News Corporation has provided details of its results for Q3 January to March 2020.

Results highlights:

• Revenues were US$2.27 billion, an 8% decline compared to $2.46 billion in the prior year
• Dow Jones saw 20% growth in digital-only subscribers to over 2.5 million, including 15% growth in digital-only subscribers at The Wall Street Journal, while experiencing record traffic across its digital networks
• No details of streaming drama service apart from launching soon
• News Corp says sports rights costs heading for major “reset”

Commenting on the results, chief executive Robert Thomson spoke on a conference call this morning:

“We are operating in a different, difficult time. Every business and family is facing challenges and our thoughts, in particular, are for those who are suffering deeply and personally from the impact of COVID-19.

“Our fiscal third quarter results demonstrate the strength of News Corp and the power of our premium content. We also maintained a robust balance sheet, with $1.4 billion in cash and cash equivalents as of March 31st and an untapped $750 million corporate revolving credit facility, providing a strong foundation for the company’s future.

“Despite the onset of COVID-19, and particularly volatile, adverse currency movements, profitability was relatively stable. Notably, profitability was higher at the News and Information Services segment, fuelled by significant digital advertising and subscriber growth at Dow Jones, including The Wall Street Journal, which reached approximately 3 million subscribers in the last week, a new record, with over 2.2 million that are digital-only.”

Thomson confirmed a strategic review of its Australian newspaper holdings, focusing on the larger brands and their digital reach.

“Clearly the pandemic will have an impact on our results in the fourth quarter, but all of our businesses are embarking on cost-cutting programs intended to deal with short-term need but also to ensure that the company is well-equipped to prosper in a decidedly different business environment after the crisis abates.

“There will obviously be an impact on executive compensation, and it is worth noting that bonuses are often the largest cash component for our senior executives. Pay reductions will be led by our executive chairman, Rupert Murdoch, who is voluntarily forgoing his entire cash bonus for the current fiscal year, and as chief executive I will forgo 75% of my annual cash bonus. The collective cuts in bonuses and other cost initiatives will have a positive impact on profitability and our cash position.”

When asked about sports rights costs by an analyst, Thomson replied there needed to be “a fundamental reset”. He added: “It is absurd to think things might return to normal.”

Third Quarter Results

The company reported fiscal 2020 third quarter total revenues of $2.27 billion, 8% lower compared to $2.46 billion in the prior year period. The decline reflects a $78 million, or 3%, negative impact from foreign currency fluctuations. The rest of the decline primarily reflects lower print-related advertising revenues at the News and Information Services segment and lower subscription revenues at Foxtel.

News and Information Services

Revenues in the quarter decreased $94 million, or 8%, as compared to the prior year, reflecting a $25 million, or 2%, negative impact from foreign currency fluctuations. Within the segment, Dow Jones revenues grew 5%, while revenues at News America Marketing, News Corp Australia and News UK declined 16%, 14% and 9%, respectively. Adjusted revenues for the segment decreased 5% compared to the prior year.

Circulation and subscription revenues increased 1% compared to the prior year, which includes a $10 million, or 2%, negative impact from foreign currency fluctuations. Circulation and subscription revenues again benefited from a healthy contribution from Dow Jones’ consumer products, which saw a 4% increase in circulation revenues, reflecting 20% growth in digital paid subscribers and subscription price increases. Dow Jones’ consumer products reached more than 3.5 million total subscribers, reflecting a 10% increase compared to the prior year.

Advertising revenues declined 14% compared to the prior year, of which $12 million, or 2%, was related to the negative impact from foreign currency fluctuations. The remainder of the decline was driven by weakness in the print advertising market, lower revenues at News America Marketing and the $14 million estimated negative impact from the COVID-19 pandemic. The decline was partially offset by growth in digital advertising. Advertising revenues at Dow Jones declined 2% in the quarter due to an 18% decline in print advertising, driven by market weakness across conference and traditional sales, partially offset by 25% growth in digital advertising.

Advertising revenues represented 22% of total Dow Jones revenues in the quarter, of which 47% was digital. Thomson was keen to point out that digital ad sales for The Journal were up 25% YOY, while they were down 8% at The New York Times for the quarter.

Advertising revenue in Australia fell 30% YOY for the March quarter, said CFO Susan Panuccio during the call.

Digital revenues represented 36% of News and Information Services segment revenues in the quarter, compared to 31% in the prior year. For the quarter, digital revenues for Dow Jones and the newspaper mastheads represented 42% of their combined revenues, and at Dow Jones, digital accounted for 58% of its circulation revenues.

