Telstra and footie

Morris Kaplan

Morris Kaplan is a guest blogger.

Morris Kaplan, one-time stockbroker and venture capitalist, brings his finance skills and recent experience as a business journalist and writer to IT, with a special interest in telecoms and how communications is being transformed by technology.

Telstra shareholders will now have to wait until later in the year for the approval of the $11.3bn National Broadband deal to be signed, sealed and delivered. Originally expected in mid year, it’s been delayed – perhaps offering some benefits to shareholders given NBN-related line loss. Shareholders may however be less than pleased by the extraordinary amount of money Telstra is prepared to invest in footie.

Telstra, which owns 50 per cent of pay-TV group Foxtel, emerged as the key driver of a $369 million cash increase in the new broadcast agreement announced recently. The $1.12 billion deal includes a $155m contribution from Telstra for the right to broadcast live games on mobiles, tablet devices and internet television, representing a threefold increase that Telstra paid for the 2007-11 rights.

For sure, Telstra (as well as Foxtel) have secured more content, including the right for Telstra to broadcast all games live on mobiles and tablets. Users of Telstra's T-Box set-top box will be able to watch one game live per round online.

The strategy appears based on the premise that Telstra can increase its broadband customer base by offering unique content. The pressure on internet service providers to differentiate their offerings will become more acute when the government's National Broadband Network levels the playing field. This is supported by CEO David Thodey’s recent comments to media: “This agreement represents the coming of age for mobile technology and IPTV.”

It does seem footie Chief Andrew Demetriou has squeezed out a great result for the AFL particularly given that AFL audiences have dropped each year since 2007. Additional televisions in the family home and the rise of the internet means a marginal viewer has more alternatives.

In the UK, British broadcaster BSkyB has boosted its new customer base by 51,000 in recent months by offering high-definition services and now boasts 10.15 million households. Many of the customers have signed on because of the new channel Sky Atlantic, which are the exclusive home off new HBO content and the Mad Men TV show in Britain.

Here in Oz, it seems footie is at least the equivalent drawcard to Mad Men, proving once again that sports is big business here and a feel-good investment outlay for Telstra. Shareholders will, once again, be asked to wait for the dividends to flow, hoping that brand AFL has enduring value.

Tags: Telstra, AFL, Foxtel; T-box, PAY-tv

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