Low-cost ethnic pay-TV looks a lot like Foxtel<br /><br /><br />From http://www.theaustralian.news.com.au/common/story_page/0,5744,18393843^7582,00.html<br />HE says it's not a competitor to Foxtel, but the low-cost pay-television service that Foxtel's former boss Jim Blomfield is rolling out has some remarkable similarities.<br /><br />SelecTV is described as a boutique ethnic pay-TV service set to rival other ethnic pay-TV broadcasters such as UBI World TV, the successor to TARBS World TV which was placed in administration last year. <br />SelecTV already has a Spanish language service on air and during the next six weeks plans to launch its Vietnamese, Greek, Italian and German language packages. <br />And this month it will launch an English-language service of 20 channels such as National Geographic (which, ironically, is owned by Foxtel's 25 per cent owner News Corporation), Turner Classic Movies, BBC and Movie One for $29 a month. <br />This compares with Foxtel's $50.95 a month basic package of 36 TV channels, as well as 30 audio channels and interactive services. <br /><br />But Mr Blomfield plays down his expectations for the cut-price English service, saying it's pitched to older audiences with lower incomes who may consider a few extra channels valuable. <br />"That's why we haven't high expectations for the English channel take-up. Within two years we are targeting 40,000 subscribers on the English package, so that's pretty modest," he said. <br />Mr Blomfield said he doesn't want to pick a fight with the big pay-TV companies, "because if we did we would just get blown out of the water". <br />SelecTV, which has spent $22million getting to launch stage and is preparing to raise $18 million through a public offer, expects to break even in about two years with 80,000 subscribers. <br />It has attracted investors such as Melbourne's Myer family and former Seek chairman Irvin Rockman in its last raising, and is seeking a cornerstone shareholder ahead of its stock-market listing, which is expected to value the business at $55 million to $60million. <br />SelecTV's financial adviser David Williams, from corporate advisory group Kidder Williams, said many people who already pay for an internet connection and a mobile phone simply can't afford existing pay-TV offers. <br />"So we don't see ourselves competing with Foxtel or Austar but there's unsatisfied demand out there because in most pay-TV countries penetration is between 40 and 45 per cent, so why are we maxing out at 23 per cent? It's because it's too expensive," Mr Williams said. <br />The $18 million is expected to cover SelecTV's operating expenses for the two years until it breaks even, as Mr Blomfield said it had created a low-cost model. <br />"The model is not to own a lot of technology but to out-source as much of the entire operation as possible," he said. <br />SelecTV will have a total staff of 35 to 40 people to operate about 40 channels. <br />"This is a marketing company; it's not about owning technology or controlling set-top boxes but getting relevant content to a niche market cost effectively," Mr Blomfield said. <br />SelecTV will pay for the foreign channels via a fixed annual fee, while it pays a per subscriber amount for the English channels based on "very small" minimum subscriber guarantees. Mr Blomfield said he hoped it would pick up 150,000 subscribers from the 6.5 million Australian TV homes within five years. <br />Mr Williams said he believed the ethnic market was under-serviced, as until now there had been no Vietnamese offering and the Spanish market was poorly serviced. <br />But SelecTV's plans attracted the interest of UBI, which late last year forced the company to change the prospectus for its $10million raising after taking concerns to the Australian Securities and Investments Commission. UBI alleged SelecTV was insolvent, which was not properly disclosed in the prospectus. <br />SelecTV had to issue a supplementary prospectus that did not include financial forecasts. <br />But Mr Blomfield claimed that was just an episode of "dirty tricks" by a competitor and "we would not be that silly to be so finely tuned to the requirements of our funding". <br />"If you want to take a swing at someone, you should at least make sure you hit them," he said