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Foxtel Considering Initial Public Offering

R
eports are suggesting a Foxtel initial public offering (IPO) would be tough but not impossible, as the business looks to further expand into the streaming service world.

Already part of the streaming industry with services Kayo and Binge, The Australian Financial Review (AFR) report investors and industry insiders are sceptical an IPO would work for Foxtel, but now is the time to try “as the streaming market booms.”

AFR state: “In its third quarter earnings to March 31, Foxtel’s revenue dipped 4% on the previous corresponding period, while its earnings before interest, tax, depreciation and amortisation jumped 13%…”

MST Marquee head of telecoms and media equity research, Fraser McLeish, told AFR an IPO for Foxtel would be very difficult.

“To IPO, and for investors to want to own it, it’s got to have positive operating momentum, and at the moment the revenues are still going backwards,” McLeish said.

“That decline in core broadcast subscribers actually accelerated in the third quarter of 21 and there’s no sign that it is really easing off.

“When you’ve got that kind of revenue profile, that’s pretty hard to IPO a business with those trends,” he said.

According to AFR, Foxtel’s traditional cable and satellite business lost “72,000 residential subscribers in the March quarter” while paying subscribers to Binge and Kayo increased on their previous quarter by 85,000 and 227,000 respectively.

McLeish said while its streaming services are improving, it will not be enough to convince investors.

“Yes, they’re growing some streaming subscribers and growing streaming revenues, but they’re still nowhere near enough to offset the declines they are seeing in their core broadcast revenues,” McLeish said.

“[Foxtel need] runs on the board in terms of revenue stabilising and growing and showing the growth in streaming revenues is offsetting declines in broadcast,” he said.

Further expanding into the streaming service industry, Foxtel have announced it will add a third streaming site to its repertoire.

The Sydney Morning Herald report former news.com.au editor in chief, Kate de Brito, will lead the business’s newest streaming service “as the company makes a series of structural changes to prepare for the future.”

The new service called Newsflash will focus on news content and will reportedly cost $5 a month and is expected to feature Foxtel’s news channels including Sky Australia.