21st Century Fox has cited the digital expansion of its domestic TV brands via OTT as key to its business plans going forward, as the company recorded impressive growth for the last quarter; increasing net income from $118 million to $606 million, and growing revenue 7% to $6.6 billion, up from $6.2 billion in the same period last year.
The company shipped off its Direct Broadcast Satellite (DBS) Television businesses to Sky in November 2014, and has since averted its gaze smartly to more promising OTT ventures such as Sling TV, Playstation Vue, Hulu, as well as the launch of live streaming of Fox primetime entertainment across the US via its Fox Now service in July this year. As a result, the company has grown advertising and content revenues, although, Fox Now still has its work cut out against the aggressively marketed CBS All Access.
However, the company reported annual income from continuing operations of $2.76 billion, compared with $8.37 billion in the prior year. This is due to the sale of Sky Italia, Sky Deutschland and its DBS businesses to Sky for around $8.8 billion.
Star India, 21st Century Fox’s main Indian business, contributed to a 3% international affiliate revenue growth, driven by its acquisition of the broadcast business of MAA Television Network and through its OTT mobile app hotstar, which has amassed over 72 million downloads.
Hotstar was built around the Accenture Video Solution (AVS) software platform, which came out of work for Mediaset in Italy, KPN in the Netherlands and BT Sport in the UK. The new service is funded by advertising, using functions added by Accenture, and it provides access to a catalog of 45,000 movies and TV series. Part of this system comes from the code inherited from Myrio, which went into the KPN IPTV system. The multiscreen part of the system was engineered by Accenture itself.
21st Century Fox is well known for its live sports focus through its various regional sports networks, and it recently invested in a US soccer OTT Multichannel Video Programming Distributor (MVPD) called fuboTV, along with Sky, leading a group of investors putting in $15 million. Neither 21st Century Fox nor Sky are currently licensing content to fuboTV, but both companies intend to work closely with fuboTV as it continues to grow.
At the end of 2015, 21st Century Fox reported that Fox Sports Networks and its affiliated regional sports networks currently had approximately 89 million subscribers.
21st Century Fox also referred to Time Warner taking a stake in Hulu this week (see separate story in this issue), saying it welcomes the investment and that it “underscores all that Hulu has achieved over the last ten years.”
Revenues from its Cable Network Programming business for the quarter increased from $3.6 billion to $3.9 billion, its Filmed Entertainment sector was up from $1.9 billion to $2 billion, and its Television sector snuck past the billion-dollar mark, increasing from $987 million to just over $1 billion.
Advertising brought in $1.7 billion in revenues for the quarter, up from $1.66 billion, while content revenues grew from $1.7 billion to $1.9 billion. Adjusted total revenues for the twelve months ended June 30 were $27.3 billion, up from just under $27 billion in the previous year.
“We delivered full-year revenue and earnings growth on the strength of gains in affiliate and advertising revenues despite considerable foreign exchange headwinds and difficult film comparisons. The value created by our multi-year investment in our content production and our global video brands is clear. Our brands are an indispensable part of any consumer offering, whether from a traditional distributor or a new entrant like Hulu’s upcoming live and on-demand service, which will benefit greatly from Time Warner’s investment and participation. The work we did this year bolsters our strong position in a world of growing demand and access to the premium content that consistently sets us apart,” said Executive Chairmen Rupert and Lachlan Murdoch.
Across 21st Century Fox’s six-continent wide footprint, it says it reaches 1.8 billion subscribers every day through its cable and broadcasting networks and properties, including Fox, FX, FXX, FXM, FS1, Fox News Channel, Fox Business Network, Fox Sports, Fox Sports Networks, National Geographic Partners, Star India, 28 local television stations in the US and more than 350 international channels; film studio Twentieth Century Fox Film; and television production studios Twentieth Century Fox Television and a 50% ownership interest in Endemol Shine Group. It also still holds a 39.1% ownership interest in Sky, which serves 21 million customers across five countries.
Despite strong financial goings on at the company, there is trouble looming at 21st Century Fox amid a leadership crisis, involving Roger Ailes’ controversial resignation.