Emirates the Arab airline has admitted to entertainment and technology problems on their aircraft.
David Richards
BluRay PCs Soon
Toshiba and Samsung have completed the technical development of its Blu-Ray disc drives for PCs with product excpected to appear soon.
The backward-compatible single-layer technology will read CD and DVD formats and is expected to launch in March, according to Richard Aguilera, western regional sales manager for optical disc-drive products at Samsung. “The first technology will burn Blu-Ray, but only read DVD and CD disks,” he said.
“The next technology we’ll launch,” Aguilera said, “will burn all three technologies–Blu-Ray, DVDs and CDs.” Samsung’s second-generation is scheduled for release between April and August, Aguilera said.
Today’s DVDs use red lasers at 650nm to read and write data, while Blu-Ray and HD-DVD use a shorter wavelength, blue laser at 405nm. The Blu-Ray beam can focus more precisely, enabling it to read information recorded in pits that are only 0.16 microns long, which is more than twice as small as the pits on a DVD. The smaller pit length allows for the storing of up to 25 Gigabytes in a single layer disc, about five times more than can be stored on a standard DVD disc.
Blu-Ray will initially surface in high-definition consumer products sometime before September, Aguilera said. As prices begin to fall, more PC manufacturers are expected to build the drives into their products.
“First, you’ll probably see the technology pop up in storage applications to replace tape technology,” he said. “And you’re likely to see the technology used by the telecommunications and the financial markets before you see it built into PCs.”
Anchorage Capital Claims Dick Smith Was A Viable Business..”Pigs Arse”
COMMENT:The now failed Dick Smith retail business was” viable” and “absolutely” had a sustainable business model when it was floated on the share market for hundreds of millions, Anchorage Capital boss Philip Cave bleated to the Australian newspaper on Friday.
Seriously, Mr Cave, who are you kidding.
The business was a mess when you bought it and is still a mess today.
What Anchorage Capital have become are masters at applying lipstick on a pig.
What Anchorage Capital got away with was pure manipulation and the hiding of facts which the Australian Companies and Investment Commission are set to investigate.
What you did may be legal on paper but it was morally wrong.
Cave and his cronies, had one objective and that was to screw as much as they could from the deal for Anchorage Capital investors and then disappear.
It was not till Cave quit the board as Chairman and Rob Murray the former Lion Nathan executive took over, that the pack of cards at Dick Smith started to crumble.
While Cave was running the show Nick Aboud the former CEO was seen as the golden haired boy a person who in the eyes of Cave and his cronies could do nothing wrong.
The problem was that by the time Murray was bought on board the Company was a mess, costs were blowing out, suppliers were starting to get tetchy because of late payments and boatloads of unsalable house brand stock was arriving into Dick Smith warehouses.
Dick Smith was a train wreck and no one, had a clue how to stop the bleeding.
The smart executives in the group quit.
The facts are that on average a good JB Hi Fi, Harvey Norman, or Good Guys stores turns over $20M.
Dick Smith stores were struggling to make $3M.
Even Dick Smith stores in New Zealand were being jacked up and are still being jacked up today.
What Nick Aboud and Marketing Director Neil Merola did to cut costs in New Zealand was shift the operational side of the business back to Australia.
This allowed them to shift around $4M from the bottom line of the business which when added back into the cost of running the New Zealand business would show that the New Zealand business is not as profitable as Ferrier Hodgson the receivers at Dick Smith are making out.
In FY 2015 Dick Smith New Zealand had an EBITDA of $2M add back in $4M operational cost and the Dick Smith New Zealand stores could be a bigger mess than Australia which is why retailers such as JB Hi Fi, Harvey Norman or the Good Guys will not be bidding for them.
“It was a great model and it had a lot of opportunities to grow the business,” Cave, told The Weekend Australian.
Cave went on to claim that every single one of the Dick Smith were profitable, there were no loss-making stores, so was it a sustainable model? Absolutely” He said.
So why was it that arguments were taking place between Nick Aboud and store managers over “unprofitable” stores back in April and May 2015.
