If Telstra Media (ASX: TLS.AX) CEO Rick Ellis has his way, the Australian company will live and die--financially at least--on its digital media and IPTV businesses.
"We're changing the model from a telco model, which is largely one where … investment in content is justified on the basis of the pull-through benefits of market share where shift and churn reduction, to actually positioning the that business as a P&L business in its own right," Ellis told a media gathering covered by Commsday. "We're changing the way that we think about users, market segments, communities … and what content we're going to package in which way to meet those market segments. We're going from a product-centric approach, which is a telco approach, to a media company approach where we're focused on viewers, users, audience, market segments and maybe what their expectations are."
The move is not surprising considering Ellis' background. He came to the CEO position from a job as CEO of Television New Zealand. As CEO of Telstra Media he manages Sensis, BigPond, TradingPost, IPTV, Foxtel and other content arrangements. He even renamed the division Telstra Media.
Ellis said he recognizes the presence of OTT IPTV players but dismissed their potential impact on the Telstra business model, especially in competition with Foxtel.
"There are a number of commentators who say the over-the-top players are going to kill local pay TV and free-to-air businesses. And I just don't believe it and I just don't see it," he reportedly said. "OTT is Internet and Internet doesn't deliver you ten or a dozen HD channels just at the flick of a switch when you turn your telly on. And even in an NBN (Australia's National Broadband Network) world the estimated cost of delivering HD linear channels to a television set is going to be like five times cable, satellite or digital terrestrial."
Sounding like any of his U.S. MVPD counterparts, Ellis said OTT providers "add an extension to core video consumption, which tends to be watched during primetime."
While the new Telstra Media strategy is obviously aimed at transforming the company from telephone to digital media, there is another purpose that says something more about today's connected society. He's hoping to resurrect, through transformation, the company's Sensis division from a directories business to "Australia's leading directories and digital marketing service."
"We need to be wherever users are going to look for information about a product they want to secure," he said during the briefing. "To get to those places—just think Google (Nasdaq: GOOG) and Facebook for the obvious ones—we need to make sure that we have strong relationships with those sorts of organizations and that the interface between our environment … and their environment as, effectively, the publisher is as seamless as it can possibly be."
- see the Commsday story
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