News Corp today released its first quarter Fiscal 2022 results for the period ending September 30, 2021, including subscriber highlights for the Foxtel Group and financial results for the Subscription Video Services segment.
Commenting on the Foxtel Group in News Corp’s Q1 FY22 results announcement, News Corp Chief Executive Robert Thomson said: “We are primed to capitalize on the patent success of the Foxtel, which was highlighted during the Foxtel Strategy Day, and are reviewing potential permutations to maximise shareholder value and growth. It’s worth noting that Subscription Video Services Segment EBITDA rose an impressive 46 per cent in the first quarter.”
Key Foxtel Group Subscriber Metrics
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Speaking at the Investor Briefing, Mr Thomson said: “In Subscription Video Services, the first quarter built on the significant progress made in FY21 in reshaping the Foxtel Group as a streaming-led business, with improved revenues, profitability and cash generation. For the second consecutive quarter, growth in Kayo and Binge revenues clearly offset the not-unexpected modest decline in retail broadcast revenues.
“As of September 30, total subscribers were approximately 4 million, up 18 per cent year-over-year. This includes a record 2.2 million total streaming subscribers, up 68 per cent, thanks to Kayo and Binge. While there will always be a certain seasonality in sports viewing in Australia, Kayo is quickly establishing itself as a year-round provider as it now offers 50 sports in toto, and is furnishing engaging off-season programming for the football tragics ahead of the new season early next year.
“Foxtel’s appeal was further broadened with the launch of the Flash streaming news service, featuring a nonpareil collection of 20 local and global news sources, with content for all political persuasions. That breadth, combined with a cutting-edge, world-class user interface, adds to the lustre of Foxtel, and is indicative of its renaissance. We are obviously now in a position to be even more ambitious for Foxtel and are always seeking to maximise its undoubted potential.”
News Corp CFO Susan Panuccio added: “Revenues for the quarter were US$510 million, up 3% versus the prior year, benefiting from higher streaming revenues and the modest benefit from positive currency fluctuations, partially offset by lower broadcast and commercial subscription revenues. On an adjusted basis, revenues were flat.
“Total closing paid subscribers across Foxtel reached nearly 3.9 million at quarter end, up 17% year-over-year, with total subscribers, including trialists, approximately 4 million. The increase was driven by continued growth in paid streaming subscribers partially offset by a decline in broadcast subscribers and Commercial subscriptions, which were exacerbated by the impact of the lockdowns in Australia.
“Kayo and BINGE ended the quarter with approximately 1.1 million and 885,000 total subscribers respectively. In the aggregate, total paying streaming subscribers were up more than 69% to nearly 2.1 million, and total streaming subscribers, including trialists reached over 2.2 million. Streaming products in the aggregate reached approximately 54% of Foxtel’s total paid subscriber base.
“Broadcast churn improved, declining to 14.0% from 14.6% last year and 17.1% in the fourth quarter. Broadcast ARPU increased 4% from the prior year to 82 Australian dollars, mitigating subscriber volume declines, consistent with Foxtel’s strategy of focusing on higher ARPU subscribers and fewer low cost offers. Foxtel continues to see an improvement in subscriber mix, as the percentage of higher valued, longer-tenured subscribers continues to rise with a corresponding decline in churn rates.
“Net declines for Residential broadcast subscribers moderated sequentially with 1.6 million broadcast subscribers at quarter end. Commercial subscribers were down over 30% from the fourth quarter to 162,000 and we do anticipate a recovery in the second-half with the easing of restrictions.
“Product innovation continued with the launch of iQ5, an IP-enabled set-top box, the announcement of plans to partner with Comcast and Sky on the launch of Sky Glass, and the launch of a third streaming product, Flash, a dedicated live news streaming service featuring more than 20 local and global live news services.
“Segment EBITDA in the quarter was US$114 million up 46% compared to the prior year. The improvement was primarily driven by US$34 million of lower sports costs, benefiting from the US$36 million of negative impact seen in the first quarter of fiscal 2021 related to deferred sports costs from the fourth quarter of fiscal 2020. Adjusted Segment EBITDA increased 42%.”
On forward commentary, Ms Panuccio said: “In Subscription Video Services, we remain pleased with the ongoing performance of Kayo and Binge and the efforts to improve broadcast ARPU and churn. We do expect seasonality in Kayo, given the end of key winter codes but look forward to our summer schedule with The Ashes and the Cricket World Cup in the second quarter. Costs are expected to be higher in the second quarter, most notably for Entertainment and Sports rights, as well as some higher marketing to support the launch of Flash, the new streaming offering. Overall, we continue to expect costs for the full year to be relatively stable in local currency.”
Data and quotes are sourced from News Corp’s Fiscal 2021 Fourth Quarter and Full Year Earnings Announcement and Investor Briefing of November 4, 2021 (New York). Full details can be found at https://investors.newscorp.com/