And why was it that stores like Dick Smith in North Sydney were being closed down.
Mr Cave also defended private equity practices and questioned the board’s decision to write down stock by $60 million.
Dick Smith collapsed on January 4 when its lenders – National Australia Bank and HSBC – withdrew support for the company following poor sales over Christmas.
That followed a profit downgrade in October and a $60m stock write down in October as well as a clearance sale ahead of the all-important holiday trading period.
Last week the receivers instructed Dick Smith stores to lift the price of house branded goods.
One NSW Dick Smith store manager said “I don’t know what is happening. We were selling audio cables for $5.00 and they were selling. Then we got instructions to lift the price to $25, now no one is buying the cables”.
He added “Most of our stock is house brand it’s either Move or Dick Smith branded and it is not selling. Take TV’s why would you buy a Dick Smith branded TV when the Company could not be around in a few weeks”.
Several observers have questioned how Dick Smith could go from reporting record profits in August to calling in administrators in the first days of January, and highlighted the huge profit Anchorage made buying and selling the business between August 2012 and December 2013.
Forager Funds Management called the deal, in which Anchorage bought the business for $94m in 2012 and floated it at the end of 2013 for $520m, “the greatest private equity heist of all time”.
But Mr Cave said he was disappointed with the “inflammatory tone and misleading nature” of commentary about the collapse and that “undeniable historical facts” about the business had been overlooked.
Mr Cave, who chaired the retailer in private ownership and through its first 14 months as a public company, said it was up to the board-appointed administrator, “not Anchorage or anyone else”, to determine the substantive reasons for Dick Smith’s collapse.
Forager investment analyst Matt Ryan, said that management was forced to borrow to build up stock levels after Anchorage ran them down from $370m to $170m ahead of selling the business.
As well as the inventory writedown, Anchorage put writedowns on onerous leases and other assets that reduced future charges and boosted profits in a way that would inflate the price they could onsell the business for.
A spokesman for Anchorage said while the balance of the purchase price was funded from cash generated by run-down sales of significant amounts of excess and slow-moving stock, it was incorrect to argue that this left the business needing to take on debt to rebuild inventory.
Dick Smith had cash and short-term receivables of $90m in December 2013 after the float and $95m in December 2014, when it remained debt-free, he said.
Anchorage said criticism of the increase in inventory to $293m at the end of 2015 failed to take into account the growth in store numbers – they increased by 25 per cent as a public company – and the change in business mix, with Dick Smith making a push into higher-margin home-brand product to balance the slim pickings from big brands.
The collapse has imperilled the jobs of more than 3000 employees and could see the long-established brand and its network of more than 300 stores collapse if it cannot be sold.
Already 11 people have been sacked from the accounts department according to a circular to staff by administrators yesterday.
Mr Cave said he hoped the brand would survive and the firm would work “constructively” to assist the administrator.
“Everyone at ACP shares the dismay felt by many in the community regarding the circumstances at Dick Smith,” he said.
This is a guy who along with AC, got $320M out of the Dick Smith float, while leaving hundreds of investors with worthless stock and over 3,000 staff now looking for a job.
Three Tech PR Companies Facing Problems As BlueFreeway Freefalls
The Company that owns Spin Communications, Max Australia and Spectrum Communications all PR Companies that handle major technology clients has reported a $4 million dollar loss with directors now admitting that the Company Bluefreeway is up for sale.
Shares in the Holding Company have crashed over 40% on news the group recorded losses of $4.048 million in the first half of the current financial year. Currently suspended the Company that has Greg Daniels the former CEO of Clemenger on their board is desperately looking for a white knight.
Blufreeway claims that it has entered into exclusive due diligence with a potential suitor. It has also been revealed that the Company is looking to sell off recently acquired assets. Among the technology PR clients who could be affected if Bluefreeway does engage in a fire sale of assets are Telstra Bigpond, Acer, Blackberry, iBurst, Gizmo, Intel, pba (Personal Broadband Australia), MessageLabs, Orbi, and Blur-ray Disc.
