Foxtel Group nudging 4m subscriptions

News Corp today released its first quarter Fiscal 2022 results for the period ending September 30, 2021, including subscriber highlights for the Foxtel Group and financial results for the Subscription Video Services segment.

Total Foxtel Group subscribers are 3.97 million (of which 3.85 million are paying customers), up 18% on the prior year.

Kayo and Binge are now at 1.1 million and 885,000 total subscribers respectively, of which 1.06 million are paying Kayo and 802,000 are paid Binge subscribers. Foxtel Residential subscribers declined to less than 1.61 million.

While there was no announcement of an IPO News Corp Chief Executive Robert Thomson said it would be inappropriate to discuss as a review of the future of the business underway but noted, “We are now in a position to be more ambitious with Foxtel.”

Key Foxtel Group Subscriber Metrics

• Total Foxtel Group subscribers were 3.97 million (3.85 million paid) as at September 30, up
18% on the prior year.
• Total streaming subscribers, including Kayo Sports, BINGE and Foxtel Now reached 2.2 million
(2.09 million paid), up 68%.
– Streaming subscribers represent 53% of the Foxtel Group’s total subscribers.
– Kayo reached 1.08 million subscribers (1.06 million paid), up 59%.
– Binge reached 885,000 subscribers (802,000 paid), up 176%.
– Foxtel Now reached 239,000 subscribers (227,000 paid), down 23%.
• Foxtel residential and commercial broadcast subscribers were 1.77 million, down 5.2%.
– Foxtel Residential subscribers declined to less than 1.61 million.
– ARPU was up 3.8% to A$81.70 through a continued focus on Foxtel’s premium brand
positioning.
– Residential churn continued to moderate in the first quarter, improving 310 basis points
to 14.0% compared to the fourth quarter FY21.

“We are primed to capitalize on the patent success of the Foxtel, which was highlighted during the Foxtel Strategy Day, and are reviewing potential permutations to maximise shareholder value and growth. It’s worth noting that Subscription Video Services Segment EBITDA rose an impressive 46 per cent in the first quarter,” Thomson said.

“In Subscription Video Services, the first quarter built on the significant progress made in FY21 in reshaping the Foxtel Group as a streaming-led business, with improved revenues, profitability and cash generation. For the second consecutive quarter, growth in Kayo and Binge revenues clearly offset the not-unexpected modest decline in retail broadcast revenues.

“As of September 30, total subscribers were approximately 4 million, up 18 per cent year-over-year. This includes a record 2.2 million total streaming subscribers, up 68 per cent, thanks to Kayo and Binge. While there will always be a certain seasonality in sports viewing in Australia, Kayo is quickly establishing itself as a year-round provider as it now offers 50 sports in toto, and is furnishing engaging off-season programming for the football tragics ahead of the new season early next year.

“Foxtel’s appeal was further broadened with the launch of the Flash streaming news service, featuring a nonpareil collection of 20 local and global news sources, with content for all political persuasions. That breadth, combined with a cutting-edge, world-class user interface, adds to the lustre of Foxtel, and is indicative of its renaissance. We are obviously now in a position to be even more ambitious for Foxtel and are always seeking to maximise its undoubted potential.”

News Corp CFO Susan Panuccio added: “Revenues for the quarter were US$510 million, up 3% versus the prior year, benefiting from higher streaming revenues and the modest benefit from positive currency fluctuations, partially offset by lower broadcast and commercial subscription revenues. On an adjusted basis, revenues were flat.

“Total closing paid subscribers across Foxtel reached nearly 3.9 million at quarter end, up 17% year-over-year, with total subscribers, including trialists, approximately 4 million. The increase was driven by continued growth in paid streaming subscribers partially offset by a decline in broadcast subscribers and Commercial subscriptions, which were exacerbated by the impact of the lockdowns in Australia.

“Kayo and Binge ended the quarter with approximately 1.1 million and 885,000 total subscribers respectively. In the aggregate, total paying streaming subscribers were up more than 69% to nearly 2.1 million, and total streaming subscribers, including trialists reached over 2.2 million. Streaming products in the aggregate reached approximately 54% of Foxtel’s total paid subscriber base.

“Broadcast churn improved, declining to 14.0% from 14.6% last year and 17.1% in the fourth quarter. Broadcast ARPU increased 4% from the prior year to 82 Australian dollars, mitigating subscriber volume declines, consistent with Foxtel’s strategy of focusing on higher ARPU subscribers and fewer low cost offers. Foxtel continues to see an improvement in subscriber mix, as the percentage of higher valued, longer-tenured subscribers continues to rise with a corresponding decline in churn rates. “Net declines for Residential broadcast subscribers moderated sequentially with 1.6 million broadcast subscribers at quarter end. Commercial subscribers were down over 30% from the fourth quarter to 162,000 and we do anticipate a recovery in the second-half with the easing of restrictions.

“Product innovation continued with the launch of iQ5, an IP-enabled set-top box, the announcement of plans to partner with Comcast and Sky on the launch of Sky Glass, and the launch of a third streaming product, Flash, a dedicated live news streaming service featuring more than 20 local and global live news services.”