Tim Dick MEDIA EDITOR
October 29, 2010
PAY television is in ''a bit of a ****-fight'' with free-to-air television, says John Porter, the plain-speaking and well-remunerated chief executive of the listed operator Austar.
But during a results update yesterday, he was upbeat about Austar's ability to persuade its 762,000 subscribers - most of whom live in regional Australia - to pay more for their TV despite getting more of it for free.
Despite a marketing campaign by free-to-air rivals promoting more free channels Austar announced a 2 per cent increase in subscribers in the three months to September 30. It also reported a small drop in the number of customers who cancelled their service each month and a 5 per cent increase in average revenue won from each residential subscriber - to $86 each quarter (it was $74 in 2006.)
Mr Porter, who was paid $5.2 million last year, said every extra dollar added to that average was worth a total of between $7 and $8 million.
It was the greatest contributor to Austar profitability, and he said the company was ''far more sensitive'' to that figure than to the total number of new subscribers over the medium term. It tried hard to stop people cancelling; about a third of those who rang up to do so were persuaded not to.
Regional Australians were ''particularly price sensitive'' compared to those in the cities, but despite that Austar posted an increase in overall revenue of 6 per cent to $180 million compared to the same period last year.
The rise was attributed to more people taking its MyStar recorder, high-definition service and ''stay at home and save'' ad campaigns.
As pay TV subscriber growth has slowed in Australia to about 30 per cent of homes, the industry increasingly relies on encouraging customers to pay more for it. It is fighting the threat from increasingly vibrant free-to-air multi-channels and programs delivered via the internet with better recorders, improved on-screen guides, far more choice and video on demand.
He said pay TV depended less on big events and more on having a wide range of consistent channels. ''Everyone knows when they turn to that channel what they're going to get,'' he said. While Austar was moving to allow searching for programs and on-demand, it was looking at bundling internet television ''within a reasonable period of time''.
He said competition from broadband-based offerings (such as Fetch TV) was of only a low risk because the necessary network in regions was not there to support it, while he said ''dumbed-down versions of pay TV'' were the least of his concerns in his area.
Austar's results reflect those of Foxtel, the dominant metropolitan pay TV provider, in pinning its continued revenue growth to wringing more from its subscribers.
* Simon Canning
* From: The Australian
* October 29, 2010 12:00AM
REGIONAL subscription TV broadcaster Austar has captured more than 750,000 subscribers for the first time.
Chief executive John Porter has warned that regional consumers remain in a cautious frame of mind.
Subscriber numbers rose by 14,771 to 761,919 in the third quarter, boosted by a marketing drive and package offers.
Austar United Communications posted a 21 per cent rise in third-quarter net profit of $22.8 million for the three months to September 30, up from $18.8m in the previous corresponding period.
But Austar's net profit for the nine months to September was $43.5m, down 20 per cent from $54.3m in the same period last year.
Although subscriber numbers were up, average revenue per user remained steady compared with the previous quarter.
Mr Porter said that although there was caution in the marketplace, Austar had benefited from a strong demand in value for money products and an increasing interest in home-entertainment products.
"We've had our strongest subscriber growth this year, which is a result of initiatives and hard work by the business," Mr Porter said.
"Regional Australians are still cautious about their spending, but they are now more willing to pay for products that give them great value for money."
Although operating cashflow increased by 3 per cent, at $61.4m, Mr Porter said it was being held back by investment in establishing high definition services, which led to a 30 per cent increase in the number of MyStar HD subscribers in the third quarter.
The company also launched a number of new "no cost" services for subscribers.
"(These included) our content download and streaming service, Austar Anywhere, and our content preview service, Austar On Demand," Mr Porter said.
ADDITIONAL REPORTING : AAP