Ex-Foxtel CEO Peter Tonagh has joined Village Roadshow as a non-executive director following a major board restructuring, while also issuing a word of warning to his former employer.
The overhaul, which was revealed last month, will see chairman Robert Kirby step down and his son Clark Kirby made CEO, replacing Graham Burke in 2020.
Tonagh stepped down from his role as Foxtel CEO in early 2018 after two years in the job. He left amid game-changing disruptions at the embattled pay-TV company.
Now, Tonagh has issued a word of warning to Foxtel, saying it will need a major overhaul if it wants to stay competitive in an era where cheap, online streaming platforms are quickly gaining national and global popularity.
He told SMH and The Age if Foxtel wanted to keep up with the likes of Netflix, the business could not be able to spend as much on content, including sports.
“My view is that disruption is definitely getting more intense … there’s an acceleration in the movement towards non-traditional services. I think we’re going to see that continue,” Tonagh said.
“The challenge for traditional players is it’s getting harder and harder for them to maintain the quality and differentiation as earnings are being impacted, as we’ve seen with Foxtel.”
Foxtel is 65 per cent owned by News Corp and 35 per cent owned by Telstra and recently reported total subscribers were up five per cent year-on-year to 2.9 million. This has been primarily driven by Kay Sports ($25p/m) and Foxtel Now (minimum price $50p/m).
Tonagh said there is a need for a “dramatic change” at Foxtel.
“The pressures on the cost and revenue will be great. Something has got to give.”
As it stands, Foxtel is doing everything it can to retain its customers, including offering significant discounts whenever a consumer threatens to leave.
The SMH and The Age spoke to dozens of Foxtel customers who had their service cost slashed by the pay-TV company following threats to cancel their subscription.
One mother from Freshwater was already paying a discount rate of $75 per month was quickly offered the entire Foxtel package for just $35 a month after attempting to quit.
She said: “They were very easy to offer that as a solution to stick around with them.”
Foxtel’s typical pricing starts at $69 a month with the full package costing $139 a month with a minimum lock-in contact of 12 months.
A Foxtel spokesperson told B&T: “Foxtel is undertaking a turnaround. There has been significant progress in the past 12 months in improving public perception of us and metrics such as Net Promoter Score are showing positive increases.
“Foxtel has also bought in experienced international pay-TV executives who have already done a great deal to improve customer service. Foxtel Group is pleased with the progress of Kayo.
“The company’s strategy of introducing a well-differentiated brand to pick up subscribers outside the 30 per cent of the market already with Foxtel is proceeding well with very little Foxtel sports churn.
“Clearly Foxtel Group will benefit from both Foxtel and Kayo revenues in regard to sporting rights. Foxtel churn is coming primarily from low price point customers acquired prior to 2018 and actions have been put in place over the past 18 month to systematically address the issue.”