New Look Foxtel Set To Dent Revenue & Subscription Declines

News Corp chief backs Foxtel despite subscription revenue fall

News Corp worldwide reports $1.4bn net loss, but paid subscriptions rise

While reporting News Corp.'s Q2 results in a February 8 earnings call, Thomson pointed out: "Clearly, there are profound changes taking place in the creation and the distribution of digital content".

"News Corp is now a more substantial company after the Foxtel transaction, with a much higher percentage of recurring, subscription-based revenues, which should help offset a volatile advertising environment".

In April, News Corp and Telstra combined their respective 50% interests in Foxtel and News Corp's 100% interest in Fox Sports Australia into a new company Foxtel. The company posted earnings of 8 cents a share, excluding some items, and revenue of $2.69 billion - both topping analysts' estimates.

However, the company's total revenue rose 11 per cent to US$9.02 billion during the last financial year, thanks to strong growth for its digital real estate and book publishing segments, and the inclusion of Foxtel's results.

In the quarter, advertising revenue declined $12 million, or 2%, globally, but this was more than made up by 5% growth in subscriptions to $26 million.

"Fiscal 2018 was a year of operational and transformational success at News Corp", said CEO Robert Thomson.

The digital real estate services unit reported a revenue rise of 19 per cent.

"HarperCollins' success underscores the importance of intelligent editors and great writers in creating premium content. Algorithms are, as yet, unable to write empathetic, compelling books".

Mr Thomson reiterated plans to introduce an over-the-top streaming service in late-2018, and noted the recent acquisition of cricket rights ensured a "year-round offering for the first time" that would help reduce seasonable subscriber churn.

"Mastheads like The Times, The Sunday Times and The Wall Street Journal reached new heights in their digital transformation, with digital paid subscribers now exceeding print subscribers". At Subscription Video Services, the company will focus on launching new OTT products, 4K, the next generation of the IQ Box and managing its broadcast base.

Foxtel's revenues dropped $US33 million in the three months to June 30, "primarily due to lower subscription revenues at Foxtel, due to subscriber mix, and lower advertising revenues, partially offset by the positive impact from currency fluctuations", a note to investors says.

When the company launched the "new" News Corp. five years ago, "we promised to be relentlessly digital and global and that we would remain faithful to the principles and the values inherited from the founding company", Thomson told analysts.

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