Freeview Nobbles Packer As Profits Slump 74%

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Free-to-air multichannels and their Freeview electronic program guide appears to have scored a stinging blow to James Packer’s Consolidated Media Holdings who earlier today recorded a 74 per cent fall in its full-year profit.

Free-to-air multichannels and their Freeview electronic program guide appears to have scored a stinging blow to James Packer’s Consolidated Media Holdings who earlier today recorded a 74 per cent fall in its full-year profit.

Two weeks ago Foxtel which is one third owned by CMH, was reporting that despite “tough” economic” conditions the pay TV Company had managed to achieve a 15.5% growth in earnings  to $551m for the year to 30 June 2011. Revenue was up 6% to $2.1B.

CMH who are currently working with Foxtel and Telstra management in an effort to convince the Australian Competition and Consumer Commisssion to approve a $2.2 Billion dollar takeover of regional pay TV Company Austar appears to have been hit by a slump in contributions from its 50 per cent stake in the sports-focused Premier Media Group.

In a report to the ASX today the group reported a profit slump to $101.7 million in the 12 months to the end of June.

Executive chairman John Alexander says the number of people subscribing to pay TV has been hit by the free-to-air multichannels and a drop in consumer confidence.

“I think it’s pretty clear that the free-to-air multichannels appear to have achieved their intended purpose of slowing down subscriber growth at Foxtel and Austar, although the retail malaise – the well-publicised retail malaise – in Australia in my view has played an even more important part in that,” he said.

The ABC reported that despite the drop in profits, shares have gained 5.5 per cent as the result beat analysts’ profit expectations.

The company says it benefited from improved revenue from its 25 per cent shareholding in Foxtel.

But contributions from its 50 per cent stake in the sports-focused Premier Media Group were lower than in the previous year.

Consolidated Media Holdings, through its part ownership of Foxtel, is currently looking to take over regional pay TV provider Austar.

Mr Alexander says the group is still working hard on the takeover.

“I’m not going to comment on the ACCC’s position other than to say it’s a process that Foxtel, and Foxtel management, is working diligently to get through, and we expect the transaction will proceed,” he said.

“As for CMH’s thoughts on a merged Foxtel and Austar, I think everybody on this call acknowledges it makes sound commercial sense and is a logical transaction for Foxtel.”
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