News Corp profits rise, Foxtel sheds customers

Advertising revenues and economic pressures bit News Corp Australia and Foxtel Group in the second quarter despite a rise in global revenues and profits driven by its Dow Jones and Real Estate Australia businesses.

The company revealed on Thursday that revenues at the Murdoch family-controlled business rose by 3 per cent to $US2.59 billion ($3.97 billion).

News Corp Australia owns a range of local assets including The Australian, the Herald Sun and The Daily Telegraph.
News Corp Australia owns a range of local assets including The Australian, the Herald Sun and The Daily Telegraph.Credit: Rhett Wyman

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 16 per cent to $US473 million due to higher revenues, lower costs in its book publishing business and a 5 per cent reduction in the company’s headcount.

Foxtel’s total paying subscribers fell by 6 per cent across the quarter to 4.32 million ahead of the launch of its new streaming aggregation product Hubbl later this month. Compared to the same time last year, subscriber numbers were flat.

Almost 250,000 Kayo customers cancelled or paused their subscriptions across the quarter, which it put down to a “more difficult summer sports season” alongside inflationary pressures, with traffic on its news titles also down, due to what company chief executive Robert Thomson called “algorithmic aberrations” across major platforms – a trend experienced by the majority of news websites.

Total paying Kayo subscribers as of December 31 were 1.17 million, compared to 1.4 million the September quarter. Paying Binge subscribers rose marginally to 1.47 million, alongside another dip in Foxtel broadcast customers, which follows previous trends.

Thomson said crucial content negotiations are underway with artificial intelligence providers, while renegotiations for content deals with digital platforms at “advanced stages”. “We are not naive on possible impacts of AI on journalism,” he said.

Revenues for the segment were up by 2 per cent, with Foxtel Group revenues of $US470 million for the quarter now representing 29 per cent of total circulation and subscription revenues for the company.

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Segment EBITDA for the quarter decreased by $US13 million – or 14 per cent – compared with the year prior, which it said was due to higher sports broadcasting costs, particularly for the AFL and NRL, alongside $10 million in costs relating to the launch of Hubbl.

In an address to investors, Thomson said the company’s “e-revolution” was advancing in tough conditions, with digital subscriptions now accounting for 52 per cent of total revenues.

He also paid tribute to News Corp’s “three core pillars” – Dow Jones, book publishing and digital real estate services for the quarter of growth.

Following a drop in the first quarter for the year, News Corp’s Australian mastheads, which include The Australian, The Daily Telegraph and the Herald Sun, added 3000 paying subscribers, growing to 940,000. Segment EBITDA was down 12 per cent compared to the year prior.

Revenues at News Corp Australia again decreased, by 6 per cent across the quarter due to lower advertising revenues. Revenues across the quarter for the news media division were down $US16 million, with total increases in subscription revenue not enough to offset total losses through advertising revenue.

Real Estate Australia helped the company’s digital real estate division grow profits by 15 per cent to $US147 million, with listings in Melbourne (24 per cent) and Sydney (22 per cent) both up significantly.

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Source: Thanks smh.com