a long list of big time sporting events – such as the Ashes – must be made available to free-to-air networks before they are offered to pay TV.

In Britain, for instance, the Ashes Tests are only being shown on pay TV (Murdoch’s BSkyB, in this case) with highlights on free-to-air. It’s a similar situation with England’s beloved Premier League football competition.

But in Australia, pay TV providers do not have the option of outbidding their free-to-air rivals and locking up the rights for the AFL or the NRL or the cricket. The anti-siphoning laws make that effectively impossible.

Good for the viewing public, you might say, but not so great for pay TV owners.

Without the carrot (or stick) for potential subscribers of exclusive coverage of Australia’s biggest sporting codes, what penetration could pay TV eventually achieve?

It’s a tough question to answer, although maybe we should look to James Packer.

Last year, he sold 25 per cent of Foxtel to News Corporation for $2 billion, allowing News to take its stake to 50 per cent. Part of the deal was a 50 per cent stake in Fox Sports, taking News Corp’s stake to 100 per cent.

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