Digital subscribers and users across key properties within the News and Information Services segment are summarised below:

• The Wall Street Journal average daily digital subscribers in the three months ended March 31, 2020 were 2,041,000, compared to 1,775,000 in the prior year (Source: Internal data)
• Closing digital subscribers at News Corp Australia’s mastheads as of March 31, 2020 were 613,300, compared to 493,200 in the prior year (Source: Internal data)
• The Times and Sunday Times closing digital subscribers as of March 31, 2020 were 345,000, compared to 286,000 in the prior year (Source: Internal data)
• The Sun’s digital offering reached approximately 164 million global monthly unique users in March 2020 (Source: Google Analytics; prior year comparable statistic unavailable due to source change)

Subscription Video Services

Revenues in the quarter decreased $77 million, or 14%, compared with the prior year, of which $38 million, or 7%, was due to the negative impact from foreign currency fluctuations. Adjusted revenues for the segment decreased 7% compared to the prior year. The remainder of the revenue decline was driven by lower subscription revenues due to fewer broadcast subscribers, partially offset by higher revenues from Kayo.

As of March 31, 2020, Foxtel’s total closing subscribers were 2.933 million, an increase of 1% compared to the prior year, primarily due to subscriber growth at Kayo, partially offset by lower broadcast subscribers. 2.208 million of the total closing subscribers were residential and commercial broadcast subscribers, and the remainder consisted of Foxtel Now and Kayo subscribers.

As of March 31, 2020, there were 444,000 Kayo subscribers, of which 408,000 were paying subscribers, compared to 199,000 subscribers (148,000 paying) in the prior year. As of May 2nd, there were over 272,000 paying Kayo subscribers, which reflects the impact from the cancellation and/or postponement of sports events as a result of the COVID-19 pandemic.

As of March 31, 2020 there were 338,000 Foxtel Now subscribers, of which 317,000 were paying subscribers, compared to 357,000 subscribers (348,000 paying) in the prior year.

Broadcast subscriber churn in the quarter improved to 17.5% from 17.7% in the prior year, primarily driven by improvements at the Foxtel retail channel, partially offset by increased volume of churn from lower-value customers on expiring contracts in wholesale channels. Broadcast ARPU for the quarter was relatively stable at A$79 (US$52).

There was little information about the impending Foxtel drama streaming service believed to be called Binge. However, Panuccio did reveal the service was in beta testing and would launch in coming weeks.

COVID-19 Impact

News and Information Services: Expect to continue to see adverse effects on advertising and single-copy sales revenues as a result of widespread business closures, social distancing measures and economic uncertainty.

In April, advertising revenues at Dow Jones declined more than 20% from the prior year, although digital advertising only declined modestly. Advertising revenues at News Corp Australia and News UK in April declined more than 45%, including an approximately 5% negative impact from foreign currency fluctuations. We have also continued to see strong growth in digital subscribers across our key properties in April, including over 20% year-over-year growth in digital-only subscribers at The Wall Street Journal.

Subscription Video Services: While broadcast churn in April was fairly stable, we expect the continued suspension of major sporting events to adversely impact customer churn going forward and/or result in fewer subscribers to our sports services in the near-term, including at Kayo, where we saw a sharp decline in paid subscribers, as noted above. Closures of pubs and clubs and lower occupancy at hotels throughout Australia have also adversely impacted, and are expected to continue to adversely impact, commercial subscription revenues.

“In the wake of the COVID-19 pandemic, we also took decisive action to fortify our balance sheet, protect our employees and help communities in need. And through new creative strategies and production models, we continue to deliver must-watch content that big audiences love. Importantly, we are just beginning to tap into the potential of our combined assets, and our growing scale, audience reach and earnings power will become even more apparent as the market rebounds and we put the power of our portfolio behind our streaming strategy. I thank ViacomCBS employees around the world for their adaptive creativity and continued focus on serving our audiences, commercial partners and shareholders amid these unprecedented circumstances.”

Overview of Q1 revenue

• Advertising revenue declined 19% year-on-year, but increased 2% excluding a 21-percentage point unfavourable impact from the comparison against CBS’ broadcasts of Super Bowl LIII and the NCAA Tournament in the prior year quarter. International advertising revenue included a 10-percentage point unfavourable F/X impact.

