AS NEGOTIATIONS for the broadcast rights for the NRL get under way in earnest, analysts and the media industry are questioning whether sport can deliver the numbers for pay TV.
Despite outlaying about $625 million for the AFL rights to 2016, Foxtel's subscriber numbers are lower than the market expected.
In the six months to the end of June, it signed up 20,000 new subscribers, despite offering sports lovers a dedicated AFL channel that could broadcast every game live and uninterrupted.
At the time Foxtel's then chief executive Kim Williams said the deal would be ''a very compelling proposition for our existing and potential subscribers'' and that it would ''lead to refreshed growth in the year ahead'' though he was careful not to quantify it.
But at its annual results earlier this month there was no mention of the AFL, let alone its impact on subscriber numbers.
Now as it backs a reported $1.1 billion bid for the 2013-18 rugby league broadcast rights, some in the industry are asking whether that last remaining weapon in Foxtel's armoury - sport - can lift subscriber numbers.
Although the Olympics was a critical success for Foxtel, it has come at a cost, with $20 million understood to be the amount it has lost on the Games. The company says it won't know for a few more weeks if the Olympics delivers new subscribers or stops existing ones from cancelling subscriptions.
A media analyst said the figures and 13 per cent churn rate among subscribers ''debunked the myth'' the AFL was driving growth. ''And now they are going to blow their brains out by doubling their bid for league,'' he said. ''The only thing it's going to drive up is costs.''
If Foxtel is unable to drive its penetration rates beyond 26 per cent of households, it needs to lower the churn rate, attract more lower-paying customers or extract more revenue from its existing users, analysts say.
The last option is proving harder as households cut back on discretionary spending and cheaper options such as broadband internet players and Apple and Google TV's pay-per-view models challenge Foxtel's subscription model.
Foxtel would not disclose how many had signed up for its cut-down services such as those available through Microsoft's Xbox and Telstra's T-Box.
The Foxtel chief, Richard Freudenstein, was unavailable for comment but a spokesman said its business was affected by the general economy and market specific factors, which have occasionally resulted in ''below trend growth''.
He said the slower growth was not from greater competition but consumer caution: 10,000 of iiNet's 824,000 subscribers had signed up to its internet TV service. ''The AFL deal requires far fewer incremental subscribers than you indicate and was always assumed to build over time rather than provide a one-off step change,'' he said.