According to ADNews A spokesperson for Bluefreeway confirmed “a number of parties” had expressed interest in acquiring the company over the past few weeks, with shares in Bluefreeway languishing well below its listing price despite the group more than doubling in size over the past 16 months.
Bluefreeway co-founder and interim executive chairman Greg Daniel said the company had retained Merrill Lynch and Bluestone Capital to assess the offers.
Bluefreeway would not provide a timeline on the due diligence currently under way, nor details of any of the group’s suitors.
“While this approach is indicative and non-binding, and may not translate into an offer, the board felt it was necessary to notify shareholders. The Bluefreeway board will act in the best interests of shareholders and keep the market fully informed,” said Daniel.
Bluefreeway posted first half losses of $4.048 million late on Friday (29 February) while the company’s shares were in a trading halt pending the release of today’s announcement. Within hours of the trading halt lifting today, Bluefreeway’s shares had plummeted over 40% to $0.35.
Bluefreeway management was at pains to point out the company’s recent poor performance was not a reflection of the profitability and growth of the group’s 25 portfolio companies. In the six months to 31 December 2007, Bluefreeway recorded revenue of $35.3 million and gross profit of $23.8 million. These profits, however, were eaten away by blown out corporate costs.
“This disappointing and unacceptable result can largely be put down to a high level of corporate spending, accompanied by a lack of corporate sales,” said Daniels.
Between October and December 2007, Bluefreeway’s previous management team, working under ex-CEO Richard Webb, employed 28 additional executives across six countries.
“When the board became fully aware of these unsustainable corporate costs in December, we engaged PricewaterhouseCoopers to perform a review. The findings of this review, the extent of the corporate costs and the speed at which they were accrued in late 2007, confirms that the board’s decision to change management and refocus the company was correct.”
Daniel said the Blu portal would not be scrapped as part of the new management’s corporate cost cutting exercise, although future expansion of the portal would take place from a sustainable cost base and in an evolutionary fashion.
“As a result of the corrective action taken by the board, coupled with a growth in sector, we believe that our earnings for the next financial year will return to a more acceptable level,” he said.
http://www.adnews.com.au/news.cfm?NewsID=4364&alpha=17000&beta=46539
The Car You Can’t Crash Made By Volvo
First came ABS braking, then came active suspension, then came the onboard computer that was able to adjust a car as it started to slide. Now we have the car you can’t crash, thanks to Volvo.
That sickening – not to mention painful – feeling as your car crunches into a vehicle in front looks like becoming just an expensive memory for drivers.
Volvo has come up with a crash-proof family car which will go on sale in the autumn. Its secret is a laser-guidance system to spot vehicles in front that are too close or stopping suddenly. When it does, the Volvo will stop of its own accord to avoid a smash.
 Click to enlarge |
Sci-fi reality: The crash-proof car spots dawdling vehicles using a laser-guidance system installed in the windscreen The CitySafety system, which kicks in at speeds of up to 20klm and is designed for urban driving, has the potential to prevent half of all rear-end collisions, said Volvo.
A laser sensor built into the windscreen reacts to traffic in front that is either stationary or moving in the same direction. It scans up to six yards ahead and, sensing the difference in speed between it and a vehicle in front, it makes 50 calculations a second to determine the braking force needed to avoid crashing.
If the driver fails to slow, the system brakes automatically and disables the accelerator. The system will be standard in the XC60 model Volvo. But Jonas Ekmark, of Volvo, said: “It is important to stress that CitySafety does not relieve the driver of the responsibility from maintaining a safe distance.”
Safety experts say this and similar technology being developed by other makers will help save more than 125,000 painful and costly whiplash injuries alone each year.
Rear-end collisions make up 29 per cent of all reported car accidents. In more than half, the driver does not brake at all. And 90 per cent of all such collisions are partly due to distracted drivers.
Three-quarters of all collisions happen at speeds up to 25 klh. Volvo said that if the relative speed difference between two vehicles was below 10mph the system can help avoid a collision entirely.
