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Foxtel Group Fiscal 2023 Second Quarter Earnings

News Corp recently released its Fiscal 2023 Second Quarter Earnings (Q2 FY23) for the period ending 31 December 2022, including subscriber highlights for the Foxtel Group and financial results for the Subscription Video Services segment.

Commenting on the Foxtel Group at News Corp’s Q2 FY23 Investor Briefing this morning, News Corp Chief Executive Robert Thomson said: “I am particularly proud to highlight the continuing revival of Foxtel’s fortunes under the sage leadership of Patrick and Siobhan and the team, who have increased profitability and thus optionality.”

Subscription Video Services Segment Highlights

  • Adjusted1 Q2 Revenues for the Subscription Video Services segment grew 3 percent year-on-year
  • Adjusted Q2 Segment EBITDA rose 16 percent year-on-year

Key Foxtel Group Subscriber Metrics

  • Total Foxtel Group subscribers of 4.414 million (4.329 million paid), up 10 percent on the prior corresponding period
  • Total streaming subscribers, including Kayo Sports, BINGE and Foxtel Now reached 2.758 million (2.678 million paid), up 25 percent year-on-year
  1. Streaming subscribers represented 62 percent of the Foxtel Group’s total subscriber (56 percent in Q2 FY22)
  2. Kayo Sports reached 1.136 million subscribers (1.126 million paid), up 11 percent
  3. BINGE reached 1.439 million subscribers (1.375 million paid), up 48 percent
  4. Foxtel Now reached 183,000 subscribers (177,000 paid), down 16 percent
  • Foxtel residential and commercial broadcast subscribers were 1.631 million, down 8 percent
  1. Foxtel Residential subscribers declined to 1.401 million
  2. Broadcast ARPU rose 2 percent to A$83 (year-on-year), through a continued focus on Foxtel’s premium brand positioning
  3. Residential churn improved sequentially and year-on-year to 12.9 percent

Speaking at the Q2 FY23 Investor Briefing, Mr Thomson said: “Reported segment revenues were down 7 percent, while segment EBITDA rose a healthy 5 percent. Even more impressively, adjusted revenues, which excludes the impact of forex volatility, rose 3 percent, while adjusted segment EBITDA rose a handsome 16 percent. “Streaming continues to be a core strength of Foxtel, as we have added well over a half million paying over-the-top subscribers in the past year. BINGE reached nearly 1.4 million paying subscribers in the quarter and will be launching advertising on the platform later this fiscal year as we seek to maximise the Foxtel Group’s revenue potential.

“Total paying subscriptions at the Foxtel Group were up 10 percent year-over-year, and we also saw the benefits of modest price increases at Kayo and BINGE.

“Our sports programming portfolio has been enhanced with the renewal of Australian cricket rights to 2031. We are now on the cusp of the peak selling season for Kayo as the Australian football and rugby league seasons which will start imminently, and we solidified our entertainment offerings, with an expanded, multi-year content deal with NBCU.

“Overall, Foxtel’s continuing success and positive trajectory have certainly increased our optionality for that business.”

News Corp CFO Susan Panuccio added: “On a constant currency basis, revenues rose 3 percent versus the prior year, the fourth consecutive quarter of growth in constant currency, underscoring the improved stability of the business. “Streaming revenues accounted for 26 percent of circulation and subscription revenues, compared to 19 percent in the prior year and again more than offset broadcast revenue declines, benefiting from both volume growth and higher pricing at Kayo and BINGE. We also benefited this quarter from growth in commercial revenues, as the prior year results were impacted by the pandemic-related lockdown. “Total closing paid subscribers across the Foxtel Group reached over 4.3 million at quarter end, up 10 percent year-over-year. Total paid streaming subscribers were approximately 2.7 million, increasing 25 percent versus the prior year and represented 62 percent of Foxtel’s total paid subscriber base. “Kayo paying subscribers reached over 1.1 million, up 11 percent year-over-year, but declined sequentially from the first quarter as it exhibited typical seasonal patterns with the end of the AFL and NRL seasons in September. Given its enhanced and expanded content offerings, Foxtel has rolled out a price rise to its Kayo customers, effective this month, on its Basic two-stream tier. “BINGE paying subscribers grew a robust 48 percent year-over-year to almost 1.4 million subscribers, benefiting from a strong release slate which included the second season of White Lotus and carryover demand from House of the Dragon. We are looking forward to the introduction of advertising within BINGE later this fiscal year and have begun selling launch packages.

“Foxtel ended the quarter with 1.4 million residential broadcast subscribers, down 10 percent year-over-year. Broadcast churn improved sequentially and year-over-year to 12.9 percent, despite the migration of cable subscribers to streaming or satellite. At quarter-end, less than 80,000 subscribers remained on cable as Foxtel continues to migrate subscribers from cable by fiscal year-end. Broadcast ARPU rose 2 percent to 83 Australian dollars. “Adjusted Segment EBITDA increased 16 percent despite higher sports and entertainment costs.”

On Outlook, Ms Panuccio said: “In Subscription Video Services, we remain pleased with the performance of the streaming products and the ongoing focus on Broadcast ARPU and churn as we continue to migrate customers off cable.

“We are very encouraged by the year-to-date performance and continue to expect the Foxtel Group’s profitability in local currency for the full year to be relatively stable.

“Profitability will be skewed to the fourth quarter as we expect third quarter costs to be higher in local currency compared to the prior year given the contractual escalators and expanded content from the AFL and NRL.”

Data and quotes are sourced from News Corp’s Q2 FY23 Earnings Announcement and Investor Briefing of 9 February 2023 (New York). Full details can be found at https://investors.newscorp.com

Visit https://foxtelgroup.com.au

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