News Corp. only recently made its Wall Street Journal available on the new Apple News Plus subscription service, but early signs are promising, according to Robert Thomson, News Corp. CEO.
“The initial signs are encouraging, both in terms of reaching new audiences and the strength of engagement with The Wall Street Journal in the new app,” he said May 9 on an earnings call for his company’s third quarter (ended March 31).
Apple News Plus was announced March 25. At the time, Apple said the service brought together more than 300 magazines, newspapers and digital publishers in one “convenient and curated experience within the Apple News app.” The service was made available in the U.S. and Canada.
Underscoring the significance of his company’s relationship with Apple, Thomson told analysts during the earnings call Q&A: “There are 189 million iPhones used in the U.S. and 1.4 billion iPhones active globally. So that’s quite a broad, deep and interesting user base. The Apple deal is important…. There’s just no doubt that we are reaching a far larger audience with Apple readers who may have had preconceptions about The Wall Street Journal.”
Some readers, for instance, may not have realized that the publication had strong sports and lifestyle coverage, in addition to business news, he noted.
“We are attracting more younger readers and more women from our internal data,” he said, adding: “That’s very early obviously in the Apple relationship. But what we’re not doing is compromising the business subscribers for whom we will provide even more specialist information…. We firmly believe that the number of people who will appreciate, benefit from and buy The Wall Street Journal will be enhanced by that Apple partnership.”
The Journal’s “value can be seen in its results this quarter, with paid digital-only subscribers of the Journal growing to nearly 1.8 million, reflecting 19 percent growth,” he said earlier on the call, adding 68% of subscribers are now “digital-only.”
The company, meanwhile, is “making good progress” with its over-the-top (OTT) strategy, “which is helping drive volume growth” of Foxtel, its Australian pay TV company, CFO Susan Panuccio said.
“We see OTT as a big revenue driver that will have higher contribution margins, given we are leveraging mostly fixed costs for previously acquired rights and we are encouraged by the recent performance of Kayo and Foxtel Now,” she said, referring to the company’s Kayo Sports streaming service and Foxtel OTT streaming service.
News Corp. reported Q3 revenue grew 17% from a year ago to $2.46 billion, while it swung to a $23 million profit (2 cents a share) from a $1.1 billion loss ($1.94). Subscription video services revenue soared to $539 million from $129 million, reflecting the consolidation of Foxtel.
Foxtel had about 2.9 million subscribers at the end of Q3, up 5% from last year, “driven by higher Kayo Sports and Foxtel Now subscriptions and the inclusion of commercial subscribers” of Fox Sports Australia, Panuccio said. As of May 8, the company had 239,000 Kayo Sports subscribers, of which 209,000 were paying, more than double the company’s last update, she said.
It also had over 567,000 Foxtel Now subscribers as of May 8, of which more than 505,000 were paying, up 45% in paying subscribers from the end of the quarter, “driven by the demand” for HBO’s “Game of Thrones,” she said.
Overall subscription video cost increases “should be more modest” in the fourth quarter because the company expects to see “increased contribution from OTT,” she told analysts.