As a flagship business within what has become one of the 21st century’s most competitive markets, Foxtel’s fight for survival may be nearing the end after owners News Corp (ASX: NWS) and Telstra (ASX:TLS) announced 40% write-offs in the value of the video subscription business. 

65% owned by News Corp and 35% by Telstra, Foxtel subscriptions have been decimated by the emergence of video streaming service Netflix whilst the market has been further saturated by Stan, Disney+, Apple TV and Amazon Prime as consumer trends have shifted significantly towards video-on-demand streaming content.  

Within their results for Q3 FY20, News Corp included a $1.1 billion asset write-off which coupled their ownership of Foxtel alongside News America Marketing, another media subsidiary. Likewise, Telstra announced an impairment charge of $300 million to write down the value of their 35% share of Foxtel from $750m to $450m.

“Foxtel has been facing industry disruption for several years and the COVID pandemic is obviously having an impact as global sports are put on hold, pubs are temporarily closed, and advertisers are forced to carefully reconsider their investments,” said Telstra CEO, Andrew Penn. 

For Foxtel, the coronavirus pandemic could not have come at a worse time following the company’s major investment into establishing live sports streaming service Kayo last year. Being able to offer live streaming of sports, Kayo was a major hit with Australians having secured more than 400,000 subscribers prior to the global COVID-19-enforced shutdown of professional sports leagues. 

Subsequently, there have been significant cutbacks and staff terminations in the sports media industry with no sport to broadcast, fresh news to report and of most significance – no advertising revenue to secure. 

However, global sports are on-track to return in 2020 with greater broadcast audience numbers. A recent ESPN survey confirmed the majority of fans would prefer professional sports to resume without spectators, rather than waiting till spectators can attend for leagues to resume. 

Whilst this should see a surge in Kayo customers re-subscribing, Foxtel subscriber numbers continue to decline despite the business shift towards Foxtel Now – their month-by-month video-on-demand service which breaks away from the traditional lock-in-contract subscription model. 

For all involved, the return of professional sports could not come soon enough.