Results highlights:
News Corp revenues were US$2.41 billion (all figures here US$), a 3% decline compared to $2.48 billion in the prior year – Adjusted Revenues increased 2% compared to the prior year.
• Dow Jones reported 43% Segment EBITDA growth, driven by record digital advertising revenues and continued growth in digital subscriptions
• Subscription Video Services Segment EBITDA grew 77% as Foxtel benefited from lower costs while reaching a record of more than 1.3 million paying OTT subscribers as of the quarter end
News Corp has reported financial results for the three months ended December 31, 2020. Commenting on the results, chief executive Robert Thomson said:
“The second quarter of fiscal 2021 was the most profitable quarter since the new News Corp was launched more than seven years ago, reflecting the ongoing digital transformation of the business. We reported the largest profits for Dow Jones since the acquisition of the company in 2007, with Segment EBITDA increasing 43 percent and traffic across the Dow Jones digital network surging 48 percent.
“There was also a 77 percent rise in Segment EBITDA at the Subscription Video Services segment, where the exponential evolution at Foxtel continued apace, with streaming customers increasing over 90 percent, rights costs reset and audiences for summer sports at unprecedented levels.”
Subscription Video Services
Revenues in the quarter increased $10 million, or 2%, compared with the prior year, reflecting a $33 million, or 7%, positive impact from foreign currency fluctuations and higher revenues from OTT products. The revenue increase was partially offset by the impact from fewer residential broadcast subscribers and an $11 million, or 2%, negative impact from lower commercial subscription revenues resulting from the ongoing restrictions on pubs, clubs and other commercial venues due to COVID-19. Adjusted Revenues decreased 5% compared to the prior year.
As of December 31, 2020, Foxtel’s total closing paid subscribers were 3.314 million, a 12% increase compared to the prior year, primarily due to the launch of Binge and the growth in Kayo subscribers, partially offset by lower residential and commercial broadcast subscribers. 2.001 million of the total closing subscribers were residential and commercial broadcast subscribers, and the remaining 1.313 million consisted of Kayo, Binge, and Foxtel Now subscribers.
As of December 31, 2020, there were 648,000 Kayo subscribers (624,000 paying), compared to 372,000 subscribers (350,000 paying) in the prior year.
Telstra’s Kim Krogh Andersen, Foxtel’s Patrick Delany, Fox Sports’ Hannah Hollis, Kayo’s Julian Ogrin and NRL’s Andrew Abdo
See also: TV deal: How to get Kayo Sports streaming service for just $5 a month
Binge, which launched in May 2020, had 468,000 subscribers (431,000 paying) as of December 31, 2020.
As of December 31, 2020, there were 265,000 Foxtel Now subscribers (258,000 paying), compared to 343,000 subscribers (334,000 paying) in the prior year.
Broadcast subscriber churn in the quarter increased to 17.5% from 16.0% in the prior year, due to fewer promotions and the roll-off of lower value subscribers. Broadcast ARPU for the quarter increased 3% to A$80 (US$58).
Segment EBITDA in the quarter increased $54 million, or 77%, compared with the prior year. The improvement reflects $35 million of lower sports programming rights and production costs, which was primarily driven by the savings from renegotiated sports rights, partially offset by the $20 million negative impact related to the deferral of costs from the fourth quarter of fiscal 2020. The Segment EBITDA improvement was also due to lower entertainment programming costs, lower overhead expenses resulting from cost reduction efforts and an $8 million positive impact from foreign currency fluctuations. Adjusted Segment EBITDA increased 66%.
News Media
Revenues in the quarter decreased $238 million, or 29%, as compared to the prior year, including a $22 million, or 3%, positive impact from foreign currency fluctuations. The decline was primarily driven by a $191 million, or 24%, impact from the divestiture of News America Marketing in May 2020. The decline also reflects weakness in the print advertising market and the $34 million, or 4%, impact from the closure or transition to digital of certain regional and community newspapers in Australia.
Within the segment, revenues at News Corp Australia and News UK declined 11% and 5%, respectively. Adjusted Revenues for the segment decreased 9% compared to the prior year.
Circulation and subscription revenues increased $12 million, or 5%, compared to the prior year, primarily due to digital subscriber growth, a $9 million, or 4%, positive impact from foreign currency fluctuations and price increases, partially offset by lower single-copy sales revenue, primarily at News UK and the New York Post.
Advertising revenues decreased $231 million, or 48%, compared to the prior year, reflecting a $191 million, or 40%, negative impact from the divestiture of News America Marketing. The remainder of the decline was driven by continued weakness in the print advertising market, exacerbated by COVID-19, and a $28 million, or 6%, negative impact related to the closure or transition to digital of certain regional and community newspapers in Australia, partially offset by a $10 million, or 2%, positive impact from foreign currency fluctuations and growth in digital advertising at the New York Post and News UK.
Digital revenues represented 31% of News Media segment revenues in the quarter, compared to 22% in the prior year, and represented 29% 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’s mastheads as of December 31, 2020 were 738,300, compared to 566,600 in the prior year (Source: Internal data)
• The Times and Sunday Times closing digital subscribers as of December 31, 2020 were 335,000, compared to 320,000 in the prior year (Source: Internal data)
• The Sun’s digital offering reached 130 million global monthly unique users in December 2020, compared to 140 million in the prior year (Source: Google Analytics)
• New York Post’s digital network reached 141 million unique users in December 2020, compared to 95 million in the prior year (Source: Google Analytics)
Dow Jones
Revenues in the quarter increased $16 million, or 4%, compared to the prior year, primarily due to growth in circulation and subscription and digital advertising revenues, partially offset by lower print advertising revenues. Digital revenues at Dow Jones in the quarter represented 70% of total revenues compared to 64% in the prior year.
Circulation and subscription revenues increased $23 million, or 8%, including a $3 million, or 1%, positive impact from foreign currency fluctuations. Circulation revenue grew 8%, reflecting the continued strong growth in digital- only subscriptions, partially offset by lower single-copy and amenity sales related to COVID-19. Professional information business revenues grew 4%, driven by 21% growth in Risk & Compliance products, partially offset by the decline in revenues from other professional information business products. Digital circulation revenues accounted for 63% of circulation revenues for the quarter, compared to 57% in the prior year.
During the second quarter, Dow Jones saw the highest year-over-year growth in total subscriptions and digital-only subscriptions for both The Wall Street Journal and total Dow Jones’ consumer products in its history.