• Affiliate revenue increased 1%, reflecting growth in station affiliation and retransmission fees, as well as subscription streaming revenue, which more than offset declines in pay-TV subscribers. International affiliate revenue included an 8-percentage point unfavourable F/X impact.

• Domestic streaming and digital video revenue – which includes streaming subscription and digital video advertising revenue – grew to $471 million, up 51% year-over-year.

• Content licensing revenue grew 9%, fuelled by growth in original studio production for third parties. Paramount Television Studios, CBS Television Studios and Cable Networks’ studios all benefited from strong content deliveries during the quarter.

• Theatrical revenue declined 3% as strong results from Sonic the Hedgehog were more than offset by prior year quarter revenues, which included carryover performance from Bumblebee.

CBS will finish the broadcast season as America’s most-watched network for the 12th straight year. In the quarter, CBS had the top 2 dramas, 5 of the top 6 comedies and #1 news program, as well as 5 of the top 6 freshmen series.

• Revenue declined 13%, including a 20-percentage point unfavourable impact from the comparison against CBS’ broadcasts of Super Bowl LIII and the NCAA Tournament in the prior year quarter. Excluding that impact, revenue increased 7%, driven by growth in affiliate, advertising and content licensing revenue.

ViacomCBS doesn’t break out international revenue, but advertising revenue from markets outside the US dropped from $291m to $255m. The company noted above unfavourable F/X impact on international earnings. International ad revenue includes sales generated by 5 in the UK and 10 in Australia.

CBS All Access reboot

On a conference call early Thursday New York time, Bakish spoke about plans to relaunch CBS All Access later in 2020. He indicated it would be a broad streaming product and would be rolled out in multiple international markets:

“We will build on this incredible base of content – a catalogue larger than many of the new SVOD entrants – by expanding our originals across the portfolio. This will bring first-window content from each of our brands to this platform. Our biggest franchises will be key, as will our broad programming strength across genres – from animation to science fiction, comedy, reality, kids, crime and procedurals.”

The ABC has made more than 200 additional hours of Australian content on-demand content on its ABC iview digital platform.

The Moodys

The content includes dramas, comedies, documentaries, crime and children’s shows that include Stateless, Mystery Road, Top of the Lake, The Secret River, The Slap, Cleverman, The Beautiful Lie, Miss Fisher’s Murder Mysteries, Cliffy, Mabo, It’s A Date, Luke Warm Sex, The Moodys, The Ex-PM, The Librarians, Janet King, Sporting Nation, The Time of our Lives, Blue Murder and The Agony Of series, Mustangs, Mortified, Prisoner Zero, Ready For This and My Place.

Stateless

Josie Mason-Campbell, ABC Acting Head of Programming, said: “As the nation’s leading creative voice, the ABC has boosted its support for Australian stories by securing the streaming rights to more local dramas, comedies, documentaries and children’s content, adding to our current collection of programs.

The Secret River

“With Australians stuck close to home, the ABC is showcasing the sights and sounds of this extraordinary country with more than 200 additional hours of new shows and classic content. It’s Australia’s biggest home delivery for the mind and soul, feeding audiences’ need to laugh, learn, cry and be entertained.”  

Mabo

ABC iview’s new Australia-all-over collection is accompanied by new dramas from here and overseas, such as High Fidelity, Les Miserables, The Capture and the latest season of Killing Eve.

The Beautiful Life

The ABC has also launched the $5 million Fresh Start development fund to support Australian producers and safeguard local content and creativity. ABC iview also features Australian performances across theatre, opera, ballet and classical music.

Miss Fisher’s Murder Mysteries

Navigating the new financial equilibrium, commissioned by News Corp’s integrated marketing solutions unit Newsamp, surveyed respondents from four generations to determine the economic fallout from Coronavirus on Australians.

While most Australians are affected by the pandemic News Corp’s research shows that it is impacting each generation differently. The key findings include:

• Before the crisis, consumers had a fairly balanced approach to achieving short-term financial goals and long-term aspirations, but they are now sacrificing their longer term financial security to survive in the short term
• Younger generations are being impacted by reduced employment-related income, whereas older Australians are seeing declining income from investments (e.g. shares, investment properties)
• There is no single way consumers are reacting to the financial implications of the crisis, and many are looking for guidance on the correct path to take
• Despite the significant work that banks are doing in helping their customers, consumers are not currently giving them credit for it. Consumers recognise large supermarkets and retail brands for their role in the crisis but give little thought to the banks.   

