Foxtel which is under pressure to attract new subscribers due to high churn rates, is close to launching a new “triple play” option that will see its service bundled with a TV, broadband and telephone service next year, this is the same organisation that wants you to pay to watch cricket.
The move comes as US content Company Netflix is tipped to enter the Australian market with a service that is significantly cheaper than Foxtel services,
The Australian newspaper which is owned by 50% Foxtel shareholder News Corporation, is reporting that Telstra which owns the other 50%, has reached agreement with Foxtel to supply wholesale broadband to the subscription TV company.
Desperate to cut their churn rates, Foxtel is looking to emulate the success of UK satellite broadcaster BSkyB which cut their churn rate by offering bundled packages that include broadband.
Speaking to News Corporation journalists at the American Chamber of Commerce, Foxtel chief executive Richard Freudenstein said that there had been a breakthrough in talks between the two Foxtel shareholders.
“Both shareholders have said how supportive they are of us doing a triple play offering,” Mr Freudenstein said.
“If we can get through that I’d love to see it launch next year. It takes a long time to put all these systems in place and so it’s going to take a while if we get approval to do it.”
Mr Freudenstein said consumers were attracted to bundled “entertainment-led” services, but declined to be drawn on pricing.
A big issue for Foxtel is pricing with consumers asked to pay over $125 a month to get access to HD Movie and sporting content. In comparison Netflix is tipped to offer a service in Australia for sub $15.
In a move to try and shore up their content offering Foxtel via News Corporation has moved to lobby the new Tony Abbott led Government to dismantle the anti-siphoning rules, so that Foxtel can force consumers to pay to view their favourite sports such as Cricket and Rugby.
Freudenstein has called on the federal government to allow it to compete for the rights to more major sporting events, saying current rules give an unfair advantage to free to air networks.
Mr Freudenstein said current anti-siphoning regulations, which ensure major sporting events are broadcast on free to air television, had hurt competition in the TV industry.
Yesterday, Australia’s three major TV networks Seven Ten and Nine supported Free TV Australia which dismissed Freudenstein’s renewed calls for dismantling the anti-siphoning rules.
Free TV Chairman Harold Mitchell said “It’s no surprise to see pay TV out there crying foul over television sporting rights. It’s more of the same from an industry that is about one thing – making people pay for stuff they would otherwise get for free.”
Mr Mitchell said that 70% of Australians rely exclusively on free television for their sport, news and entertainment. They don’t want to be forced to pay an average of $100 per month to watch their favourite sporting heroes.
Free TV said that the current anti-siphoning rules was working for both consumers the TV networks and the major codes spanning the AFL, NRL and cricket who are benefiting from record rights deals.
Mitchell said “It is simply a fantasy to imagine that the same content can be sold to two competing platforms. “That scheme is simply the latest strategy devised by pay TV to achieve their ultimate goal – exclusive rights to premium sporting content
He added “Have sympathy for Pommie cricket fans: the real story about The Ashes in the UK is that if you want to watch it there, you have to subscribe to Sky.”
Freudenstein said that he will lobby Communications Minister Malcolm Turnbull for a reduction in the list, including the removal of Wimbledon and Socceroos’ World Cup soccer qualification matches overseas.
But Seven West Media chief executive Tim Worner said: “The free-TV industry stands accused of ‘gaming’ the system. If that is true we must be playing a very ordinary game given the record rights fees being secured for AFL, NRL and cricket.
“The notion that somehow some sort of lid is being kept on rights fees is a nonsense. Australia has an aggressively competitive free television market.”
