'Foundations laid, now we'll be judged on execution' - Foxtel CEO Peter Tonagh

Arvind Hickman
By Arvind Hickman | 8 September 2016
Peter Tonagh, Foxtel

Peter Tonagh's return to the helm of Foxtel in March could not have come at a more important juncture. The threat of hugely popular SVOD juggernaut Netflix, ongoing technical problems with Foxtel's set top box iQ3 and the loss of the English Premier League (EPL) to rival Optus had mounted pressure on Australia's largest pay TV company and its increasingly challenged business model.

Standing still was not an option, Foxtel needed a new direction to allow it to compete with new media rivals and adapt to shifting consumer demands.

Hardly six months into the new role, the widely-respected and understated Tonagh has already stamped his authority on the business - assembling his own dynamic senior executive team and getting the company's more than 2,000 staff to buy into his plans.

Having just about ironed out iQ3's numerous glitches and fresh from securing an important expansion to the content licensing agreement with HBO, Tonagh has announced bold plans to provide a cut-priced content offering to take on the likes of Netlfix and Stan in the transient, lower end of the market.

AdNews caught up with Tonagh in the sidelines of the ASTRA conference to find out more about his first six months in the role, the impact of losing the EPL and what lies ahead.

AdNews: You’ve been in the role for six months, what have you achieved and what are your priorities going forward?

PT: In the first six months I set out to put the right executive team in place. In hiring (managing director of customer and retail) Mark Buckman and (executive director of channel aggregation and wholesale) Deanne Weir, we are now confident we have the right team in place.

I also wanted to set a clear direction for the company and the third thing I did was set out to make sure everybody in the organisation understood where we are heading as a business. We’ve just finished workshops with every one of our 2,000-plus staff, so they all know what we are doing and where we are heading.

The first six months was about putting the plan in place, making decisions around the foundations. From here it is all about execution. I expect we will be measured now on the things we bring to market.

AdNews: Former News Corp chief commercial officer Sharb Farjami recently joined as Foxtel's director of content commercialisation. Tell me more about his role and what you think he will bring to Foxtel?

PT: If you take a pure advertising perspective, MCN is without doubt the leading ad sales business in Australia. They’ve got fantastic innovation and technology. If you then look at the Foxtel platform, I don’t think it has kept up with the evolution MCN has gone through. So one part of Sharb’s role is ensuring that as a platform we evolve as quickly as MCN – making sure we are delivering pre-rolls, mid-rolls and data-driven addressable advertising.

All of those elements - things like the Sky ad smart products in the UK - Sharb will help to make sure we have that. The second thing is Sharb will help us work on other ways to monetise our content that fall outside of advertising.

AdNews: Lowering your pricing structure for Foxtel Play comes with risk. How do you strike the right balance to ensure a lower entry price point for content won’t cannibalise your core satellite and cable subscriber base?

PT: There's a risk that other offerings might cannibalise our base as well. From our perspective, first of all we’d say the satellite service is quite distinct. If I use a simple sporting analogy, if you are somebody who happens to love cricket and you watch a test match, typically you’ll turn the television on in the morning and... often it will be on in the background all day. That is not well suited to an IP streaming service, so from that perspective we think customers will prefer a satellite-delivered service than an IP streaming service.

Equally there’s customers who love the Foxtel iQ (set top box) and they’re going to pay for that premium service so they can record multiple shows at once, remote record and a whole bunch of other features they value.

AdNews: Optus acquiring the English Premier League must have been a bit of a blow, but it hasn’t gone too smoothly for them with customers complaining about delays and other technical glitches. Are you surprised by the problems they’ve had?

PT: Streaming technology is not the best technology for distributing live, mass-market sporting events. If you consider Optus and their skill-set is in delivering broadband-delivered content, they’re pretty good at it as it’s what they do for a living, but you cannot prevent that delay when you deliver content via streaming.

Can you imagine if they delivered the Melbourne Cup in that way? That 60-second delay people are experiencing in the Melbourne Cup would be a disaster.

I think for a long, long time to come, the best way for mass-market live sports to be delivered is high quality, high definition satellite.

AdNews: What impact has losing the EPL to a rival had on your business, have you had much a drop off in subscribers?

PT: We track very closely customers who leave and why they leave. One thing I will say is we are very comfortable that the money we saved by not having the EPL far offsets the cost of the customers who have left us.

We’ve taken a lot of that money and re-invested it recognising we do have customers who love the EPL. So we’ve brought in the beIN sports channels, EPL club channels and programming block, out a lot of programming back in, but we haven’t lost a lot of customers. I would say we are better off, but having said that we'd always rather deliver great quality content to our customers.

AdNews: In such a competitive media environment, what do you think traditional media companies need to do to come out on top?

PT: Listen to the consumer and understand consumer trends, make sure you deliver on those trends. For us in particular, make sure you have a very crisp and compelling argument, or story and narrative for the customers to what it is that we are delivering that makes us different.

We know we have a huge amount of on demand content and deliver across multiple platforms. We know we have the benefits of the best live linear sport and great local content no-one else can match.

We need to tell that story more effectively, getting that narrative right is key. But it all starts with listening to the consumer.

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