Telstra and News Corp's secret broadband deal stalls

Live streaming is coming to Australia and they want the biggest slice of the pie, but negotiations are failing.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Foxtel, owned by Rupert Murdoch's News Corp (ASX: NWS) and Telstra (ASX: TLS), has made plans to launch a triple play in the Australian broadband market, but negotiations seem to have stalled.

The pay-tv operator is Australia's most profitable media company, reaching 30% of Australians, but the triple play would offer broadband, pay-tv and telephony in one package – a strategy aimed at improving its market share.

Under the two owners' shareholder agreement, Foxtel cannot launch a broadband service without the approval of Telstra, which controls around 47% of the Australian broadband market. It would likely approve the offering on the condition it was the wholesale provider for Foxtel – something some analysts believe will put Foxtel at a competitive disadvantage when the NBN is rolled out.

Instead of paying the NBN Co for direct access to the fibre optic network, Telstra will be able to charge a price as a wholesaler between the two companies, putting Foxtel at a disadvantage to competitors.

Foxtel has considered this type of offering because of increased competition from iiNET's (ASX: IIN) Fetch TV, Quickflix (ASX: QFX) Play and huge international internet-based broadcasting services such as Netflix (NASDAQ: NFLX) and Hulu. Foxtel has already begun to counter the increased competition by implementing a new service called Presto, but it might prove too little too late unless they can attract customers with their unique offering.

According to The Australian Financial Review, discussions have broken down between Telstra and News Corp because of the uncertainty surrounding the NBN and the price its owner would charge the Telco for access.

Foolish takeaway

Australia's market for internet-based broadcasting is largely untapped and companies could stand to draw massive amounts of revenue from the industry. It would seem however that the arrival of Netflix and Hulu is the force to be reckoned with and unless negotiations can progress, they risk being left behind.

Telstra share price has risen massively in the past 2 years. Savvy investors are now seeking growth in smaller companies. Discover two stellar small-cap opportunities now, in our brand-new research report, "2 Small Cap Superstars" — simply click here to download your FREE copy.

More reading


Motley Fool contributor Owen Raskiewicz does not have a financial interest in any of the mentioned companies.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »