Fox revenue up 25pc, as Credible Labs emerges as winning bet
Fox Corp said its revenue rose 25c in the latest quarter but warned of negative impact from COVID on its local TV stations.
Fox Corp said its revenue rose 25 per cent in the latest quarter but warned investors the coronavirus is having a negative effect on some of its operations, particularly its local television stations in the US.
A strong performer was the loan search and comparison digital marketplace Credible Labs, which Fox bought a majority stake in for $US265m last year, and has had loan and revenue increases of 100 per cent. Fox Bet, which came out a $US236m investment in The Stars Group in May last year in exchange for 5 per cent of equity in the company, was another standout.
That investment is already estimated to be worth $US385m despite the ban on sports as a result of COVID-19, with Stars Group recently completing a merger with British betting powerhouse Flutter.
“Fox Bet had an incredible Super Bowl, obviously since COVID-19 there’s less sports being played, but I should say that part of that acquisition it was an equity stake in TSG, which has done rather well with the merger with Flutter,” Fox Corp executive chairman and chief executive Lachlan Murdoch told an investor call.
Like other media companies, Fox has been hurt by the shutdown of television production, the cancellation of sporting events and advertisers pulling their commercials.
Its assets include the Fox News Channel, Fox Sports, Fox Entertainment and 29 local television stations. The company said on an analyst call to discuss its most recent quarterly results that it couldn’t accurately forecast its performance in the near to medium term.
Fox’s local-station business is typically one of its strongest performing assets, but the company said advertising on the stations could fall by 50 per cent in the current quarter from a year earlier if current trends continue, despite a rise in ratings with more people stuck at home watching television.
In addition, political advertising expectations for the local stations have fallen short as the primary season was relatively short, with Democrats rallying around Joe Biden as their presumptive presidential nominee in early March. The company expects momentum to pick up again as November’s general election draws nearer.
Fox News is weathering the pandemic better. While some major advertisers such as auto manufacturers and travel have pulled out, the void has been filled by the technology and telecommunications sector, and the channel continues to see strong ratings.
The Fox News streaming service Fox Nation was also seeing growth, with 80 per cent of people who sign up for a free trial deciding to subscribe, the company said. Mr Murdoch said that while the company had been hurt by sports being put on hold, its biggest sports properties — including college and professional football and postseason baseball — weren’t until September.
While television production isn’t expected to resume until August at the earliest, a good chunk of the line-up on Fox’s broadcasting network consists of animated shows. Those series, including hits such as The Simpsons and Family Guy, are continuing to be produced.
“Fox is in a strong position to deal with this pandemic,” Mr Murdoch said.
A strong performer was the loan search and comparison digital marketplace Credible Labs, which Fox bought a majority stake in for $US265m last year, and has had loan and revenue increases of 100 per cent. Fox Bet, which came out a $US236m investment in The Stars Group in May last year in exchange for 5 per cent of equity in the company, was another standout.
That investment is already estimated to be worth $US385m despite the ban on sports as a result of COVID-19, with Stars Group recently completing a merger with British betting powerhouse Flutter.
“Fox Bet had an incredible Super Bowl, obviously since COVID-19 there’s less sports being played, but I should say that part of that acquisition it was an equity stake in TSG, which has done rather well with the merger with Flutter,” Mr Murdoch said.
Increases in advertising and distribution fees lifted Fox’s third-quarter revenue 25 per cent from a year earlier to $US3.44bn, ahead of analysts’ estimates of $3.33bn, according to FactSet. Fox posted a quarterly profit of $US78m, compared with $US529m for the comparable quarter a year earlier.
The company said it recognised a loss related to the sale of its former investment in Roku, as well as higher operating, selling and general administrative expenses in the quarter related to the costs associated with operating as a stand-alone company compared with a year earlier.
Cable-network programming revenue rose 6.1 per cent to $US1.47bn. Television revenue rose 41 per cent from a year ago to $US1.93bn, due to increases in affiliate revenue from programming fees for third-party Fox affiliates and higher average rates per subscriber. However, the company said it saw a drop in subscribers in the quarter.
-with Dow Jones Newswires
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