“Between 10mph and 20mph, the focus is on reducing speed as much as possible before impact,” said Volvo. At higher speeds, including on motorways, a separate “adaptive cruise control” system keeps the car safe from traffic in front by braking and accelerating as necessary.
Volvo, Mercedes and Honda will be demonstrating their anti-collision technology at a driver training centrein the UK this week.. A spokesman for the centre said: “It sounds like sci-fi fantasy – cars that can’t crash. But the fictional notion is about to become reality.”
Apple May Buy Palm
Apple Computer, who are concerned over the impact of mobile phones on the sale of iPods, are according to insiders considering the purchase of the troubled Palm Group makers of the Treo mobile phone.
Speculation that Apple plans to buy handheld maker Palm has been revived by a call from two leading Palm investors for the company to be put up for sale, according to the local paper of both companies. Mike Nelson, who owns eight per cent of Palm shares, argued that the company is poorly equipped to dominate the market for smartphones which are beginning to eat into sales of traditional PDAs, reports Siliconvalley.com , online edition of the San Jose Mercury.
The drift from PDAs to smartphones is borne out today by a report from analysts IDG. Palm has sold one million phone-enabled Treos and its stock has nearly doubled in value over the past year. But Nelson is reported to have told the Palm board that competitors are developing products quickly and could afford to sacrifice profits to gain market penetration.
Another shareholder, with five per cent of Palm shares, also urged a sale of the company late last year. The fact that Apple has been named as a possible buyer may seem strange to those who recall that one of the most controversial acts of CEO Steve Jobs was to kill off the pen-driven Apple Newton, a pre-cursor of the Palm Pilot, when he returned to the company after a 10-year absence in 1996. Yet the two companies are closely linked. They are near neighbours and several early Palm employees, including co-founder and former company president Donna Dubinsky, previously worked with Apple.
Palm, at least in its early days, also enjoyed the kind of anything-but-Microsoft fan base that has long sustained Apple. Jobs tried to buy the company in the late nineties, according to the Mercury.
Neither Apple nor Palm has given any sign that there is any basis for the renewed speculation but there are obvious fits between the two companies.
Apple’s Ipod boom can hardly be sustained unless it can head off competition from PDAs and smartphones that can pack music players along with a host a other functions. Palm itself was slow off the mark in adding tricky telephony technology to its products and Apple would have a hard time starting from scratch in the market.
Also, for all their vaunted style, the latest Apple notebooks look like antiques beside the latest pen-driven Tablet PCs.
The company will sooner or later be forced to offer a pen interface, and could benefit from Palm expertise in the area – especially as tablets are getting smaller, and may eventually supersede the PDA.
COMMENT: Missing Numbers Flaky Results, Why Gerry Harvey Should Quit
COMMENT: What’s the difference between Woolworths, Coles and Harvey Norman? A lot when it comes to responsible financial reporting and the way in which their operations are run.
A trip through the annual financial reports of all three companies reveals that a lot is lacking when it comes to trying to glean information from the Harvey Norman annual report.
There are no breakdowns of how his consumer electronics or IT divisions is performing because Gerry Harvey and his management team don’t want the market to know how each individual division is performing.
Are appliances doing better than IT or are furniture sales propping up the company?
The fact is we will never know because the inclusion of performance breakdowns would expose some of the weaknesses in the Harvey Norman operation. Talks to analysts will tell you that Harvey Norman is more a retail property company than smart discount retailer.
Unlike Coles, who publish their Officeworks store’s department performance or Woolworths who does the same with its Dick Smith stores, Harvey Norman chooses to hide their numbers and one has to question why?
Is it because their consumer electronics and IT operations are struggling up against JB Hi Fi, Officeworks, Dick Smith and the likes of The Good Guys?
Analysts and Investors are now calling for more transparency and better reporting by the retail giant who is suffering on several fronts. It was only 12 months ago that Gerry Harvey was telling the world that Clive Peeters was a “great buy” at $35M, now after losing a million dollars a month from a business that was breaking even when he acquired it, which he intends to shut down at an additional cost of 10 million.
It was only a few years ago that Harvey Norman had 60% of the Australian IT market, which is the era when brands like Logitech made serious money partnering with the retailers.
Recently they walked away from Harvey Norman due in part to what is called the “Gerry Tax” which is the 20% that Harvey Norman demands above normal profit margins. There is also the issue of falling sales with Logitech executives claiming that as Harvey Norman demand more from the Swiss Company that sales from his stores were actually falling while climbing with other retailers.
Once a great discount retailer, Gerry Harvey and his wife Kate Paige, who plays a key role in the Harvey Norman business appear to be on a slippery slope, as Gerry makes ill-timed and ill-informed comments about online retailing and the lack of a GST Tax.
Last week he was blabbering Australians should be “as happy as pigs in shit” with low unemployment and the resources boom, but he reckons they’re too frightened to spend – in his stores presumably – and has predicted this Christmas will be a shocker.
Or is it more a case of products being expensive in Harvey Norman stores and when consumers do walk into his stores they get a poor retail experience?
Melbourne based writer Leon Gettler said that Gerry Harvey is kidding himself if he blames his problems on nervous consumers. The idea of the so-called cautious consumer is not what it’s cracked up to be.
He says that despite the signs emblazoned all over the front of shops advertising 30 per cent, 50 per cent and 70 per cent discounts, no one is buying. But that’s not about consumers being too scared to spend: it’s a failure of his retail management strategy.
Blaming his poor performance on frightened consumers is a cop-out, as yesterday’s ABS numbers reveal household spending is not weak at all.
The hard reality is that Harvey Norman appears to be more a property company than a smart retailer. His recent 9% climb in profits was more attributable to a revaluation of his property portfolio than it was selling more products.
Gettler claims that a closer analysis of GDP figures shows that household spending is doing well. Retail spending accounts for only 32 per cent of total household spending – in other words, more than two thirds of household spending is done outside the retail sector.
Closer analysis of the data suggests that while retail sectors are experiencing serious deflation and weak spending volumes, households are spending more on non-retail goods and services.
Gerry Harvey is today being hurt by people and organisations that are smarter than he and his management team.
Well known for their bullying of vendors and distributors the Harvey Norman team is constantly being outperformed by the likes of JB Hi Fi who started out in 1974 selling audio equipment and records.
They are now a major seller of mobile phones, home theatres, computers anything with an Apple brand on it and above all content such as music, video and games products that are hard to find in a Harvey Norman store.
JB Hi Fi recognised that goods under $99 are often the bait that draws consumers into their stores.
Consumers who walk in to a JB Hi Fi store to buy an iPad, Phone or the latest Samsung offering are tempted by racks of cheap CDs and DVDs. In an age when retailers are worried about the Internet, JB Hi Fi is launching a digital music streaming service followed by a video streaming service.
Last week when I walked into a large Harvey Norman store in Sydney and asked for assistance the retail assistant told me that did not work in the IT department and that she would find someone who did, 10 minutes later I was still waiting.
What Gerry Harvey needs is a new younger management team, a team that have the passion and the nose to turn his business around. Most Harvey Norman executives today are clones of Gerry Harvey and he is a force who back in 1997 said the Internet was a “fad.” Since then he has fought the Internet day in day out as he has tried to hold onto consumers.
What he needs to do is retire and the sooner the better the business will be.
Samsung Revenues Surge As Profits Hit $24M
Samsung Australia, who five years ago were struggling to get traction in the Australian market is now outperforming most other consumer electronics Companies including LG, Apple, Google and Sony.
According to documents lodged with the Australian Companies and Securities Commission, Samsung Australia has seen revenues jump from $1.29 Billion in 2008, to $1.6 Billion in 2009.
Profits for the local subsidiary climbed to $24.2 Million in 2009 from $16.10 Million in 2009. Advertising and marketing budgets went from $53M to $60M while staff costs went from $25M to $29M. In comparison Google spends $81 Million on staff costs despite only have $110M in revenues in Australia.
