Roaring Foxtel to address IPO talk

The powerful momentum of the Foxtel Group’s multiple streaming services will underpin the company’s inaugural strategy day on Thursday.

Foxtel chief executive Patrick Delany.

The powerful momentum of the Foxtel Group’s multiple streaming services will underpin the company’s inaugural strategy day on Thursday, when chief executive Patrick Delany is expected to address rumours of a possible IPO in the first half of next year.

Now boasting more than four million subscribers, Foxtel – which is part-owned with Telstra by News Corp, publisher of The Australian – has undergone a dramatic transformation in the past three years, with the development of sports streaming ­service Kayo, entertainment platform Binge, and the soon-to-be-launched Flash, which will feature more than 20 local and global live news sources.

A sharp increase in subscribers to Kayo and Binge in the past year contributed to News Corp’s most profitable financial result in eight years, News Corp chief executive Robert Thomson said last month.

“The Foxtel narrative is particularly positive, as our early emphasis on streaming and on securing long-term, valuable sports and entertainment rights has put the company on a decidedly upward trajectory,” Mr Thomson said.

At Thursday’s strategy day – the first in the history of the Foxtel Group – investors will hear from Mr Delany about the successful rollout this month of the iQ5 cable-less set-top box, further details about the international and locals partners who have committed to news streaming service Flash, and the prospect of public listing.

Angus Aitken, a partner of Aitken Murray Capital Partners, described Foxtel’s new streaming businesses as “scalable and capital-light”.

“They are the absolute opposite of the capital-heavy business Foxtel once was … the Foxtel business that was perceived as hard work and going nowhere by most analysts and fund managers is now a genuine growth vehicle for News Corp and Telstra,” he said.

“You can clearly see why this business could be an IPO within the next 12 months.”

Morningstar analyst Brian Han said Foxtel’s perceptual value had increased dramatically with its pivot towards streaming services.

“What the move into streaming has done is announce to investors ‘Do not mistake us for a one-trick pony’,” Mr Han said.

“The company is heading in the same direction as the technologies, and is positioning itself as a multi-platform sports and entertainment provider of the modern day.”

Fraser McLeish, media analyst from MST Marquee, said Foxtel, like many other media players, was still facing sizeable headwinds in terms of being seen as a legacy business, but argued shareholders should be buoyed by the success of the company’s streaming arms. “I guess the big challenge is the need to prove to investors that strong growth is sustainable for more than just one or two quarters,” he said.