MCN in the spotlight as Foxtel battles sliding revenues

Foxtel has warned more jobs at its sales arm MCN are at risk along with coverage of second-tier sports as the pay-TV operator battles sliding revenues and looks to refinance its lines of credit.

In a statement to the US Securities and Exchange Commission, parent News Corp disclosed Foxtel’s revenues had slid 8% to $1.55bn in the first half of the company’s 2019 financial year and flagged continued headcount reductions at MCN along with “reduced spend on non-marquee sporting content’


The company also said it is currently reviewing prices various programming packages “including potential price increases for certain tiers.”

Late last year, News Corp CEO Robert Thomson said the company was still committed to floating Foxtel. The latest trading update made no mention of those plans.

At the time, Thomson said of the IPO plans: “All I would articulate is our absolute confidence in our ability to grow revenues, to grow the subscriber base and to grow profitability at the combined company over coming years. That means extra value for the company, but in particular, it will mean extra value for our own business.”

Driving the revenue falls were a $133m decline in subscription income and a $15m slump in advertising. While Foxtel managed to reign in some costs, with total expenses falling 7.1% to $471m, programming expenses jumped 6%.

Foxtel’s sporting expenses have grown on the back of gaining rights to Australian cricket last year. At the time, the rights were seen as a driver of the company’s subscription push.

The company also said it was reviewing the timing of upcoming contracts with an eye to reducing programming and other expenses

Over the last six months of 2018, Foxtel’s core subscription base fell from 2.287m to 2.195m while Annual Revenue Per User fell from $80.45 to $78.56. Foxtel Now growth effectively stalled, only picking up 9,000 new subscribers to 358,000 while sports streaming service Kayo picked up 72,000 users following its November launch.

Foxtel previously reported Kayo had picked up 115,000 subscribers over the following two months to February this year.

The flagged cuts at MCN come after a reorganisation of the sales house following Ten pulling out of what was originally a joint venture between the two broadcasters.


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