Foxtel is confident it can again achieve growth this financial year aided by its $600 million plus AFL deal, despite consumer uncertainty creating a tough market for pay TV.
The AFL is expected to earn around $1.2 billion from the 2012-16 broadcast deal, which gives Foxtel the rights to show all games live on pay TV.
Foxtel on Thursday reported that earnings rose by 15.5 per cent in the year to June 30, as it gained new subscribers and retained existing subscribers in greater numbers.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $551 million from $477 million a year earlier, Foxtel said in a statement.
Foxtel is understood to have bankrolled around half the AFL deal, which also gives Channel Seven the rights to the four premium matches each week, and Telstra the online rights.
Foxtel chief executive Kim Williams said he was confident the five-season AFL deal would generate more subscribers this year, despite soft consumer sentiment.
“The only thing to do in this environment is … to take a deep breath, and invest, that’s what we’ve been doing,” Mr Williams said.
“We made the largest sporting deal in Australian history with our new AFL rights deal, and we’re confident that that’s the sort of thing that’s needed to drive growth.”
Mr Williams also said he was pleased with the 2010/11 results, given growing concerns among consumers about global uncertainty.
A key indicator of consumer sentiment, the Westpac – Melbourne Institute index, fell 3.5 per cent to 89.6 in August, showing confidence sinking to the lowest levels since the global financial crisis three years ago.
“They’re solid results in what is obviously a very unsettled time with consumers,” Mr Williams said.
“Clearly consumers are in a very awkward space, in terms of having security to commit to new transactions.
“Despite that, we’ve been successful at getting some modest growth.”
Subscriber numbers grew 2.5 per cent during the year to more than 1.65 million and revenue increased by almost six per cent to $2.14 billion.
Mr Williams said he remained confident that Foxtel’s proposed $1.9 billion takeover of regional pay TV provider Austar would go ahead despite concerns by the competition watchdog.
The Australian Competition and Consumer Commission (ACCC) published a statement of issues last month that said a Foxtel takeover of Austar could create a near monopoly.
“Our very strong view that the transaction does not result in a substantial lessening of competition,” Mr Williams said.
“That derives in substantial measure that we do not compete with Austar on content, we do not compete with Austar for advertising.”
Foxtel has said the merger would result in a range of consumer benefits including, new digital services to regional Australia and investing about $600 million a year in new and original Australian content.
Foxtel is half owned by Telstra, while News Corporation and Consolidated Media Holdings each have a 25 per cent stake.