News Corp Australia’s managing director of national sales, Lou Barrett, said: “As consumers assess the short and long term impact of Covid-19 on their household budgets, they’re seeking analysis and advice from trusted sources. Traffic to finance content across our network has jumped 86 percent2 which presents financial brands with an opportunity to engage Australians of all ages and be their trusted advisor.”

Ryan Murphy received critical acclaim for two series of American Crime Story about O.J. Simpson and Gianni Versace, and Feud about Joan Crawford and Bette Davis. All were true stories that needed no further embellishment, so why is his new series Hollywood (now on Netflix) about real people in fictional versions of their lives?

Set around a gas station that doubles as a brothel (true) and a movie studio that was woke back in the 1940’s (fake), it’s about actors like Rock Hudson (true) and Claire Wood (fake) making a movie that never happened. The all-star cast includes Samara Weaving, Jim Parsons, Patti LuPone, Queen Latifah and Mira Sorvino, but despite the impeccable re-creation, it’s inauthentic.

Australians probably know more about Hollywood than Australian film and TV history. Who knew Amazon Prime had The Shiralee (the highest rating event of 1987), and Return To Eden, which was made by Ten and repeated by Nine years later.

It’s rare to see Aussie shows being shared around networks, but the lines are being blurred on their catch-up sites. 7Plus has series from the ABC (Police Rescue) and Nine (Water Rats), as well as complete seasons of Love My Way (Foxtel) and The Secret Life Of Us (10). 10Play also offers those last two shows, but missing is their final seasons.

There are still a stack of Aussie classics begging to be brought back, like The Dismissal (10) which was about Gough Whitlam’s sacking, and has just made for a fascinating ABC podcast The Eleventh. Back when it was a 1983 mini-series, it cast icons like John Meillon as Sir John Kerr, Bill Hunter as Rex Connor and Ruth Cracknell as Margaret Whitlam.

Malcolm Turnbull’s biography is selling way more copies than some media commentators would have predicted, so how about someone turn A Bigger Picture into a mini-series because that would make their heads explode. Let’s spend isolation picking the perfect cast … how about Gary Sweet as Malcolm Turnbull, Noah Taylor as Tony Abbott and Shane Jacobsen as Scott Morrison?

Peter Helliar could do a good Barnaby Joyce, but hopefully 10 will keep him busy writing another series of How To Stay Married (Tuesday on 10). And well done to Have You Been Paying Attention? (Monday on 10) for re-creating an in isolation version that replicated the original in look, thanks to some Brady Bunch-like video squares. And even more importantly, it sounded the same, thanks to Jane Kennedy laughing in the background … that is her, isn’t it?

Thursday news highlights

Seven News 1,184,000/1,122,000
Nine News 1,061,000/988,000
ABC News 845,000
Current Affair 706,000
7.30 588,000
The Project 387,000/603,000
10 News 469,000/307,000
Sunrise 285,000
The Drum 242,000
The Latest 226,000
News Breakfast 218,000
Today 211,000
Nine News Late 204,000
SBS World News 200,000

Nine: Share was up 1.0 on last week, but Nine trailed Seven by 2.4.
A Current Affair hovered just above 700,000.
RBT did 456,000 at 7.30pm and then the 2004 movie The Bourne Supremacy did 345,000.

Seven: Seven is poised to come from behind and take the week if it can go close to the shares it recorded on Friday and Saturday last week. After five days of week 19, Seven is on 18.2%, just 0.5 behind Nine. This time last week Nine had a lead of 2.1.
A three-play of Home and Away did 598,000.
The movie The Intern then did 371,000.

10: MasterChef ended its week again as #1 entertainment and #1 in key demos for Thursday. The immunity challenge took place in a suburban sushi train restaurant with Amina emerging the winner who will be safe on the Sunday elimination episode. The Thursday audience of 957,000 was down on last week’s 1.018m.
Two episodes of Law & Order: SVU then did 268,000 and 175,000.

ABC: The Heights did 230,000 followed by Grand Designs Australia in Launceston on 347,000. Is it surprising that the Australian version of the format gets an 8.30pm Thursday timeslot while the NZ version is on at 7.40pm on Sundays? Barrie Cassidy’s guest on One Plus One was former Ambassador to the US Dennis Richardson. The program did 238,000.

SBS: Thursday looks like delivering the channel’s best share for a second successive week.
Another episode of World’s Most Beautiful Railway didn’t screen, instead The Railway Revolution episode of How the Victorians Built Britain did 241,000 at 7.30pm.
Building Britain’s Canals followed with 203,000.