Foxtel casts gaze at Disney ahead of Netflix-killer launch Media Man Int

Foxtel casts gaze at Disney ahead of Netflix-killer launch - 14th June 2019

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The Walt Disney Company is on the verge of launching Disney+. CREDIT: RICHARD DREW

By Jennifer Duke

Nobody doubts the world's biggest entertainment company, Disney, will enter the Australian market in a meaningful way soon. The question is how?

Since December, The Walt Disney Company has sold its vast library of content - which includes The Avengers and Star Wars franchise, Pixar movies such as Toy Story and classics like The Lion King - to local video streaming service Stan.

Disney's content helped Stan, which is owned by Nine Entertainment Co (also the owner of this masthead) achieve strong subscriber growth over the summer period.

That deal expires towards the end of this year leaving Disney's California-based executives with a choice: go it alone by launching the Disney+ streaming service or do another deal with an Australian media company.

"Media sources are convinced News Corp and Telstra owned pay-TV platform Foxtel will talk to Disney too."

So far much of the focus has been on whether Disney might buy a stake in Stan to cement its existing arrangements. Stan and Nine executives have made it clear they are interested in doing a deal.

But media sources are convinced News Corp and Telstra owned pay-TV platform Foxtel will talk to Disney too. Foxtel is hoping to establish a viable streaming business based around general entertainment and its latest financial results show it has lost about 100,000 subscribers from its traditional pay TV product.

News Corp has previously approached Nine (owner of this masthead) about a partnership with Stan. Then in late-2018 Foxtel launched sports streaming service Kayo Sports, which recently doubled subscribers to more than 200,000, but surprised some media commentators after it didn't launch a widely-expected entertainment option in time for the latest season of Game Of Thrones.

It's unclear whether Disney would do a deal with a local business as part of its expansion as its brand is strong in Australia already and arguably would not need a substantial marketing spend.

Singtel Optus has a deal with Disney giving subscribers access to National Geographic content until June 2020 and Seven West Media has "legacy" arrangements with Disney to show some movies, a spokesman said, but would not confirm when this agreement expires.

Disney withdrew its children's channel Disney XD from Foxtel in January though Foxtel still shows the Disney Channel, some Disney movies and National Geographic content.

However, at an investor day in April, Disney said that in countries where it would need to launch with "distribution partners" it would allow extra time for integration.

There could be benefits around customer service and immediate access to a database of subscribers from doing a deal with a local player,it said. Though for a company of Disney's size the barriers to setting up from scratch in Australia would not be substantial.

A source with close ties to media said that "anyone with subscribers and regular billing" has eyes on Disney's moves in Australia, listing existing media businesses, supermarkets and telecommunications companies as among those likely to be watching the company closely.

Foxtel is widely considered to be among the most likely to have an appetite for a longer-term deal.

Mr Murdoch's $US71 billion ($102 billion) sale of the majority of 21st Century Fox assets to the storied entertainment giant in March pushed his six children high up the Financial Review Rich List with 17 million shares in Disney each.

This deal also saw Disney take a controlling position in streaming business Hulu, a well-known brand in Australia - though unlaunched - for its success with The Handmaid's Tale that also aired on SBS.

A News Corp spokesman said in a statement that the business does not discuss confidential conversations and would not comment further.

A hypothetical deal could take any number of forms. It's worth remembeing Foxtel even struck a deal with Netflix earlier this year to make the US streaming giant's shows available on the pay TV platform's set top box.

Disney has already lodged trademarks for Disney+ locally and there is undoubtedly strong interest in its vast catalogue of crowd-pleasing films from Australian media companies looking to stay relevant in the Netflix era.

Regardless, it's worth noting Disney is in the enviable position of making a record annual profit of $US12.6 billion in the last financial year, meaning there's no guarantee it will pick a dance partner at all.

(The Sydney Morning Herald)