News Corp tops estimates as Foxtel, books unit drive gains

News Corp chief backs Foxtel despite subscription revenue fall

The stronger results that News Corp. reported for the fourth quarter (ended June 30) were driven by contributions from Australian pay TV company Foxtel, which it bought earlier this year, and continued growth in its digital business, according to company executives.

The growth was partially offset by lower print advertising revenues at the news and information services segment. Adjusted revenues (which exclude the foreign currency impact, acquisitions and divestitures) increased 5%.

The company reported Foxtel's subscribers at the end of the year were approximately 2.8 million, higher due to the launch of Foxtel Now.

Total revenue in News Corp.'s Subscription Video Services business, which includes Foxtel and Fox Sports Australia, soared to $610 million from $140 million.

Robert Thomson, chief exec of News Corp, still described the year as an "operational and transformational success" as the company switched the flow of its revenues to being digital and subscriber based.

Rupert Murdoch's News Corp. fell the most in more than five years after the company said it will invest more in its Australian cable network.

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"I've just returned from Australia and it's fair to say with Patrick Delany you have a new team, a new mood, a new momentum", Mr Thomson said. As a effect, the company is focused on driving higher penetration of digital paid subscriptions, particularly in Australia and at News UK in fiscal 2019.

Digital revenues represented 30% of News and Information Services segment revenues in the quarter, compared to 26% a year ago. We generated strong revenue and Segment EBITDA growth in the Digital Real Estate Services and Book Publishing segments, which, together with the consolidation of Foxtel, drove over $1 billion in profitability for the year.

The swathe of red ink came despite healthy digital subscriber growth led by The Times, Sunday Times and Wall Street Journal as well as successes at its property portal realestate.com in addition to its book publishing unit.

"Digital Real Estate Services continue to flourish and we expanded into meaningful adjacencies, broadening our audience and our revenue sources".

"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".

Thomson said a new sports OTT streaming product, which is due to roll later this year, would help drive subscriptions and a Foxtel IPO is still on the cards.

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