The new Fox Corp. that was recently created in the wake of Disney buying the 20th Century Fox film and television studios is “off to a solid start with good positive momentum across all” its businesses as its first full fiscal year as a standalone public company begins, according to Lachlan Murdoch, its CEO and executive chairman.
“Perhaps more importantly, we are making significant progress on the operational goals and strategic initiatives that we outlined” to analysts at its recent Investor Day, he said Nov. 6 on the company’s earnings call for the first quarter (ended Sept. 30).
The firm’s strategy to “build Fox around live sports, news and event programming is producing results and delivering audience growth and engagement faster than we expected,” he told analysts. For example, Fox is six weeks into the fall season and it’s already “established itself as both the number one-rated broadcast network and the only Big 4 network to deliver year-on-year audience growth in the key 18 to 49 demographic and in total viewers,” he said.
Fox is up 5% in ratings among 18 to 49-year-old viewers and up 10% in total viewers, he noted. That “leadership position stems from the investments we’re making across our network beginning with Fox Sports, which has accounted for 22 of the 50 most-watched telecast in the country since” the start of the National Football League (NFL) season, he said, adding its ratings are up 11% across its “entire portfolio of college and pro football, led by Thursday night, with viewership up 22 percent and our Sunday broadcast,” up 8% — a “three-year high.”
The reach of Fox’s direct-to-consumer platforms, meanwhile, has “grown to over 250 million users per month, with total engagement grown to over 11 billion minutes per month,” he told analysts. The company is also now seeing “well above 10 percent of our streaming audience consuming the 4K stream” of its programming, he disclosed, adding Fox will be the first broadcaster “ever to stream the Super Bowl in 4K” Feb. 2.
In conjunction with the kickoff of the football season, Fox launched the free-to- play mobile gaming app “Fox Sports Super 6” nationally, and it’s “already achieved nearly 1 million registered users and almost 10 million players,” he also told analysts.
Fox and The Stars Group also launched the digital sports wagering service Fox Bet in New Jersey and Pennsylvania, he said.
The recently proposed merger between sports betting company FanDuel’s parent company, Flutter Entertainment, and The Stars Group “will create many opportunities for us,” he predicted. “We’re excited to develop the Fox Bet brand in partnership with FanDuel and are confident in the dual brand strategy to capitalize on the rapidly growing sports wagering market,” he said.
On the Fox Business front, the company launched a “brand refresh across its linear and digital platforms” more than a month ago, including a new logo and tagline, he also said. As part of that initiative, FoxBusiness.com and the Fox Business app were launched with new content and editorial tools “to drive engagement,” he told analysts, adding: “The initial performance of the relaunched digital properties has been encouraging as we have seen substantial increases in page views and in unique users.”
Among the negatives for Fox in the quarter, the company saw the “rate of subscriber declines in the traditional” multichannel video programming distributor (MVPD) “universe escalate in recent months, with this quarter yielding industry declines of over 4 percent.” But the subscriber losses reported by “just one distributor, which accounts for approximately 25 percent of pay television subscribers, represent the majority of the net losses we experienced over the past 12 months,” he pointed out, adding that distributor – which he didn’t identify –”accounts for almost 80 percent of total losses over the last year.” Without that, subscriber losses would have been about 1.3%, he noted, adding that “suggests that it is too early to draw firm conclusions from a market that is still clearly fluid.”
Total Fox Q1 revenue grew 5% from a year ago to $2.67 billion. The increase included affiliate revenue growth of 4%, “driven by a 14% increase at the Television segment, partially offset by a 2% decline in advertising revenues,” Fox said in its earnings news release. The company also reported a 65% increase in other revenue, “reflecting growth at both the Television and Cable Network Programming segments and higher revenues associated with the operations” of the Fox Studios Lot for third parties. But Q1 income decreased to $513 million from $615 million.
“While the industry is under siege from accelerating cord-cutting and audience erosion, we believe Fox’s laser focus on live sports and news content is the right strategy to drive higher per subscriber pricing and more stable viewership trends,” MoffettNathanson senior analyst Michael Nathanson said in a research note Nov. 7.