Packer gives News a sporting chance
With a ConsMedia-News Ltd deal expected within weeks, James Packer will have taken another step away from his family's old empire. And News will be closer to pay TV sporting mastery.
Upon the release of ConsMedia’s full-year results, all eyes were on the takeover update rather than the numbers themselves.
If the deal goes ahead, James Packer will have effectively rid himself of all but one of his media interests – he holds about a 9 per cent stake in Ten Network – in favour of the higher growth potential of the gambling industry.
And in true Packer fashion, his efforts to grow his casino empire kicked up a notch in recent weeks. Packer-controlled Crown is moving full steam ahead with expansions in both Sydney and Perth, with six-star hotels planned for both Barangaroo in Sydney and Burswood in Perth.
But as Packer moves away from media interests in Australia, News is forging ahead with plans for its pay TV holdings in the Australian market.
Australian Rugby League Commission chairman John Grant today confirmed that Nine Entertainment Co and Fox Sports Australia have secured broadcasting rights to the National Rugby League in a $1.025 billion deal over the next five years.
This is a major coup over rivals Seven West Media and Ten Network, even if it was largely expected by the industry.
The NRL deal will be further sweetened if News is successful in its bid for ConsMedia, since it will allow the media company to take full control of Fox Sports. The acquisition would also enable News to secure ConsMedia’s 25 per cent stake in Foxtel, lifting its own stake to 50 per cent, further adding to the media company’s dominance in the pay TV industry.
With the sale of ConsMedia to Rupert Murdoch’s News becoming more and more likely, News is edging closer to imitating the success of BSkyB in the UK, where Sky Sports for years dominated the broadcast rights for sporting events in both the UK and Ireland.
Earlier this year, Fox Sports launched a dedicated AFL channel, Fox Footy, as another means of bringing in more subscribers. News seems to have learned from the UK that to get more subscribers, exclusive live coverage of sporting events needs to be on offer.
But News has a bit of an uphill climb if it’s to replicate that kind of success in the domestic market.
For a start, in the UK and Ireland, pay TV is bundled with broadband and landline services as an added incentive to consumers. In 2012, 32 per cent of Sky customers in the UK opted for this bundle.
This needs to be the next move News makes if it really wants to conquer the market.
At the moment, pay TV is bundled with broadband, but not landline services. By bundling broadband and landline services together with its pay TV service, News and Foxtel’s other stakeholder Telstra, could be on track to significantly lift consumer interest in pay TV in the Australian market.
Telstra’s recent statements that it would be open to developing a similar type of bundle to that seen in the UK indicates that Australians may not have to wait too long before pay TV, broadband and landline services will all be listed under the one bill.
Though Packer may support Telstra and News working on such a deal, he has expressed little interest himself. All he needs to do now is get the ConsMedia sale completed so he can pour his $1 billion share into expanding his gaming empire.
News Ltd is the owner of Business Spectator and Eureka Report.
Follow @ClionaODowd on Twitter.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free