Foxtel goes into partnership with the BBC

On Wednesday, the BBC announced it had acquired 100 percent ownership of Foxtel’s UK TV from 1 July. The BBC already had 20 percent of the Australian pay TV channel and have now bought out the other two owners Foxtel (who owned 60 percent) and Fremantle Media (who owned the other 20). In addition BBC Worldwide has formed a strategic alliance with Foxtel to roll out three new channels in Australia. The deal is part of an ambitious new BBC strategy to bring its own and others programming to a global audience.

The three new channels are BBC HD, BBC Knowledge and the children’s station CBeebies. BBC HD rolled out this month as part of Foxtel’s HD service which kicked off with live coverage of the Australia v China world cup qualifying match on 22 June. Foxtel chief executive and managing director, Kim Williams, said 15,000 homes are capable of receiving HD broadcast, with that number set to increase now that the service is operational. Foxtel HD will also get content from Discovery, National Geographic, Fox Sports and ESPN.

However it is the new BBC deal that has created the most waves. The BBC paid an undisclosed sum for the buy out rights to UK TV. It is likely the BBC will rebrand UK TV under its existing BBC Entertainment label in the next 12 months. Darren Childs, BBC Worldwide channels' managing director said they would also look to launch other channels from its portfolio. “We felt we needed a bigger stake in the Australian pay-TV market,” he said. “Our content has a huge amount of affinity with Australian audiences, but we only had a small equity stake in UKTV.”

Yesterday Childs was in Sydney to talk up the BBC’s new deal. He told the ABC’s Media Report the new Foxtel stations would be tailored be Australian audiences even though they are using BBC product. Childs also claimed the deal would not harm the long standing relationship between it and its Australian equivalent, the ABC (with both national broadcasters even sharing the same nickname ‘Aunty’). He says that in addition to the large amount of content the ABC already purchases from the BBC there is “thousands and thousands of hours of content that actually never gets to these shores”. Childs says that “what we're actually doing now is again, giving consumers choice and actually bringing them more content.”

But there is no doubt that the BBC and the ABC will be in competition in certain fields. The move to bring in the biggest commercial-free children's channel in Britain, CBeebies, is a direct challenge to the Australian network who has planned to introduce its own children’s network in 2009. The BBC will work with Australian producers to find local hosts for its children's shows, and create an advisers' council of experts in preschool education.

The British broadcaster is increasingly active in Australia having declared it to be one of its key growth markets. In the last 18 months, their acquisitions department has been extremely busy having purchased a 25 percent stake in Australian TV production company Freehand (responsible for My Restaurant Rules, and Missing Persons Unit among others), bought out Lonely Planet, have launched two magazines “Top Gear Australia” and “BBC Australian Good Food Guide” and made a deal with SBS to produce an Australian version of the hit TV show “Top Gear”. It is all part of BBC Worldwide’s wider global strategy to focus on key territories.

While the ABC may be worried by this growth, Foxtel are not. Its CEO Kim Williams called the BBC an “iconic global brand and the world’s largest producer of quality television programming” and said he was “delighted” they had chosen Foxtel as its long-term Australian subscription TV partner. Foxtel is half owned by Telstra and the other 25 percent each by News Corp and Consolidated Media Holdings has now connected 1.5 million Australian homes through cable and satellite.

The Pay TV operator is turning a significant corner having made its first ever profit in 2006 after ten years of losses. It is becoming an increasingly significant player in the Australian television market and regularly challenges the free to air networks on a nightly basis with over 20 percent of the audience share. It is well ahead of the other channels with its conversion to digital and only the controversial anti-siphoning laws (which keep nominated sporting events on Free to Air) stands in its way of outright domination. "It basically says we don't get a seat at the table until the terrestrial networks have passed on what they don't want,” complained Williams about the law. “So, to think of compounding what is already an absurd degree of excessive regulation is disappointing."