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Foxtel’s Christmas present for subscribers

Christmas is coming early for Foxtel’s subscribers. With 21 free channels, on-demand content coming to iPads next month, and a new deal to deliver US shows to Australian audiences within hours of being first broadcast, Foxtel subscribers will be spoilt for choice.

Foxtel is set to launch a new iPad app next month, that will give subscribers access to 21 channels, plus on-demand content free of charge.

The company has also announced a new deal with US TV giant, HBO, to deliver new episodes to Australians within hours of them airing on US TV, as well as access to HBO’s back catalogue of shows.

The deal is designed to combat illegal downloading of shows, much of which is due to the delay between the first broadcast in the US and in Australia, according to Foxtel’s CEO, Richard Freudenstein. Some delays can be as long as a year, leaving Australian viewers frustrated.

The deal is another blow to free-to-air networks, including Seven West Media (ASX: SWM), Ten Network Holdings (ASX: TEN), SBS and Nine Entertainment, which will no longer be able to broadcast older HBO shows. As I mentioned yesterday, the free-to-air TV networks are already struggling to compete against internet based entertainment.

Foxtel which is 50% owned by Telstra Corporation (ASX: TLS) and soon to be 50% owned by News Corporation (ASX: NWS) has been struggling to grow subscriber numbers. This move should kick-start subscriber growth, and may increase revenues by prompting subscribers to upgrade their packages to get access to the Showcase channel. Foxtel currently has 2.3 million subscribers, and is aiming to increase penetration to 50% of Australian households by 2017, according to Mr Freudenstein.

Foxtel also plans to add more channels to the iPad app and launch on other devices, including laptops in February next year, although subscribers are expected to be hit with price increases.

Foolish takeaway

Pay TV has been struggling against other media delivery channels like the internet. This move looks set to shore up their current subscriber base, and potentially increase it – most likely at the expense of free-to-air networks.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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