In comparison Apple who has bragged about the success of their iPhone and iPad sales was only able to deliver a profit of $2.5 Million on similar revenues to Samsung.
LG Australia in comparison was only able to deliver a profit of $13K on revenues of $968 Million during the same period.
Sony, who report their financial results in July based on a Japanese year end of April is tipped to report a decline profits and sales after last year reporting record sales of $924 Million and profits of $34.59 Million.
According to Samsung Australia executives the Company is witnessing record growth across all divisions, including their recently restructured IT division which last year appointed former BenQ executive Phillip Newton to head the division.
In the AV market Samsung has grown 27% since May 2009, when the overall market has only grown 3% the Korean Company claims. Overall Samsung now has 20% of the total AV market.
According to GfK data, Samsung has achieved the highest level of combined value sales across its four biggest AV categories – flat panel TV, digital camera, portable media player and DVD/Blu-ray Player market – from May 2009 through April 2010.
Head of Corporate Marketing for Samsung, Lambro Skropidis, said “It’s exciting to see the Samsung brand enjoying so much consumer support. Our tracking data shows that consumer awareness and preference for our brand has been continuing to build from year to year. The ultimate expression of consumer support is seeing preference translate into higher levels of sales at the store level.”
Several consumer electronics Companies are suspected of deliberately engaging in tax minimisation through the use of offshore subsidiaries in tax havens. Google for example has a service agreement with Google Ireland for the provision of sales and marketing advice.
According to sources in the Australian Tax Office, some International consumer electronics Companies re set to be investigated for transfer pricing after delivering extremely low profits.
In the past several IT Companies have been prosecuted for transfer pricing practises. This often involves goods being sold to a local subsidiary at one price, often higher or equal to what it is being sold in Australia. This allows a local subsidiary to transfer profits out to an International Company located in a tax haven or low tax Country.
The Australian Tax Office said that the purpose of Australia’s transfer pricing rules is to counter the underpayment of Australian tax by businesses that are also International.
They claim that pricing for international dealings between related parties should reflect a fair return for the activities carried out in Australia, the Australian assets used (whether sold, lent or licensed), and the risks assumed in carrying out these activities.
They claim that transfer pricing is often referred to as ‘international profit shifting’.
Plasma/LCD Mount With New Twist
Atdec, the Australian designer and manufacturer of display mounting systems, has launched the Telehook 31-42 Pivoting Wall Mount – the first to allow both landscape and portrait positioning of LCD or Plasma flat panel displays.
The 31-42 Pivoting Wall Mount is the latest addition to Atdec’s Telehook series of wall mounts. The Telehook series provides a range of practical solutions for mounting all types of large, flat panel LCD or plasma displays.
“Sales of 30 to 37 inch LCD and Plasma televisions are growing strongly in Australia, and the Telehook 31-42 Pivoting Wall Mount addresses the needs of this market segment by offering consumers a simple, flexible and affordable mounting solution,” said Stephen Crozier, Managing Director of Atdec Pty Ltd. “Users are given the option of displaying their screen in either a portrait or landscape position. It opens up new possibilities for using flat panel displays for decorative purposes, as well as for entertainment”.
The 31-42 Pivoting Wall Mount also offers users the flexibility of adjustable tilt and pan options from -20 to 20 degrees on the wall.
The Telehook 31-42 Pivoting Wall Mount is ideal for LCD and Plasma Flat Panel Displays from 31in. (78cm) to 42in. (106cm), weighing up to 50kgs (110lbs). It suits Video & Electronics Standards Association (VESA) compliant displays with 100mm x 100mm (4in. x 4in.) and 200mm x 100mm (8in. x 4in.) mounting hole patterns. The design features a maximum distance of 81mm from the wall to the back of the display.
