Foxtel: Broadband’s good for business; News Corp: We’re not as big as you think

Foxtel rebrandFoxtel has this afternoon issued a statement insisting that it is in favour of fast broadband for Australia. The comment comes against a series of claims that the company’s 50 per cent owner News Corp is campaigning against the Labor government because it fears that the National Broadband Network could damage its business model.

At the weekend, Fairfax Media’s The Sun-Herald and The Sunday Age suggested there was a “News Ltd plot to get the Prime Minister”. In an item heavily promoted on the front page, columnist Paul Sheehan claimed that the reason controversial News Corp editor Col Allan has temporarily returned from the New York Post is to lead a battle against Rudd’s re-election. Sheehan claimed: “News Corp hates the government’s National Broadband Network. The company has formed a view that it poses a threat to the business model of by far its most important asset in Australia, the Foxtel cable TV monopoly it jointly owns with Telstra.”

While the Coalition is also committed to delivering NBN, its vision is for a cheaper but slower version of the service. Sheehan claims this offers consumers less opportunity to download content.

tele front page laborOn Monday, News Corp’s Sydney tabloid The Daily Telegraph led with a front page splash urging readers to “kick this mob out”.

However, Foxtel today issued a statement suggesting that it sees the NBN as an opportunity rather than a threat. It said:

“Foxtel welcomes the deployment of broadband networks in Australia.
Better broadband will improve Foxtel’s ability to reach new customers and offer new services.

“There is currently good quality broadband through much of Australia.

“Today’s broadband supports products such as Foxtel Go (Foxtel’s mobile offering) and Foxtel Play (Foxtel’s internet protocol television (IPTV) product).

“Even without government intervention, these networks would have developed and expanded. If government action improves in the reach and quality of broadband networks, or ensures that they are deployed more quickly, Foxtel will benefit by being able to offer products such as Go and Play to more Australians.

“Of course improved broadband increases the opportunities for new entrants and competitors. Foxtel has always anticipated that this would happen. In fact Foxtel already faces competition from many old and new entrants to the media and communications market.

“Just as Foxtel created competition for the incumbent free to air broadcasters and redefined the television market in Australia, broadband delivery will, overtime, further reshape the media in ways that will be beneficial to consumers.

“Foxtel is confident that the quality of its content, technology and brand will ensure that it will continue to be a market leader in the delivery of video services.

“The company will not comment further on this issue.”

Rudd reportedly today told journalists of News Corp boss Rupert Murdoch:

“It’s for others to ask the question why Mr Murdoch really doesn’t want the National Broadband Network to be connected to everyone’s home and everyone’s small business premises.

“Does he sense it represents a commercial challenge to Foxtel – which is a major cash cow for his company – or not?”

“I think he’s made it fairly clear through one of his editors the other day that he doesn’t really like us and would like to give us the old heave ho and get his mate Mr Abbott in.”

5.10pm update: Less than an hour after Foxtel’s statement, News Corp put out its own statement, responding to attacks on its media dominance:

“Recent political commentary has perpetuated a long-standing myth that News Corp Australia owns 70% of Australian newspapers.

“News Corp Australia owns or co-owns 33% of all ABC and CAB audited newspapers in Australia.

“News Corp Australia newspapers are popular – over half the adult population of Australia chooses to read a News Corp Australia newspaper each week. This means that News Corp Australia has a 59% share of newspaper circulation.

“All of this ignores television, radio and the myriad of online news sources which offer more diversity in opinion than at any time in history.”

Comments


  1. George Michaelson
    6 Aug 13
    7:43 pm

  2. The target is labor. Denying it just makes news ltd look like ningnongs. We all know the target is labor, they know are know.

    The nbn is a target because Rupert will lose to Netflix and the like. He will have declining share of the total market. Other forms of net investment prolong his foxtel profit margins in relative terms. The only way for news is down, in terms of eye balls and since eyeballs inform ad rate, they lose. If the nbn was controlled by news he’d be remarkably more pro. And of course, now we are facing a malcoms mess of fiber to the node the message has to be finessed. Cos the nbn wont be labors nbn, it will be Malcolm’s nbn. Which we have to like, cos we like tony. Simple innit.

  3. Schmoul W. Aschkenazi
    6 Aug 13
    8:59 pm

  4. Foxtel’s model is built on supplying a load of crap, much with ads and of which most viewers will only watch a small portion. NBN will allow viewers to choose from a smorgasbord of content, mostly without ads and on demand.

    If Rupe says he suddenly loves NBN and that it’s good for Foxtel, there’s a reason for that.

    He’s lying.

  5. Byron
    6 Aug 13
    9:10 pm

  6. @George Ever tried watching the footy on Netflix? Or Game of Thrones? Or any movie less than three years old? Use your brain son.

  7. Tink agin
    7 Aug 13
    12:51 am

  8. @Byron: the basic point is that the AFL can go direct to its audience with its own media product and that would cut a huge chunk out of Foxtel’s subs.
    Murdoch’s whole business is built on government favours. Thatcher let him break the rules with Sky, Hawke let him break the rules with the HWT takeover, various US admins have let him break many rules – notably those that would have prevented Fox TV network from being created.
    Wonder what Abbott has promised?

  9. Lindsay.
    7 Aug 13
    12:00 pm

  10. Tink again.
    The big problem for the AFL if Foxtel was not around would be how to replace the money it now pays for broadcasting the games. Maybe some other body will be formed to use the NBN, but until that happens the money Foxtel pays the sporting organisations for broadcasting their games keeps them going. Murdoch knows this and knows he will probably not be able to try and run a NBN network while he still has his Foxtel network.

  11. offal spokesperson
    7 Aug 13
    1:43 pm

  12. Umm, isnt the NBN the problem solver for the AFL. With high speed reliable internet, there can be real competition for the broadcast of AFL.

    Optus, Iinet Telstra, and one hundred and one new business’s could broadcast HD quality footy online direct to your smart tv.

    I could be wrong, but that looks to be a major issue for foxtel.

    Lets not even talk about movies and tv shows being streamed direct/live from the US.

    Mind you they will still have Foxnews and all of its value, so they will be fine…right?

  13. Adam Paull
    7 Aug 13
    6:00 pm

  14. Good news! I look forward to News Corp’s passionate support of the NBN in all their newspapers…

  15. Ex-reader
    7 Aug 13
    9:20 pm

  16. I’d rather pay AFL directly to watch AFL.

    Just like I’d rather buy straight from the artist to hear/read/watch their song/book/film.

    Retail middle-men are dead, content middle-men are dead. It’s not rocket surgery.

  17. Murf
    8 Aug 13
    2:17 pm

  18. Download a copy of raspbmc (FREE), buy a raspberry pi ($40), wireless network adapter ($25), HDMI cable ($8), Global VPN account ($80 pr year). Phone call to Foxtel to end subscription (FREE). Naked DSL subscription at 100gb per month from iinet ($60)

    The End.

    And this is happening in my house now. TV when I want ad free; BBC, ITV, Channel4, Hulu, Netflix,Comedy Central, Discovery, NetGeo, HBO, ESPN (yes I worked it out) Amazon Prime (not subscribe yet) plus hundreds of other channels I can’t be bothered to list. Granted it’s probably not 100% legal, but it works and that is why Rupert is dead against NBN.

    The big European and US networks are watching, it’s only a matter of time before I gladly pay the BBC a fee to watch their content in Aus. The TV here is awful truly, truly awful.

    There is nothing on Foxtel worth watching expect sport. And like someone said above, I’d rather pay the source than the middle man.

  19. These boots were made for walking
    8 Aug 13
    3:05 pm

  20. I called to cut off my Foxtel. When asked why I told them that I didn’t want to fund the crap I saw on the cover of the Tele. The guy responded quick as a flash “ok so for financial reasons then”. I guess this means that there will be no actual data on what the fallout is from all of this. I wonder how many swing voters have turned this bad taste into a vote for Labor and how many other people have realised that Foxtel is overpriced for a sub-standard product.
    Bring on the NBN and Netflix!

  21. George Michaelson
    9 Aug 13
    1:17 pm

  22. @Byron Use your brain son. love it! I only watch Rogers & Hammerstein, so movies of the last 3 years don’t float my boat. GoT was one of the top direct-download theft orgies of the year. (which btw, I do not do, nor encourage. somebody has to pay the talent, those dragons don’t come cheap)

    I appear to be in a vanishing minority who think Foxtel has a downside in the NBN. I still think its all about the rate card and ad revenue, not subscribers. The last story I was told, is an avid rugby fan who subscribes for the week of the world series, and drops off the rest of the year. Thats not making News Ltd shareholders a lot of money in my books, the capex of his feed won’t be recovered inside a reasonable ROI window.

    The smart money (I am told) is on in-programme product placement. That doesn’t involve Foxtel admen, it involves HBO admen, and at that point, dis-intermediation is looking live, rewarding and plausible.

    I still say News has only downsides in a Labor NBN and has upsides in Turnbulls model because either they retain market share, or they get paid for opening the HFC.

  23. George Michaelson
    9 Aug 13
    1:18 pm

  24. btw. I am not in the industry I’m a mug punter. So welcome corrections from Don Draper types.