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.
Biggest cost and efficiency saving Foxtel could make would be cutting MCN
The more one flogs the donkey, the less it will be able to pull the cart efficiently; eventually, it must collapse.
Corporate thinking is fine, but the associated greed and determination to build greater and greater profits are tantamount to flogging the donkey. Foxtel was programmed to fail from the start.
The public, upon whom the entire structure depends, is not so gullible and single-minded as some may seem to think.
Why do they keep MCN a separate entity?
Should just be merged with the existing sales teams at News Corp, and maybe just keep it as a split division and less duplication of resources.
Netflix, Stan and Prime have set a benchmark for streaming service pricing and provide a lot of content we never had. The choices are endless and Foxtel is collateral damage. Even Kayo is too dear (and has a shit app). Only hard (er) core sport fans see some value. Like many, I only want to subscribe to sport but don’t view it as a premium to Netflix etc. Just a nice to have.
Enter Disney’s streaming service later this year (or early next year), and it really does look like Foxtel’s content and subscription model is not going to last…
MCN has been on life support for a long time. The prognosis is obviously terminal. It really makes no sense to keep funding that headcount when the sales function can be easily merged in to News Corp. Can’t be too long before it happens.
Very expensive for sooo many repeats
And the ads are ridiculous
Makes no sense having MCN around any longer. News is the natural fit for Foxtel and the mcn model is outdated and defunct
Foxtel is not going to last so an IPO is a not a viable proposition for an investor. The needed to move away from dishes and cables onto an App some time ago. This would have reduced costs of supporting subscription TV and invest in content. As more of the content rights owners start their own subscription services such as Disney and other movie houses a large part of Foxtel’s current model is gone. If major sporting codes go or are substituted via another options such a Kayo this is another bad sign for Foxtels long term.
Having three sites (Moonee Ponds, Ronina & Head Office in Syndey) is also a drain of funds. All the operational power is in Moonee Ponds, and the travel expenses to Robina are insane. The Robina office needs to go as its a cost that doesnt need to be incurred.
Commissions being paid to sales & retention staff are insane and way to high so thats why all these jobs are being place off shore. The team in South Africa do it better and cheaper with less fuss than the agent based in either Robina and moonee ponds.
Senior management decided to let go of the long term analyst’s and better managers about 4 years ago. Chrun was low sales growth good with informed decisions being made. Now a string of inexperienced analyst’s and managers lead by a tv content blind marketing team looking for the next wiz bang quick fix is leading a once solid company to ruin.