News Corp chief executive Robert Thomson and CFO Susan Panuccio hosted an analysts call today after the company released the details of its most profitable first quarter since the company split eight years ago.
There was no announcement of an IPO for Foxtel. When asked, Thomson said it would be inappropriate to discuss as a review of the future of the business underway. But he did comment: “We are now in a position to be more ambitious with Foxtel.”
Q3 2021 highlights included:
• Dow Jones had its highest first quarter revenue and profitability since its acquisition
• Subscription Video Services Segment EBITDA grew 46% as Foxtel’s streaming products reached approximately 2.1 million paid subscribers, up 69% compared to the prior year
• News Media segment revenues grew 18%, benefiting from the rebound in the advertising market, strong digital subscriber gains and new content licensing revenues from recent news payment agreements with major tech platforms
Robert Thomson also commented: “I am pleased to report that the first quarter of Fiscal 2022 was the most profitable of its kind since the re-launch of News Corp in 2013, building on the trends evident in the last financial year. Revenues for the quarter were US$2.5 billion, an increase of 18 percent, while our profitability rose by a hefty 53 percent.
“Dow Jones achieved stronger profitability than any first quarter in its 140-year history.
Digital Real Estate Services was again a source of express growth, with both REA Group and Move benefiting from robust yield growth, increased audience and expansion into adjacencies. HarperCollins is thriving, driven by strong sales and the successful integration of HMH.
“News Media was an especially notable contributor to profitability this quarter, thanks to significant digital advertising growth and our groundbreaking agreements with Google and Facebook.
“We are primed to capitalise on the patent success of the Foxtel streaming strategy, which was highlighted during the Foxtel Strategy Day, and are reviewing potential permutations to maximize shareholder value and growth.”
News Corp reported fiscal 2022 first quarter total revenues of US$2.50 billion, 18% higher compared to $2.12 billion in the prior year period, driven by growth across key segments.
In the quarter, revenues at REA Group increased $94 million, or 62%, to $246 million, driven by higher financial services revenues, primarily due to the acquisition of Mortgage Choice, and higher Australian residential revenues due to increased depth penetration, strong national listings, price increases and favourable product mix. The growth was also driven by the acquisition of REA India and a $7 million, or 3%, positive impact from foreign currency fluctuations. Australian national residential buy listing volumes in the quarter increased 11% compared to the prior year, with listings in Melbourne up 79% and Sydney down 7%, despite the lockdowns across multiple states.
Subscription Video Services
Revenues in the quarter increased $14 million, or 3%, compared with the prior year, reflecting a $16 million, or 3%, positive impact from foreign currency fluctuations. Higher revenues from Kayo and Binge and higher advertising revenues were offset by the impact from fewer residential broadcast subscribers and the negative impact from lower commercial subscription revenues primarily resulting from recent lockdowns related to the global COVID-19 pandemic.
Foxtel Group streaming subscription revenues represented approximately 19% of total circulation and subscription revenues in the quarter. Adjusted Revenues were flat compared to the prior year.
As of September 30, 2021, Foxtel’s total closing paid subscribers were around 3.9 million, a 17% increase compared to the prior year, primarily due to the growth in Binge and Kayo subscribers, partially offset by lower residential and commercial broadcast subscribers.
Approximately 1.8 million of the total closing paid subscribers were residential and commercial broadcast subscribers, and the remaining 2.1 million consisted of Kayo, Binge and Foxtel Now subscribers.
As of September 30, 2021, there were around 1.1 million Kayo subscribers (total and paying), compared to 681,000 subscribers (644,000 paying) in the prior year. Binge had 885,000 subscribers (802,000 paying) as of September 30, 2021, compared to 321,000 (290,000 paying) in the prior year.
As of September 30, 2021, there were 239,000 Foxtel Now subscribers (227,000 paying), compared to 310,000 subscribers (298,000 paying) in the prior year. Broadcast subscriber churn in the quarter improved to 14.0% from 14.6% in the prior year and Broadcast ARPU for the quarter increased 4% to A$82 (US$60).
Dow Jones
Revenues in the quarter increased $58 million, or 15%, compared to the prior year, primarily due to growth in circulation and subscription revenues, a $20 million contribution from the acquisition of Investor’s Business Daily (“IBD”) and higher advertising revenues. Digital revenues at Dow Jones in the quarter represented 75% of total revenues compared to 73% in the prior year. Adjusted Revenues increased 9% compared to the prior year.
During the first quarter, total average subscriptions to Dow Jones’ consumer products reached approximately 4.6 million, an 18% increase compared to the prior year, and includes 128,000 IBD subscriptions, the majority being digital-only. Digital-only subscriptions to Dow Jones’ consumer products grew 24%.
Total subscriptions to The Wall Street Journal grew 13% compared to the prior year, to over 3.5 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 19% to over 2.8 million average subscriptions in the quarter, and represented 80% of total Wall Street Journal subscriptions.
Advertising revenues increased $20 million, or 29%, primarily due to 38% growth in digital advertising revenues, driven by improvement across all categories, most notably technology and financial services, and 17% growth in print advertising revenues. Digital advertising accounted for 61% of total advertising revenues in the quarter, compared to 57% in the prior year.
News Media
Revenues in the quarter increased $89 million, or 18%, as compared to the prior year, driven by higher circulation and subscription revenues and the continued recovery of the advertising market from COVID-19-related market weakness in the prior year.
Within the segment, revenues at News UK and News Corp Australia increased 18% and 14%, respectively. Wireless Group and the New York Post also saw higher revenues in the quarter. Adjusted Revenues for the segment increased 13% compared to the prior year.
Advertising revenues increased $39 million, or 21%, compared to the prior year, driven by growth in digital advertising across the businesses, recovery of print advertising at News UK and a $9 million, or 5%, positive impact from foreign currency fluctuations.
The growth was partially offset by lower print advertising in Australia due to the continued weakness in the print advertising market, exacerbated by the recent Covid-19 related restrictions across key states.
Digital revenues represented 33% of News Media segment revenues in the quarter, compared to 28% in the prior year, and represented 30% of the combined revenues of the newspaper mastheads. Digital subscribers and users across key properties within the News Media segment are summarised below:
Closing digital subscribers at News Corp Australia as of September 30, 2021 were 897,000 (850,000 for news mastheads), compared to 727,000 (685,000 for news mastheads) in the prior year (Source: Internal data)
The Times and Sunday Times closing digital subscribers, including the Times Literary Supplement, as of September 30, 2021 were 380,000, compared to 342,000 in the prior year (Source: Internal data)
The Sun’s digital offering reached 133 million global monthly unique users in September 2021, compared to 140 million in the prior year (Source: Google Analytics)
New York Post’s digital network reached 151 million unique users in September 2021, compared to 144 million in the prior year (Source: Google Analytics)