Foxtel CEO Patrick Delany on churn, content reviews & revenues

Foxtel CEO Patrick Delany

• Kayo’s secret weapon is not multiscreen, but the Kayo Minis

Foxtel CEO Patrick Delany has spoken with Mediaweek in London shortly after he returned from one of the two epic sporting events that captured the imagination of sports fans around the world in the early hours of Monday morning back in Australia.

Delany was on a mid-year break, travelling with his family to the UK before he gets back into the rough and tumble of running Australia’s subscription TV platform as it faces more challengers than ever.

A visit to the Wimbledon men’s final was a reminder of the critical part sport plays in the Foxtel offer.

Mediaweek crossed paths with Delany in London the day after the final and asked him about sports rights and how they are impacted by any changes to the Foxtel business model.

Although Fox Sports doesn’t have live rights to the semis and finals at Wimbledon, the TV platform does cover the first week live and then has replay rights. Those replay rights will make the historic Novak Djokovic v Roger Federer final the most-requested on demand tennis match of all time.

Delany wasn’t too concerned about how the Wimbledon rights are split in the agreement. “It shares the rights between Seven and ourselves quite well. It allows the correct platforms to monetise the rights. We have quite a bit of tennis on our platform. And now that we have the two platforms, we are able to monetise well between Kayo and Foxtel,” he told Mediaweek.

When Delany returns to Australia he is prepping to launch what is being branded a new Foxtel experience, which updates the user interface on IQ3 and 4. It is anticipated that experience will include extra streaming specifically for the on demand products.

That might mean more live events, without needing to put the content on existing channels.

Part of the on demand-only content currently available are the sports mini highlight packages. While Djokovic v Federer will be much in demand, you can bet more people will gravitate toward the Kayo mini package at 30 minutes, instead of having to sit through the whole five hours.

Delany checks into the business regularly during time away, telling Mediaweek: “What I have been delighted with is watching the numbers for both sport and drama. They have been very healthy and the cricket has been fantastic.

“What you are not seeing in the ratings is our Kayo numbers. The platform continues to grow and people are watching as many as five and six sports with much cross over between NRL and AFL and major events like the Cricket World Cup.”

Delany wanted to stress, unlike some speculation, “The growth of Kayo is not coming at the expense of our Foxtel platform numbers. We have been having record NRL numbers for the Foxtel platform. You can then add on the Kayo numbers.

We have record viewership on the Foxtel group platforms and at the same time we are seeing good take up of drama on demand, the latest of which has been Chernobyl.”

MCN is expected to soon reveal a solution for advertisers where the TV channel and Kayo numbers will be available together. “We expect that will allow us to generate even better advertising revenue,” said Delany.

Foxtel is continuing to examine options for any further streaming offerings in the vein of Kayo – perhaps one for drama. “We have all the content,” said Delany. “And we now have a world class platform. If and when we do it is still something we are planning.”

While allowing customers the option of running multi-screens during simultaneous sporting events was a popular initiative, Delany said the biggest success at Kayo has been the growth of the minis. “The cut downs we offer of every event.”

The Wimbledon men’s final we noted above. Also a hot property this week on Kayo is the Cricket World Cup final. To relive the final in its entirety on Kayo will take you 11 hours and 5 minutes. The mini relives the highlights and the Super Over in 39 minutes.

The mini is also something but that been welcomed by Optus Sport subscribers who get a mini version of all the EPL matches and more recently the Women’s World Cup games.

Delany said one of the biggest misconceptions about the Foxtel business, and something he noted is spread by his competitors, is that Foxtel’s churn is being driven by Kayo.

“That’s just not right. Any churn we are getting is out of the bottom end in non-sports. Our sports subscribers are very strong and any of them we are losing is minimal.

“The take up of Kayo is very good. It’s not just a streaming service that costs $10. It has a price tag of $25 and is contributing to our revenues in a meaningful way.

“It’s strategy is to strengthen and maintain Foxtel. To give our customers more value.”

The other thing Delany wanted to emphasis was the value of the investment in cricket. “The Cricket World Cup has been great. We also have a broad range of cricket from so many touring countries. We are able to segment out the data and reactivate subscribers.

The difference between Foxtel and streaming platforms is that with Foxtel people sign up and stay. With a streaming platform they come in and out.

As to commentary surrounding Foxtel shedding some of its sports rights, Delany said: “We always review all content. It is a very competitive world and from time to time the price of content goes up. We are getting better with the use of data and with our data we are able to tell what content is adding value and how many subscribers stay or go.

Whether it is sport, drama or an output deal, if it is not performing in terms of people watching or seeing value in it, we will review it.

“We are also reviewing other content we don’t have, but that we might want.”

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