Speculation has been running rampant about the future of News Corp-controlled Foxtel in Australia for some time, but it reached fever pitch when COVID-19 impacted its sports content.
While the ability to broadcast sport at present is something Foxtel can’t control, it has boosted its non-sport offering by securing a new and expanded deal with Warner Bros, HBO, HBO Max and WarnerMedia networks.
The commitment from Foxtel to the new deal should, at least temporarily, suspend speculation about News Corp’s commit to supporting the Australian pay-TV and streaming service with over 2.5m customers.
Foxtel faced spirited bidding from another party, speculated to be Stan, with Foxtel securing the deal as recently as Sunday after a negotiation period that commenced mid-2019.
The WarnerMedia deal is the latest in a series of contracts that have seen CEO Patrick Delany redraw the output deals with the world’s biggest producers and distributors. Delany told Mediaweek those deals are “part of the whole transformation of the company”. He added that what people watched 25 years ago when Foxtel launched is not necessarily what they want to watch today.
“This WarnerMedia deal will also help us fuel and realise our streaming aspirations. The strategy of the company has been consistent from day one – to strengthen and maintain Foxtel. We have a big advantage in the market in that we have a premium service for a premium price. With Kayo we are getting part of the market that couldn’t afford Foxtel. Now we have the ability, if we want to, to launch a movies and drama service that would do the same thing across a whole range of content.”
Delany would not comment on the new streaming product believed to be called Binge. “Project Aries is something we are still considering. In the last 18 months with the transformation of all the content deals, and the creation of the Kayo platform, creates the right environment for us to have the ability and freedom to launch a world class service.”
Presumably with the WarnerMedia deal locked away consideration on Aries/Binge needs to be stepped up if Foxtel is to make its first half launch target.
Foxtel would not comment either on how much it is paying WarnerMedia under the new deal or for how many years the new contract runs. However the old HBO deal was expected to run until 2022, so Foxtel possibly now has the rights for five years beyond that.
Delany said the WarnerMedia deal was different to recent BBC, ViacomCBS, NBCU and Discovery deals. “Those deals were initially framed as channel deals and were recrafted as output arrangements that included channels. The WarnerMedia deal is a very, very high quality output arrangement across multiple brands. Even content in the library is quality – the most popular shows in the world are still Friends and The Big Bang Theory. We have picked them up for all of our platforms. The content can be used to fuel not only our channels, but also our iQ3 and iQ4 platforms for video-on-demand. It also allows us to fire up platforms outside the Foxtel brand.”
Delany would not speculate about who the other bidder for HBO was, but he did say: “They could have used the content well, but they probably couldn’t have monetised it as well as we can. The majority of the material is produced for subscription video services and is very, very premium. This is the highest quality and most popular material in the world. Having a premium product like Foxtel means that we are in a much better position to monetise the cost of an output arrangement like this.”
And therefore presumably able to outbid any competitor as Foxtel goes into more homes with customers paying more money than the underbidder.
The terms of the deal mean Foxtel has access to scripted originals from HBO Max, presumably indicating the new US streaming service launching late in May has no plans for an Australian service.
Delany did comment that including Warner Bros. International Television Production in Australia means producing scripted and non-scripted material for Foxtel. “Give their production expertise here and internationally that it is something that will be innovative for the Australian market. Either standing alone or in combination with other Australian producers they will do Australian drama really well.”
Foxtel commissions Beyond to make the Warner Bros distributed format Selling Houses.
When it comes to catalogue material, Foxtel is believed to have extensive picks over what’s available and it seems that The Big Bang Theory and Friends will live at Foxtel, possibly not at Stan (Friends) or Netflix (BBT).