Presto closure drives Foxtel into the red as News Corp revenues tumble
The decision to close streaming service Presto forced pay-TV provider Foxtel into the red for the first quarter of 2016, recording an $11m loss according to News Corp’s latest results.
Presto will close in January after Foxtel bought out partner Seven West Media from the service, with plans to transition its “130,000” customers to repriced packages on the Foxtel Play service.
While Foxtel has traditionally been one of the most profitable media companies in the world News Corp’s results show the Presto decision cost it US$21m.
Foxtel is shown in the results as having an US$11m loss for the quarter, which includes write-downs by News in the value of “finite-lived tangible assets” of the company. However, that number applies only to News’ half of the business, which it co-owns with Telstra.
Overall, Foxtel’s net income increased 1% on the year before “due to higher subscribers”, with the company claiming 2.9m subscribers as of September 30. However, it does not state whether that includes the 130,000 named Presto subscribers.
News Corp’s overall revenues declined from US$2.01bn for the quarter last year to US$1.97bn this year, which included a loss of US$31m in foreign currency swings.
While digital real estate, including locally, REA Group, lifted by 18%, those increases were “more than offset” by drops in advertising in its news division.
Revenues for that division were down 4% to US$68m, year-on-year, with ad revenues down 10%, which it blamed on print advertising. The company also showed its increasing reliance on digital with those revenues making up 24% of the division’s revenues, up from 20% the year before.
Robert Thompson blamed “political turmoil” in the US and UK for some of the drop
It also showed subscribers for News Corp’s digital products were at 283,800 as of September 30, compared with 246,400 the year before.
Global CEO, Robert Thomson, said he blamed “ongoing political turmoil” in the US and UK for some of the decline, adding: “While the quarter presented some obvious challenges, particularly in print advertising and the weakness of Pound Sterling, our revenues were relatively stable, underscoring the strength and scale of our portfolio and shift to digital.”
Totally fed up with ever increasing advertising on subscription TV. I pay no small fee for a service, I am paying to watch advertising, I have had very poor performance from my Q etc. Will be scrapping Foxtel very soon.
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