You wouldn’t value Foxtel at nothing after its latest figures, although that’s exactly how Telstra carries its investment in the country’s major Pay TV business in its books.
In fact, from Foxtel’s figures, it is probably the most profitable media business in the country, with all its major measures rising and now impaired assets to write-down, as Fairfax, News Corp, APN Media and Seven Network have done this half.
Foxtel lifted subscriber numbers, revenues and earnings in the six months to 31 December, and unlike the Seven TV Network, had no worries in talking about it and providing numbers:
Viewing growth was driven in part by continued solid customer growth. FOXTEL’s direct subscriber base grew to 1,449,000 at 31 December 2008, an increase of 7% on the prior corresponding period. Including wholesale customers, FOXTEL’s base reached 1,591,000. Despite the economic climate, new subscriber additions for the half were in line with the same period in 2007 and 11% up on the 2006 year while churn, at an annualised rate of 13.3%, was 0.2% lower than in the previous corresponding period.
And this detail, that the Seven Network seemed unable to provide for either the Seven TV Network, or Pacific Publications:
FOXTEL recorded earnings before interest, tax, depreciation, and amortisation (EBITDA) for the 6 months to 31 December 2008 of $196m, an increase of 19% on the first half of the 2007 year. This result was achieved notwithstanding the additional costs associated with the successful launch of the FOXTEL HD+ and the accelerated rollout of iQ.
FOXTEL’s total revenue for the half was $908m, a 13% increase on the $805m revenue generated in the previous corresponding period. FOXTEL’s subscription revenue increased from $689m for half year ended 31 December 2007 to $762m for the 31 December 2008 half year, an 11% uplift while other revenues grew 26% to $145m.
FOXTEL’s financial position remains strong with leverage of 1.8x EBITDA, no debt falling due until mid-2012 and a strongly hedged position against the fall in the Australian dollar.
Telstra said in its half year accounts this morning that:
At 31 December 2008, the FOXTEL carried forward losses amounted to $145 million compared to $135 million at June 2008. The increase in the half-year is mainly due to a $50 million distribution received, partially offset by our share of FOXTEL’s profit which amounted to $37 million.
We received a $50 million distribution from FOXTEL during the current half-year, a 50.0% reduction from the prior corresponding period,” Telstra said in notes to its accounts.
The Foxtel result echoed the solid report from rural rival, Austar, which showed a solid rise in subscriber numbers and a solid rise in average revenue per user.
But Austar warned that the 2009 year would be tougher and the group expected to find it harder to get subscribers and that the ‘churn’ rate (i.e. subscribers who drop out) would rise as more people made adjustments to their personal situations. Today, Foxtel’s Kim Williams echoed that in saying that “the months ahead appear confronting for the country and Australian business generally and this will inevitably provide FOXTEL with challenges to maintain its growth momentum.”
But at least we know where Foxtel, the Ten Network, Austar and Macquarie Media stand operationally. But not the front running Seven Network. What will Cons Media Holdings, the James Packer associate, reveal about PBL Media, now 0.74%? It’s due to report shortly.
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