Rupert Murdoch-backed media conglomerate News Corp will review offers for its Australian pay-TV platform Foxtel as it looks to reorganise its business amid a volatile trading period for news organisations.
News Corp chief executive Robert Thomson said in an earnings release that a review of the company’s assets had identified potential buyers for the Foxtel business.
“This review recently coincided with third party interest in a potential transaction involving Foxtel Group, which has undergone positive transformation in recent years,” Thomson said.
“Given this external interest, we are reviewing options for the deal with our advisors.”
Foxtel’s business includes the streaming services Kayo and Binge as well as the new service Hubbl.
Foxtel’s set-top boxes, once a status symbol, are increasingly disappearing from Australian homes, reducing the value of what was once a highly lucrative source of income.
Foxtel now competes in the Netflix-led streaming era through its online platforms, which operate on much lower margins than its traditional business.
According to earnings results, the company lost subscribers to its Foxtel Now service, while numbers increased on its Kayo and Binge platforms.
Graeme Hughes, a consumer expert at Griffith University, said the rise of free and ad-supported services, as well as rising consumer living costs, were leading to increased competition.
“It’s a very competitive environment and it will remain so for the foreseeable future,” Hughes said.
“Given that consumers have less money to spend on other things, this may be a business model that should be outsourced.”
News Corp, which announced its annual earnings in the US, owns a majority stake in the Foxtel Group alongside minority owner Telstra.
Headwinds for news
The release of the annual results came amid a tussle over future editorial control of News Corp. and Fox Corporation after media mogul Rupert Murdoch handed full control to his eldest son Lachlan following the patriarch’s death.
His other adult children – James, Elisabeth and Prudence – would still receive equal shares of the profits, but would be denied the opportunity to influence the company’s management. This is intended to help maintain the company’s conservative voice.
There were mixed results across the various businesses of the U.S.-listed company, which owns publishing houses, book publishers, subscription television channels and real estate advertising assets in the U.S., U.K. and Australia.
News media revenues fell 23% year-on-year, reflecting weaker sales in the Australian business, where circulation and subscription revenues declined.
The trading period, marked by high inflation, proved difficult for publishers around the world due to subdued demand from advertisers and subscribers.
News Corp recently cut jobs in Australia, where it publishes newspapers such as The Australian, Daily Telegraph and Herald Sun. The expiring licensing agreement with Meta also hit revenue.
The company’s newspaper portfolio also includes The Sun and The Times in London and the New York Post.
Due to the fallout from the wiretapping scandal, The Sun’s digital reach declined rapidly over the course of the year: the number of monthly unique users worldwide fell from 159 million to 112 million.
For the 12-month period, advertising revenue fell $73 million, or 8 percent, mainly due to lower print and digital advertising at News Corp.’s Australian and UK news divisions.
Rays of hope
News Corp reported an increase in annual revenue, thanks to robust results from its business-focused Dow Jones division, its book publishing arm and its Australian property portal, all of which helped offset weakness in its news division.
At Dow Jones, publisher of The Wall Street Journal, subscription and advertising revenue rose, contrasting with the success of many of News Corp.’s non-business titles.
Overall, the company reported annual sales of $10.1 billion, up 2% from the previous year. Net profit also recovered.
His majority stake in the REA Group, which operates the realestate.com.au portal, has proven valuable as a robust property market continues to drive high listing numbers, which in turn drive revenue.
News Corp is also bullish on its tie-up with ChatGPT developer OpenAI, a deal that will provide access to all of News Corp’s current and archived content.
Thomson said he expected the deal to prove “lucrative” but warned that AI aggregators could access News Corp.’s content for free.
“We have now begun taking legal action against AI aggressors, the unscrupulous aggregators who predatorily seize our content,” Thomson said.
“Open source can never be a justification for open source.”
While News Corp. is among those that have signed deals with AI companies, many publishers have raised concerns that their copyrighted content could be used to train generative models that could serve as an alternative source of news information for consumers.