News Corp global profits fall 20% but Foxtel’s local revenues grow due to higher subscribers
News Corp today told the market that its global revenues continued to slide in the second quarter of the current financial year, with lower print advertising revenues in the company’s news and information services partially to blame.
The company, which locally publishes newspapers The Daily Telegraph, Herald Sun and The Australian and owns half of Foxtel, reported second quarter revenues of US$2.16bn – 4% down compared with the same time period the year prior.
The publishing company reported a second quarter total EBITDA profit of US$280m – 20% down on the US$352m from the year prior.
Robert Thomson, CEO News Corp
Robert Thomson, News Corp CEO, warned in today’s earning update of tough economic conditions:
“Macro-economic conditions in most of our markets have not been auspicious.”
However, he also pointed to the company’s accelerating shift to digital products. He said: “News Corp is evolving rapidly into a more digital and increasingly global company with a diverse revenue mix that we believe will drive long-term growth in profits and shareholder returns.
“In our News and Information Services segment, print advertising remained challenged, but we are seeing growth in digital advertising and circulation revenues.”
He also hinted that News Corp staff face further job losses locally, saying: “We are particularly focused on cost reductions and sharing services around News Corp to streamline operations at newspapers in Australia and the UK.”
News Corp’s News and Information Services segment – which includes most of the company’s Australian operation – was the hardest hit, with revenues for the second quarter of the financial year down US$123m (8%) compared with the year prior. Total advertising revenues for the segment dropped by 12% with the company blaming weakness in print advertising, negative foreign currency fluctuations and lower revenues at News America Marketing.
Globally, circulation and subscription revenues declined by 5%.
The News and Information Services segment’s EBITDA profit decreased US$58m in the quarter (27%) compared with the year prior.
The best news for the company appeared to come from Foxtel, which it jointly owns with Telstra.
Foxtel revenues increased by 5% thanks to higher subscriber numbers. The company said total subscribers, as of December 31, rose to 2.9m. It did not break down how many of those were to Foxtel’s pay TV service and how many were to the company’s joint venture streaming service with Seven, Presto.
Foxtel’s revenues were also helped by a lower percentage of subscribers dropping the product – which fell from 11.8 to 10.3%.
However, Foxtel’s profit declined by 7% “due to planned increases in programming costs to support subscriber growth, costs associated with higher sales volumes, the public launch of Triple Play and continued investment in Presto”.
News Corp’s digital real estate services business (which in Australia is the REA Group), saw its revenues grow 35% to US$54m compared with the year prior.
REA Group’s EBITDA profit increased by U$16m (28%) compared with the previous year.
The company’s book publishing saw its revenues decline by 5% to US$23m compared with the year prior, with the segment’s EBTIDA for the quarter decreasing by US$20m (26%).
Miranda Ward
Miranda Ward worked for Mumbrella from 2013 to 2017, eventually becoming deputy editor. Miranda joined Mumbrella in September 2013 from Sky News.
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This is bleak news. The print business is dying and no matter how hard Thomson pushes it there is no evidence that digital is working for them. Foxtel might be gaining revenue but now it has competition and its costs are escalating. Like Fairfax the only bit with a pulse is property advertising.
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I cannot see Foxtel continuing to grow subscribers. In fact I was surprised by this result. Unless, of course, the government gives in to Murdoch’s demands over sports rights. The product is pretty appalling these days compared to the ultra-cheap streaming services like Stan and Netflix. With Foxtel, the lowest package is $25 per month, which includes a bare minimum of channels and comes with a barrage of advertising, despite the monthly fee.
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Totally agree with Numbers.
Foxtel are artificially inflating with Presto totals, and I would wager they will lose more customers than they think at the end of this year’s EPL season.
News will surely go the same way as Fairfax as started to – as programattic and online takes over spend even more from traditional ATL sources like print spreads, they will have to scale back their operations and get used to being a smaller operation.
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Foxtel is by far the best platform in Australia. Has everything to watch. Current shows, all the sports anyone cares about, Foxtel go,, live and in HD. Netflix has nothing but old movies and one or two current shows that they have commissioned. If you want to watch what you want, when you want, Foxtel is the only way to go. And you can bundle it in with your broadband.
You can keep your cheap streaming services, you will need three or four of them to get what you want,and will be expensive if you want Premier league or NFL, or Mlb, or NBA
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Wow Tkod I’m a foxtel fan…but seriously. If you aren’t a foxtel employee Ill eat my hat. Just do us a favour and declare it next time. Nothing wrong being a fan of the product but your comments scream “read from our media script”
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What Foxtel need to be here is consistent. By all means add Presto subs into the overall picture to give a good increase to subscribers, but if you do that you need to report churn the same way. A reduction of 1.5% is a great result, however this almost certainly does not include SVOD churn numbers as we know they are much higher. Choose to include or exclude SVOD, don’t massage both stats.
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@tkod – Love the sign off with the ever-growing list of sports that Foxtel doesn’t have. Sports people care about, but there are more: English Premier League (plus La Liga, and what all other football except A league, NFL, Australian International Cricket, Big Bash League, NBA, MLB…..plus a lot of the NRL games that people watch.
Foxtel’s sport offering has been eroded in recent years, so has their tv programming with the emergence of Stan and Netflix – which by the way are literally made for watching what you want, when you want it.
Foxtel need to take a serious look at their value proposition now – sure Go is great (when it works) and On Demand is OK (nowhere near as good as streaming), but they have some work to do – surely the most challenging time in their relatively comfy history.
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