News Corp today released its Fiscal Fourth Quarter and Full Year Earnings for the year ending June 30 2021, including subscriber highlights for the Foxtel Group and financial highlights for the Subscription Video Services segment.
Commenting on the Foxtel Group in News Corp’s FY21 Earnings announcement, News Corp CEO Robert Thomson said: “We also saw record subscriber growth at Foxtel, where, at the end of June, our paid streaming subscribers reached over 2 million, an increase year-on-year of 155 percent. That sterling performance has clearly given us much optionality as we consider Foxtel’s future, which is certainly bright, given that revenues rose 33 percent in the Fourth Quarter.
Key Foxtel Group Subscriber Metrics
- Total Foxtel Group subscribers reached 4.019 million (3.891 million paid), a record high, up 40% on the prior year.
- Total streaming subscribers, including Kayo Sports, BINGE and Foxtel Now reached 2.134 million (2.006 million paid), up 142%.
- Streaming subscribers represent 53% of the Foxtel Group’s total subscribers.
- Kayo reached 1.079 million subscribers (1.054 million paid), up 132%.
- BINGE, launched in May 2020, reached 827,000 subscribers (733,000 paid).
- Foxtel Now reached 228,000 subscribers (219,000 paid), down 32%.
- Foxtel residential and commercial broadcast subscribers were 1.885 million, down 5.2%.
- Foxtel Residential subscribers declined to less than 1.7 million.
- ARPU was up 4% to A$81 through a focus on Foxtel’s premium brand positioning.
- Residential churn moderated in the fourth quarter, improving 140 basis points to 17.1% compared to the third quarter.
At New Corp’s FY21 Investor Briefing this morning, Mr Thomson added: “The Foxtel narrative is particularly positive, as our early emphasis on streaming and on securing long-term, valuable sports and entertainment rights has put the company on a decidely upward trajectory. Our paying subscribers were 40 percent higher and fiscal year revenue rose 10 percent, while our EBITDA growth was 11 percent. There was a noticable acceleration in revenue growth in the Fourth Quarter, when it surged 33 percent, driven by our streaming products and thanks, in part, to positive currency fluctuations.
“The strong growth in the streaming business, which is taking advantage of and successfully monetizing existing rights, was evident in the Fourth Quarter when the number of total paying streaming subscribers was 155 percent higher than at the same time last year. “We are obviously pleased with the exponential evolution of both Kayo, our sports streaming product, which has rights to Australia’s most popular sports, and Binge, our entertainment streaming service, as they combine world-class technology, clever user interfaces and high-quality, compelling content.
“It is worth pausing for a moment to consider how the Foxtel narrative has changed positively over the past 18 months. Then, we were being asked whether we would need to put extra funds into Foxtel, and now we have options for a growing, thoroughly contemporary business that has a tangible upside. Our immediate task, and that of our team, led admirably by Siobhan McKenna and Patrick Delany, is to keep driving the business, to keep striving, because those options will certainly be enhanced by continued success.”
Subscription Video Services Financial Highlights ($US)
- Segment Revenue – Revenues in the quarter increased $135 million, or 33%, compared with the prior year, of which $85 million, or 21%, was due to the positive impact from foreign currency fluctuations. Revenue growth was also driven by $39 million of higher revenues from Foxtel’s streaming products and the recovery of commercial subscription and advertising revenues from the negative impact related to COVID-19 in the prior year. Higher revenues from streaming products more than offset the revenue declines from the broadcast product, helped by the COVID-19 comparison from the prior year. Adjusted Revenues increased 12% compared to the prior year.
Fiscal 2021 full year revenues increased $188 million, or 10%, compared with the prior year, reflecting a $217 million, or 12%, positive impact from foreign currency fluctuations and $89 million of higher revenues from Foxtel’s streaming products. The revenue increase was partially offset by the impact from fewer residential broadcast subscribers. Adjusted Revenues declined 2%.
Speaking at the Investor Briefing News Corp CFO, Susan Panuccio said: “Revenues for the quarter were $542 million, up 33% versus the prior year, and include an $85 million, or 21%, positive impact from foreign currency fluctuations, with the growth rate also improving sequentially. Adjusted revenues increased 12% with higher revenues from the streaming products more than offsetting the revenue declines from the broadcast product in the quarter helped by the Covid-19 comparison.” - Segment EBITDA - Segment EBITDA for fiscal 2021 increased $36 million, or 11%, compared to the prior year, reflecting a $36 million, or 11%, positive impact from foreign currency fluctuations. Lower expenses related to entertainment programming, transmission and employee costs were offset by increased investment in streaming products and $35 million of higher sports programming rights and production costs, primarily driven by the absence of live sports in the fourth quarter of fiscal 2020 due to COVID-19 restrictions, which led to the subsequent recognition of $57 million of those deferred costs in fiscal 2021, partially offset by savings from renegotiated sports rights. Adjusted Segment EBITDA was flat with the prior year.
Commenting on fourth quarter EBITDA , Ms Panuccio said: “Segment EBITDA declined 37% to $66 million or 46% on an adjusted basis. As we communicated in our prior call, the decline was largely timing related, driven by $84 million (A$109 million) of higher sports programming rights and production costs in the quarter, which we didn’t have in the prior year due to Covid-19, together with higher marketing expenditures. In addition, Foxtel had approximately $11 million of one-time costs mainly related to iQ3 and iQ4 promotional activity. Importantly, looking at Subscription Video Services for the full year, Segment EBITDA increased 11% and was relatively stable in local currency, which includes the impact of $57 million of sports rights costs that were deferred from last year. The business also generated meaningful free cash flow across the year as increasing scale in streaming is leading to improved financial momentum within the company and lower capital intensity. - Free Cash Flow - Ms Panuccio said: “The business also generated meaningful free cash flow across the year as increasing scale in streaming is leading to improved financial momentum within the company and lower capital intensity.
All data and quotes are sourced from News Corp’s Fiscal 2021 Fourth Quarter and Full Year Earnings Announcement and Investor Briefing of August 5, 2021 (New York). Full details can be found at https://investors.newscorp.com/