Foxtel subscriber numbers and revenues up but marketing spend sees profits drop

Foxtel launched its IQ3 in the first quarter of the year

Foxtel launched its IQ3 in the first quarter of the year

Foxtel’s subscriber numbers are “approximately 2.8 million” as of March 31, up 7 per cent year-on-year, News Corp’s latest quarterly earnings report has revealed.

However, the huge marketing push to support the pay-TV service’s lower price stuctures, investment in Presto and the launch of ‘triple play’ home phone and broadband deals saw the company’s EBITDA – earnings before interest, tax, depreciation and amortisation – drop by US$61m to US$163m for the quarter. In local currency the EBITDA was down 17 per cent, while revenues were up 1 per cent.

Last month Foxtel marketer Ed Smith pointed to the huge investment the company had made to market streaming service Presto, as well as the spend by rivals Stan and Netflix, as the reason for increased media agency ad spend for the first quarter of the year.

Overall News Corp globally saw its revenues decline one per cent for the quarter, with news and information services, which includes its Australian newspaper business, dropping by 23 per cent year on year, with the company citing the huge drop in the value of the Australian dollar as a major factor in that decline.

News Corp CEO Robert Thompson acknowledged the company had “some revenue challenges, particularly at News and Information Services” in the quarter, but cited growth in the real estate sector as a positive sign for the company.

“We believe the company is firmly on track and the signs are positive for year-over-year EBITDA growth in the fourth quarter,” he added.

Overall News Corp’s revenues were US$2.06bn for the quarter, down from US$2.08bn the prior year, with the company citing negative currency fluctuations for the drop.

The News of the World phone hacking scandal, referred to as UK newspaper matters in the earnings release, cost it another US$57m.

The decline in news and information services was attributed to lower print circulation volumes, which were partially offset by higher cover prices, with circulation and subscription revenues down 3 per cent on adjusted numbers, whilst lower ad revenues were also cited as a factor.

Figures for the Australian operations were not broken out in the report.

Alex Hayes


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