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Wednesday, June 19, 2024

Foxtel Group Reports Growth in Fiscal 2024 Q2 Earnings

News Corp has announced its Fiscal 2024 (FY24) Second Quarter (Q2) Earnings for the period ending 31 December 2023, 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 FY24 Q2 Investor Briefing, News Corp Chief Executive Robert Thomson said, “At Subscription Video Services, our new streaming aggregation product, Hubbl, is expected to launch next month and improve the search experience for our cherished customers seeking entertainment and sports. We believe Hubbl will be the most effective conduit between consumer and content, and add to the Foxtel success story.”

Hubbl brings together paid and free streaming entertainment into a single user interface eliminating the need to go in and out of apps to discover content. The Hubbl experience is delivered via a “world-leading entertainment operating system” backed by Comcast USA and Sky UK, but designed for Australia. Foxtel says Hubbl will continuously evolve its entertainment OS with regular software updates, without requiring a new device.

Hubbl will be available as a small device that plugs into any compatible TV or via Hubbl Glass – a “world-class TV” with Hubbl and a high-quality built-in sound bar that only requires an internet connection and a power cord.

Foxtel Group Highlights

  • Foxtel Group adjusted revenue grew 2% year-on-year, representing the eighth consecutive quarter of year-on-year growth.

Subscription Video Services Segment Highlights

  • Adjusted Q2 Revenues for the Subscription Video Services segment increased 3% compared to the prior year.
  • Foxtel Group streaming subscription revenues represented 29% of total circulation and subscription revenues compared to 26% in the prior year.
  • Adjusted Q2 Segment EBITDA decreased 13% compared to the prior year.

Key Foxtel Group Subscriber Metrics

  • Total Foxtel Group subscribers of 4.365 million (4.317 million paid).
  • Total streaming subscribers, including Kayo Sports, BINGE, and Foxtel Now reached 2.841 million up 3% year-on-year (2.794 million paid, up 4% year-on-year).
  • Streaming subscribers represented 66% of the Foxtel Group’s total subscribers (62% in Q2 FY23)
  • Kayo Sports reached 1.183 million total subscribers, up 4% year-on-year (1.173 million paid, up 4% year-on-year)
  • BINGE reached 1.503 million total subscribers, up 4% year-on-year (1.471 million paid subscribers, up 7% year-on-year)
  • Foxtel residential and commercial broadcast subscribers were 1.505 million
  • Foxtel Residential subscribers reached 1.273 million
  • Broadcast ARPU rose 3% to A$86 through a continued focus on Foxtel’s premium brand positioning.
  • Residential churn improved year-on-year to 12.9%

Mr Thomson continued, “At Kayo, we are looking forward to the upcoming winter sports season for Australian Rules Football and Rugby League, the two dominant sports; and at Binge, there has been early success with advertising at the basic tier, while continuing ad-free service for premium customers.”

News Corp CFO Susan Panuccio added, “Revenues for the quarter were $470m, up 2% compared to the prior year. On an adjusted basis, revenues rose 3% versus the prior year.

“Streaming revenues accounted for 29% of circulation and subscription revenues, versus 26% in the prior year.

“Total closing paid subscribers across the Foxtel Group were over 4.3 million at quarter-end, flat with the prior year.

“Total paid streaming subscribers were 2.8 million, increasing 4% versus the prior year, although declining sequentially due to seasonality at Kayo, tougher financial conditions caused by the inflationary environment for consumers and a weaker sports cycle.

“Foxtel ended the quarter with 1.3 million residential broadcast subscribers, down 9% year-over-year. Broadcast churn was flat at 12.9% despite the final migration off cable in October, while Broadcast ARPU rose 3% to approximately A$86, helped in part by a price rise for non-platinum subscribers implemented in July.

“Segment EBITDA in the quarter of $77m was down 14% versus the prior year driven by contractual price escalators in Foxtel’s sports rights agreements and A$10 million related to the upcoming launch of Hubbl partially offset by higher revenues and lower technology and marketing costs. Adjusted Segment EBITDA declined 13%.”

On Outlook, Ms Panuccio said, “In Subscription Video Services, as mentioned last quarter, we continue to expect modestly higher expenses for the full year. Ongoing inflationary pressures, fewer new releases across entertainment due to the writers and actors strike and a weaker summer sport schedule has created some softness in streaming revenues, which may impact full year profitability in local currency.”


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