Atdec partners with most of the key AV organisations such as NEC, Hitachi, Fujitsu, Samsung, LG, BenQ, Sharp, Sony, Panasonic, Acer, Dell and IBM designing equipment to suit their individual products. “These relationships and our own research keeps us informed of worldwide trends ensuring our products meet consumer demand and emerging technology requirements,” said Mr. Crozier.
Priced at $199 (inc. GST), the Telehook 31-42 Pivoting Wall Mount is available through leading audio visual resellers, information technology resellers and major commercial furniture companies such as Thinking Ergonomix and CEDIA members as well as retailers including Harvey Norman and Domayne. Atdec’s Australian State distributors are: Ground Floor Marketing (Victoria and Tasmania), Debetrek ( Queensland and Northern Territory), Sylex (Western Australia), Leader Computers (South Australia) and Corporate Express; New Zealand distributors are Sylex and Metrolink.
Product enquiries can be made to Atdec on or www.atdec.com.au.
Foxtel Profits Slump As Netflix Takes Customers
As expected Foxtel profits have taken a battering falling 8% after the Company was forced to slash prices ahead of the launch of Netflix.
In the year to June 2015 Foxtel only added 230,000 subscribers Vs more than 1,600,000 subscribers for Netflix who only launched in Australia on the 29th of March 2015.
Foxtel’s moves to cut its prices and counter competition from Netflix comes after Foxtel spent two decades price gouging consumers due to their monopoly in the pay TV market.
Chief executive Richard Freudenstein’s decision to almost halve the price of Foxtel’s basic package from $49 to $25 a month in November pushed revenues 1 per cent higher and led to a 9 per cent leap in subscribers over the 2015 financial year.
Customer churn has been cut from 10.9 per cent from 12.5 per cent in the prior year – the lowest since 2000. Analysts believe this is due to consumers moving to cheaper Foxtel sports packages from premium packages that in the past delivered excellent profits for Foxtel.
Netflix has already attracted 1.6 million sign-ups and 900,000 paying users to its $9 to $15 a month service, Citi Research estimates.
“Last year we took the bold step of changing our pricing model to attract more customers,” said Foxtel CEO, Richard Freudenstein. “These results demonstrate that was the right call.”
Mr Freudenstein said the growth of 230,000 in subscribers was driven mainly by take up of traditional cable and satellite products and that “significant growth continued all the way through the financial year”.
But Foxtel is counting the early cost of the investment push, with its world-leading average revenues per user (ARPU) for cable and satellite dropping 2 per cent to $93 per month.
Subscriber revenues were up 2.4 per cent – lower than subscriber growth. Mr Freudenstein said that was “to be expected as we launched in November and therefore most of that increase came in the second half of the year.”
Foxtel’s 50 per cent shareholder, Rupert Murdoch’s News Corporation, reported on Thursday morning that the pay TV giant’s full-year earnings before interest, tax, depreciation and amortisation slid 8 per cent in Australian dollars.
News Corp said its equity earnings from Foxtel fell from US$90 million ($121.8 million) for the year to US$59 million.
Telstra, which owns the other half of Foxtel, said it had received a reduced dividend of $165 million, down from $125 million.
On a conference call with investors this morning, News Corp said it expects Foxtel to return to growth in its operating earnings in fiscal year 2016.
Mr Freudenstein said the decline in ARPU was “anticipated as part of the pricing changes”. He said “the vast majority of new customers” took up one or more tiers – such as sport, drama or movies, in addition to the $25 (basic) entertainment pack.
“This is a great result in an increasingly competitive space. It makes it clear that consumers understand the real benefits that only Foxtel can offer, “he added
Foxtel faces a growing threat from SVOD services, amid evidence that some customers have abandoned Foxtel’s drama and movie packs – some of them in favour of new, cheaper streaming services led by Netflix.
According to News’ accounts, Foxtel’s net income fell 24 per cent to US$232 million from US$304 million as a result of “short-term impacts related to the investment in key initiatives: the new Foxtel pricing and packaging, increased investment in Presto (its own video-streaming service) and the launch of Triple Play (its broadband, cable television and telephony service)”.