News Corp looks to sell Foxtel after strong quarterly results
News Corp has told shareholders that there is “third-party interest in a potential transaction involving the Foxtel Group” in its quarterly financial statement issued on Friday morning.
News Corp owns 65% of the company, with the remainder held by Telstra. Foxtel Group encompasses the traditional pay TV arm, plus sports streaming service Kayo Sports, streaming service Binge, and the recently-launched Hubbl.
“We are confident in the company’s long-term prospects and are continuing to review our portfolio with a focus on maximising returns for shareholders,” News Corp CEO Robert Thomson said.
“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.”
Total Foxtel Group subscribers are up 1% year-on-year, with 4.776 million Aussies using the service, and 4.69 million payers.
Total streaming subscribers, including Kayo Sports, BINGE and Foxtel Now, are up 5%, hitting 3.305 million, and representing around 69% of all subs.
Broken down further, Kayo Sports is up 14%, with 1.606 million subscribers (1.550 million paid), while BINGE reached 1.552 million subscribers (1.529 million paid), up 1%.
Foxtel residential and commercial broadcast subscribers sits at 1.452 million, with a churn rate of 11.7%, but with average revenue per user up 6%, due to price hikes.
“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,” Thomson said.
“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.”
Overall, News Corp had a good quarter, with revenue up 6%, to $A3.91 billion – up on the Wall Street estimate of A$3.78 billion.
REA Group — home of realestate.com.au and Flatmates — drove most of the growth, with a leap 37% year-on-year increase (to A$462.7 million a quarter) which was credited to price increases, and a jump in the amount of national house listings.
Mumbrella has contacted Foxtel, News Corp, and Telstra for comment regarding the potential sale.
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