Telstra takes AU$300 million write-down on Foxtel stake
The value of the Foxtel business had a combined AU$1.2 billion wiped from it on Friday morning, following the release of News Corp's third-quarter earnings.
News wiped AU$931 million off its balance sheet as an impairment charge related to "the goodwill and indefinite-lived intangible assets at Foxtel".
Following's News' announcement, Telstra followed suit with a AU$300 million write-down of its 35% stake on the pay TV provider, which now values its stake at AU$450 million.
"Foxtel has been facing industry disruption for several years and the COVID pandemic is obviously having an impact as global sports are put on hold, pubs are temporarily closed, and advertisers are forced to carefully reconsider their investments," Telstra CEO Andy Penn said.
News said as of the end of March, Foxtel had 2.9 million subscribers, up 1% year-on-year, with its Kayo streaming service boosting numbers as consumer retreated from traditional broadcast channels.
"2.2 million of the total closing subscribers were residential and commercial broadcast subscribers, and the remainder consisted of Foxtel Now and Kayo subscribers," News said.
By May 2, Kayo has 272,000 subscribers, compared to 444,000 at March 31.
"As of 31 March 2020 there were 338,000 Foxtel Now subscribers, of which 317,000 were paying subscribers, compared to 357,000 subscribers (348,000 paying) in the prior year," News said.
Foxtel spent AU$171 million in capital expenditure for the nine months to the end of March, compared to AU$223 million across the same time period last year.
Telstra said the impairment would not impact its results guidance.