Nine confirms Fairfax as partner for $100m StreamCo joint venture
Nine Entertainment has announced Fairfax Media has come on board as a joint partner for new subscription video-on-demand (SVOD) service StreamCo.
The companies will each inject up to $50 million into the venture over a “multi-year period” which will include advertising and marketing costs.
StreamCo is expected to launch in the 2015 financial year and will be headed by chief executive Mike Sneesby and operated independently of Nine’s and Fairfax’s existing media businesses. NEC CEO David Gyngell and Fairfax boss Greg Hywood will both sit on the board.
“Having two of Australia’s pre-eminent media companies as StreamCo’s shareholders strengthens the base of our experience, whilst providing an amazing marketing and promotional platform for our new service. I look forward to revealing more details about our offering in the near future,” Sneesby said.
StreamCo will offer a range of local and international programming to subscribers for a fixed monthly fee and no minimum term commitment. No subscription fee has been disclosed although it is understood it will be around $10 per month.
A joint Nine and Fairfax statement said StreamCo will take a “leading position” in the development of SVOD in Australia and offer a “substantial catalogue” of programs including TV series, movies, kids and family content and local and international documentaries, as well as content from Nine.
“Nine’s deep background in the television industry in Australia and understanding of Australia’s viewing preferences will be complemented by Fairfax’s experience and strength in subscription services and digital products,” the companies said. “The StreamCo service will benefit from the combined marketing and cross promotional capabilities of two of Australia’s leading media brands.”
The technical infrastructure of StreamCo is in the final states and a “number of cornerstone content deals” have already been concluded, the statement added.
The agreement will give both media companies an important foothold in subscription video on demand market which is expected to grow significantly over the next few years. Speculation continues to mount that Netflix will launch in Australia in 2015, while Foxtel already operates Presto in the local market.
Nine chief executive David Gyngell described the JV as a “ground breaking opportunity”.
“The combination of our two businesses will provide the joint venture with unprecedented distribution and awareness. I look forward to building one of Australia’s greatest new media businesses,” he said.
Fairfax chief executive Greg Hywood added: “We’re delighted to join Nine in developing a compelling subscription video service. SVOD is a proven business model overseas, and we look forward to offering this service to our subscribers, and indeed all Australians.
“Fairfax will continue to seek innovative ways to engage and expand our audiences, and this is an opportunity to create value through participating in the next wave of media evolution. Nine is a fantastic partner and we look forward to working with them on StreamCo.”
News of the deal is certain to increase speculation that Nine and Fairfax could pursue a merger, although Fairfax today rejected it was interested in buying a strategic stake in the TV network.
Steve Jones
(Declaration of interest: Nine are currently advertising on this website.)
What a mistake Gyng. If there’s one company that has consistently fucked everything it touches digitally, it’s Fairfax.Going right back Into the 90’s and F2 [Edited under Mumbrella’s comment moderation policy], so much potential, everything squandered. Better off taking your money to the dogs.
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Surely, Fairfax would do better shoring up its loss making print arms rather than investing in a new co that will struggle in what is becoming a very crowded market place, with little content or price differentiation. So films will be in the $5.99-6.99 bracket, TV eps similarly priced. What Australians want is complete content and price transparency and parity with US markets, not more gouging and more of the same. Presto is struggling, has anyone looked at their subscriber numbers? What’s the business case?
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Thanks for those thoughts, John Hartigan.
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Interesting. I wonder what role SteamCo will play in future sports rights deals…
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Oh la la! There’s 100 million that won’t be seen again.
Gyng and the sock puppet. Nine content and fairfax subscription expertise. Netflix will be shiitng bricks.
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Some of the worst subscription marketing about, shame Fairfax, you coulda converted me once.
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Gyng – if ya wanna improve viewers – give us what we really want.
Meself – I’d like to see a bit more biffo between you and the Packer-whacker!
That were real fun – real fun!
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I can see what’s in this for fairfax, a largely print and text-based media co. But what does 9 get from partnering with fairfax? I guess the $50m contribution to costs isn’t chump change. In any event , this market is only big enough for one, maybe 2 viable players in subscription streaming . Who will it be: foxtel? Streamco? Seven? Netflix? Fetch? Amazon ? Quickflix? Apple? Starting to feel very crowded …
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Nine could partner with Warren Buffett for a billion dollars and still botch an SVOD service.
Well said mechanic, Netflix will clean out all comers.
No mention of Quickflix, who have had an SVOD product in market for 5 years or so. I think their shares are going cheap at 0.0001 c
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Stephen Byrne: Fairfax’s print division isn’t loss making. You’re thinking about News Corp (remember The Oz – 30mill loss per year). Fairfax has hundreds of thousands of digital subscribers – more than any other news outlet. Plenty of users for StreamCo to tap into
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The Facts- if we could compare the detail I reckon they would be similar. Metros losing money. National papers losing money. Regionals making money. Note that fairfax puts domain into metro bucket when lots of domain revenue is regional ads
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Just as News lumps REA and Foxsports/ and foxtel into its ” publishing” division to shore up the numbers from its Newspapers, so Fairfax lumps Domain into its metro division , which masks the state of affairs for its newspapers. Back out the revenue and profit from Domain (currently the powerhouse of the Fairfax business) and there would not be a lot of profit left in the newspapers.
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this would only work if you got 7 and a few other broadcasters or rights holders onboard. Otherwise it’s just not broad enough to compete with Foxtel, Netflix, Apple etc…
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