News Corporation has released its financial results for the third quarter of its financial year.
Revenues were US$2.46 billion, a 17% increase compared to $2.09 billion in the prior year, reflecting the consolidation of Foxtel and continued strength at the Book Publishing segment
• Net income was $23 million compared to a net loss of ($1.1) billion, which included non-cash impairment charges and write-downs of $1.2 billion in the prior year
• Foxtel expanded its over-the-top services with 714,000 total paying OTT subscribers, which includes Kayo Sports and Foxtel Now, growing over 80% since the beginning of the calendar year
• Digital-only subscribers for The Wall Street Journal grew 19% in the quarter to a new record of approximately 1.8 million
• HarperCollins demonstrated another strong financial performance driven by new releases and backlist sales
Commenting on the results, chief executive Robert Thomson said:
“News Corp reaped rewards from our digital strategy this quarter, underscored by a robust rise in digital subscriptions across our media properties, a sharp increase in digital audio book sales and continued expansion at our digital real estate businesses despite volatile conditions in property markets.
“For the third quarter, the company saw 17% revenue growth and a 36% increase in profitability, reflecting the consolidation of Foxtel and the sterling performance overall at HarperCollins. And for the nine months, our revenues were 20% higher and profitability was 29% higher compared to the prior year.
“At the news and information services segment, digital paid subscriptions continued their ebullient expansion, with growth of over 19% to nearly 1.8 million at The Wall Street Journal.
“HarperCollins delivered a particularly strong result, with profitability increasing 29%, highlighted by 30% revenue growth in digital audio books and increased revenue from its comprehensive backlist and a strong suite of new releases, which are generating much momentum.
“Within our subscription video services segment, the recently launched over-the-top subscription service, Kayo Sports, showed much promise, gathering 239,000 subscribers since its launch late last year, 209,000 of which were paying, as of May 8. Since the beginning of this calendar year, the number of our total paying OTT subscribers has increased more than 80% to 714,000.”
In its news and information services, News Corp reported revenues in the quarter decreased $62 million, or 5%, as compared to the prior year, reflecting a $52 million, or 4%, negative impact from foreign currency fluctuations.
Within the segment, Dow Jones revenues grew 1%, while revenues at News UK and News America Marketing each declined 8% and News Corp Australia revenues declined 7%. Adjusted revenues for the segment decreased 1% compared to the prior year.
Digital revenues represented 31% of news and information services segment revenues in the quarter, compared to 29% in the prior year. For the quarter, digital revenues for Dow Jones and the newspaper mastheads represented 36% of their combined revenues, and at Dow Jones, digital accounted for 55% 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, 2019 were 1,775,000, compared to 1,490,000 in the prior year (Source: Internal data)
• Closing digital subscribers at News Corp Australia’s mastheads as of March 31, 2019 were 493,200, compared to 409,000 in the prior year (Source: Internal data)
• The Times and Sunday Times closing digital subscribers as of March 31, 2019 were 286,000, compared to 230,000 in the prior year (Source: Internal data)
• The Sun’s digital offering reached more than 84 million global monthly unique users in March 2019, compared to 84 million in the prior year, based on ABCe (Source: Omniture)
As of March 31, 2019, new Foxtel’s total closing subscribers were 2.896 million, which was higher than the prior year, primarily due to the launch of Kayo Sports, subscriber growth at Foxtel Now and the inclusion of commercial subscribers of Fox Sports Australia beginning in the first quarter of fiscal 2019, partially offset by lower broadcast subscribers.
2.4 million of the total closing subscribers were broadcast and commercial subscribers, and the remainder consisted of Foxtel Now and Kayo Sports subscribers.
As of May 8, 2019, there were 239,000 Kayo Sports subscribers, of which 209,000 were paying subscribers. For the same period, there were 567,000 Foxtel Now subscribers, of which 505,000 were paying subscribers. Broadcast subscriber churn in the quarter was 17.7% compared to 15.3% in the prior year, reflecting the impact of the price increase implemented in October.
Broadcast churn improved to 16.2% in March and 15.1% in April. Broadcast ARPU for the quarter declined 1% compared to the prior year to over A$79 (US$57), as the impact from the price increase was more than offset by a negative impact related to the adoption of the new revenue recognition standard.