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News Corp reporting shows Foxtel profits dropped 19% in FY18/19

Embattled subscription television provider Foxtel dropped 19% in earnings for financial year 2018/19, with a rise in broadcast subscriber churn, but also an increase in both Kayo and Foxtel Now subscribers.

However, parent company News Corp itself reported a 12% increase in revenue, with US$10.07bn compared to $9.02bn the year prior, driven again by strength in the real estate division.

News Corp segment review (click to enlarge)

The reporting is the first since the consolidation of Foxtel and Fox Sports, which has also impacted the results, removing the Fox Sports channel distribution write-off of $317m the year prior.

Revenues at News Corp Australia are reported as dropping 6%, with circulation and subscription revenues for print products dropping across the company, offset slightly by lower print volumes in Australia and the UK. But in digital subscribers, News Corp Australia reported 517,300 paying readers compared to 415,600 the year prior.

Regarding the declines at Foxtel, the reporting blamed costs associated with cricket and rugby rights, as well as marketing costs for the newly-launched Kayo. Foxtel’s overall subscriber figure rose 12% from the year prior, ending on 3.144m, but that includes Kayo, Foxtel Now and the inclusion of commercial subscribers of Fox Sports. 2.4m of that figure are broadcast and commercial subscribers.

Foxtel equity losses (click to enlarge)

Kayo reported 331,000 paying subscribers, following its November 2018 launch, while Foxtel Now reported 446,000 paying subscribers, up 32% from the year prior.

Foxtel broadcast subscriber churn was reported at 14.7% compared to 12.5%, with the October 2018 price increase blamed for the rise, as well as a drop in ‘lower-value’ consumers who were on no-contract plans.

Full-year losses of US$17m were posted, with News Corp recognising a $957m non-cash write-down of the investment in fiscal 2018. The year prior a $1,006m loss was posted. The Australian Financial Review reported earlier this week the bailout figure from News Corp to Foxtel had risen to AU$500m.

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