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- Mobile service provider Telstra (TLS) is taking a $300 million blow from its 35 per cent stake in Foxtel
- Telstra is writing down the value of its Foxtel investment from $750 million to $450 million
- The company made the call after News Corp, who owns Foxtel, said the television network was largely responsible for a $1.1 billion impairment
- With the suspension of global sports in the face of COVID-19, Foxtel is missing out on some key advertising streams
- Still, Telstra CEO Andrew Penn says he believes Foxtel’s struggles will only be temporary
- Shares in Telstra are trading grey today, currently worth $3.06 each
Mobile service giant Telstra (TLS) is taking a $300 million financial blow from its investment in Foxtel.
Telstra holds a 35 per cent interest in the television company but told shareholders today it is writing down the value of this investment from $750 million to $450 million.
Telstra made the call after media conglomerate News Corp said Foxtel was primarily to blame for a $1.1 billion cash impairment recorded in the company’s latest quarterly report.
It seems the spread of COVID-19 has simply added on to the pressure already being faced by Foxtel, and Telstra has fallen victim to some collateral damage.
Still, Telstra CEO Andrew Penn spoke highly of Foxtel and the services it offers, calling the network’s content “world-class.”
“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,” Andrew said.
Regional television broadcaster Prime Media revealed its own struggles earlier this week as the coronavirus dries up potential advertising streams.
Particularly with the suspension of the AFL season, key revenue opportunities are no longer available as advertisers lose a large portion of their reach.
For Foxtel, global sports has helped distinguish the network from competitors as consumers switch to streaming services like Netflix and Stan.
Now, with no global sports available for broadcast, the broadcaster is doing it tough.
Nevertheless, Andrew seems confident the disruption will only be temporary.
“We know that sport will return, and through premium content such as the multi-year deal just signed with Warnermedia including exclusive HBO and Warner Bros content, Foxtel’s offering will continue to be highly attractive entertainment options,” he said.
Shares in Telstra have had a rocky day so far, spiking in the early minutes of trade but quickly dipping into the red thereafter. At 11:13 am AEST, Telstra shares are grey and worth $3.06 each.
