Foxtel Owner Reports 53% Decline In Profits
The company made a net profit $256.42m for the year to 30 June, down 53% from $540m in 2012-13.
Foxtel who are struggling to hold onto premium paying subscribers will shortly launch a new Q3 set top box in an effort to take on new players including US content subscription giant Netflix.
News Corp got a big boost by including earnings from their pay TV business by including in the Foxtel business earnings Fox Sports who reported an EBITDA $137m.
The 2012-13 result was also boosted by a one-off gain from the sale of its stake in New Zealand’s Sky pay TV operation.
Earnings from the company’s news and information division fell 16% in 2013/14 to US$130 million, mostly due to weakness in its Australian newspapers, which suffered an 18% drop in revenue.
Total advertising revenues across the news divison declined 10%, driven primarily by weakness in the print advertising market. Circulation and subscription revenues declined 5%, but this was partially offset by cover price increases for several Australian and US mastheads, and online subscriptions.
News Corp’s full-year revenue fell 4% to US$8.57bn.
News Corp,spent US$72m in fees and costs linked to the News Of The World shutdown and the hacking scandal in the UK during the year.
The company’s digital real estate subsidiary REA Group, which runs realestate.com.au, lifted earnings 27% to US$214m while earnings from its book publishing business, HarperCollins, were up 39% to US$197 million.
News Corp chief executive, Robert Thomson, said the company had performed well in challenging conditions.
“While we are operating in a challenging advertising environment, our results highlight the diversification of our portfolio and our cost discipline, leading to improved free cash flow and a firm foundation for sustained growth,” he said.
The Guardian newspaper reported that Fusion Strategy media analyst Steve Allen said advertisers had ditched the print medium at almost twice the rate of the decline in circulation.
“Advertisers and their media agencies basically turned their back on print and we saw really severe declines which are only just starting to slow,” he said.
But he said that while advertising revenue is likely to flatten out at some point, it was likely the decline in circulation would continue.
“For News it has been more an advertising problem than a circulation problem but they will face a circulation problem,” he said.
“Our view would be that as the losses of advertising revenue start to stem, it’s likely there will be an increase in the rate of decline in circulation and cover revenue.”