Foxtel for sale, third year of increased revenue.

Foxtel is not commenting on remarks by News Corp chief executive Robert Thomson that it is exploring a sale of Foxtel.

“We are confident in the company’s long-term prospects and are continuing to review our portfolio with a focus on maximizing returns for shareholders. That review has coincided recently with third-party interest in a potential transaction involving the Foxtel Group, which has been positively transformed in recent years. We are evaluating options for the business with our advisors in light of that external interest,” Thomson said after News Corp released its quarterly financial results.

News Corp owns 65% of Foxtel, with the remainder owned by Telstra, which includes Binge, Kayo, Foxtel Now and Hubbl -Foxtel Group spent over $50m launching Hubbl.

“We believe Foxtel is particularly well-positioned for both subscriber and advertising growth as Kayo and Binge have gained traction given their unique strengths in sports and entertainment programming. Those two services added almost 200,000 paying subscribers in the quarter and digital advertising now represents more than 40 percent of Foxtel’s total advertising with Kayo growing 42 percent compared to the prior year and the recently rolled-out ad offering at Binge growing fourfold. We will keep you updated on the advertising renaissance as the quarters unfold,” said Thomson.

“Our launch of the Hubbl service is still in its early days, but, encouragingly, more than 30 percent of Hubbl customers are new to Foxtel, which is significant, given our existing presence and profile in the Australian marketplace. About 75 percent of customers of the Hubbl aggregation service purchase an additional Foxtel product along with their device and subscription. On the broadcast side, ARPU grew 6 percent and churn was a pleasingly low 11.7 percent for the quarter. Foxtel continued to generate strong cash flow as we were able to monetise our long-term sports rights across multiple platforms.”

It comes after the Foxtel Group’s third consecutive year of year-on-year revenue growth.

Revenues of $506 million in the quarter increased $5 million, or 1%, compared with the prior year, primarily driven by higher revenues from Kayo and Binge from increases in both volume and pricing, mostly offset by the impact from fewer residential broadcast subscribers and a $7 million, or 1%, negative impact from foreign currency fluctuations. Adjusted Revenues of $513 million increased 2% compared to the prior year.

Foxtel Group streaming subscription revenues represented 32% of total circulation and subscription revenues in the quarter, as compared to 29% in the prior year.

As of June 30, 2024, Foxtel’s total closing paid subscribers were nearly 4.7 million, a 1% increase compared to the prior year, driven by growth in Kayo and Binge subscribers, partly offset by fewer residential broadcast subscribers. Broadcast subscriber churn in the quarter was 11.7% compared to 11.1% in the prior year partly driven by the price and packaging simplification. Broadcast ARPU for the quarter increased 6% year-over-year to A$90 (US$59).

Segment EBITDA of $74 million in the quarter decreased $4 million, or 5%, compared with the prior year, primarily due to $28 million of Hubbl launch costs, partially offset by lower entertainment programming rights and transmission costs and the higher revenues discussed above. Adjusted segment EBITDA decreased 4%.

Foxtel indicated Thomson’s statement was a matter for shareholders and it would continue to focus on running the business, and delivering its strategy.

Meanwhile Optus Sport has also been added to Hubbl, expanding the platform’s sport offering.

Dani Simpson, Executive Director of Hubbl, “As we continue to roll out our pipeline of updates and innovation we’re excited to welcome the newest partner onboard, Optus Sport joining Hubbl now takes our sport offering to new heights. With increased convenience and content choice, customers will have unrivalled access to Australian and international sporting events across the platform.”

Howard Rees, Head of Optus Sport, said: “Hot on the heels of the successful live and exclusive broadcast of EURO 2024 and Copa América 2024, Optus Sport is now readying itself for the return of the Premier League, so we are excited to launch the Optus Sport app on Hubbl, which will provide Optus Sport subscribers with even more ways to enjoy the world’s best football.”

Source: Mediaweek