News Corporation · NASDAQ:NWS
News — Investor Day (September 2021)
94 slides from News's investor day presentation, Sep 29, 2021
Slide 1: Foxtel Group Strategy Day September 30, 2021
Foxtel Group Strategy Day September 30, 2021
Slide 2: Disclaimer and forward-looking statements
2 The information (Information) in and accompanying this presentation (Presentation) has been prepared by, or on behalf of NXEA Australia Pty Limited (NXEA) and its subsidiaries (together the Foxtel Group), solely for informational purposes to assist the reader to gain a general understanding of the
Slide 3: Overview & Strategy
Overview & Strategy Patrick Delany
Slide 4: Today's presenters
Stuart Hutton Chief Financial Officer Hilary Perchard Chief Customer, Marketing & Revenue Officer Today’s presenters Patrick Delany Chief Executive Officer Les Wigan Chief Technology & Operations Officer Amanda Laing Chief Commercial & Content Officer Julian Ogrin CEO, Kayo Sports, BINGE & Flash 4
Slide 5: Foxtel Group
FOXTEL GROUP | | | FOXTEL Kayo BiNGE EP Shia
Slide 6: Record number of subscribers
FY20 FY21 Record number of subscribers 2.9M 4.0M +40% 6 Total closing subscribers as at 30 June 2020 and 30 June 2021, which includes 2.8M and 3.9M paid subscribers, respectively, across residential and commercial broadcast and streaming platforms, with the remainder being trialists on streaming pla
Slide 7: More than 50% of subscribers are streaming
More than 50% of subscribers are streaming FY16 FY21 Residential 86% Commercial 6% Streaming 8% Residential 41% BINGE 20% Kayo 27% Commercial 6% Foxtel Now 6% 92% Broadcast 53% Streaming 7 Total closing subscribers as at Financial Year End 30 June, includes paid and trialist subscribers.
Slide 8: Foxtel Group product in share of Australian subscription TV households
A Foxtel Group product is in of Australian households with subscription TV 8 Source: FiftyFive5 Research, June 2021. The figure represents the number of Australian households which use any FOXTEL Group product as a proportion of the number of Australian households which use any subscription TV produ
Slide 9: Subscribers streaming more than ever
Subscribers streaming more than ever 2016 2021 Purpose-built platforms for streaming Streaming as a % of total viewing minutes 1% Total monthly minutes viewed on a Streaming platform as a percentage of the total monthly minutes viewed across Streaming and Broadcast. Comparison of July 2016 vs July 2
Slide 10: Our business is IP-led
Our business is IP-led 10
Slide 11: Strong digital advertising growth
Strong digital advertising growth Financial Year End 30 June. $26.0M $40.1M FY19 FY21 14% Digital ad revenue Digital ad revenue as % of total ad revenue% 9% 11
Slide 12: Local partner of choice for studios and global apps
Local partner of choice for studios and global apps 12
Slide 13: Foxtel Group strategy
Grow through streaming Strengthen Foxtel Win with world class content and technology Foxtel Group strategy 1 2 3 13
Slide 14: Grow through streaming
Grow through streaming 14
Slide 15: 2.1M+ total streaming subscribers
842k FY19 2,134k FY21 Kayo BINGE Foxtel Now 2.1M+ total streaming subscribers Total closing streaming subscribers as at 30 June 2019 and 30 June 2021, which includes 777K and 2,006K paid subscribers, respectively, with the remainder being trialists. 15
Slide 16: Record streaming revenue
$151M FY19 $360M FY21 Record streaming revenue 16 +138% Financial Year End 30 June. All figures presented in A$ under US GAAP. Total streaming revenue includes subscription and advertising revenue for FOXTEL NOW, BINGE, Kayo and other streaming products, of which 0% and 5% is advertising revenue for
Slide 17: SVOD driving growth in total Pay TV sector size
0.0 1.0 2.0 3.0 4.0 5.0 2019A 2020A 2021F 2022F 2023F 2024F 2025F SVOD Pay TV SVOD driving growth in total Pay TV Sector size Australian Pay TV Sector Size ($bn) (A$bn) Pay TVSVOD 17 Source: PwC The Australian Entertainment and Media Network 2021 – 2025 (July 2021). Pay TV sector relates to paid sub
Slide 18: SVOD growth from more subscribing households
7.7 9.1 FY21 (Today) FY25 SVOD growth from more subscribing households ... SVOD Subscribing Households (millions) 77% 85% Household Penetration +18% 18 Source: 2Q-2021 Ampere Analysis
Slide 19: More subscriptions per household
2.7 3.6 FY21 (Today) FY25 … and more subscriptions per household SVOD Subscriptions per Household 21 33 Total SVOD Subscriptions (m) US FY21 benchmark +33% 19 Source: 2Q-2021 Ampere Analysis
Slide 20: Foxtel Group is strongly positioned to capture the benefits of streaming
Foxtel Group is strongly positioned to capture the benefits of streaming 20 Australia’s transition to streaming is now a positive for the Foxtel Group Growing sector with the ability for greater penetration Breadth of choice and opportunity for multiple subscriptions per household Variety of flexibl
Slide 21: New streaming products providing scalable revenue
Q3 Q4 Q4Q3Q1 Q2Q1Q2 FY20 vs. FY19 FY21 vs. FY20 Residential Broadcast Kayo & BINGE Subscription revenue YoY change ($) New streaming products providing scalable revenue 21 Financial Year End 30 June.
Slide 22: Strengthen Foxtel
Strengthen Foxtel 22
Slide 23: Residential Broadcast ARPU has risen for consecutive quarters
Residential Broadcast ARPU has risen for 4 consecutive quarters 23 Q4 FY20 $81.2 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 $78.1 $78.8 $79.7 $80.2 Financial Year End 30 June.
Slide 24: Stabilising revenue with premium, long-tenured customer base
8+ years 58% <3 years 13% 3-8 years 29% Residential Broadcast subscriber ARPU $50 – 99 ARPU 50% $99+ ARPU 39% <$50 ARPU 11% Total closing Residential Broadcast subscribers as at June 2021. Stabilising revenue with premium, long-tenured customer base 24 Residential Broadcast subscriber tenure
Slide 25: Win with world class content & technology
Win with world class content & technology 25
Slide 26: Premium aggregator of diverse entertainment
Major studios Partner channels Free to air channels Local & global apps Premium aggregator of diverse entertainment 26
Slide 27: Leading Australian and international sports live and on demand
Leading Australian and international sports live and on demand 27
Slide 28: We are a technology-led streaming company
We are a technology-led streaming company 28 IP-led Foxtel set top Streaming services Advertising technology CRM & marketing tech
Slide 29: With a scalable core for growth
With a scalable core for growth 29
Slide 30: Three-year ambitions
Revenue growth Opportunity for margin expansion Capex to RevenueSubscribers Three-year ambitions 30
Slide 31: Strategy to achieve our ambitions
Strategy to achieve our ambitions 31 1 2 3 Grow through streaming • Launch additional streaming products • Introduce new digital advertising products Win with world class content and technology Strengthen Foxtel • Offer existing customers more value • Further reduce cost to sell and serve • Continue
Slide 32: Placeholder – video
Placeholder – video 32
Slide 33: Strategy for growth
Strategy for growth 33
Slide 34: Grow through Streaming
Grow through Streaming Julian Ogrin
Slide 35: Purpose-built for live sport streaming
Purpose-built for live sport streaming 50+ sports live and on-demand ~1.1M total subscribers As at 30 June 2021. Total closing Kayo subscribers as at 30 June 2021 includes 1,054K paid subscribers, with the remaining 25K being trialists. 35
Slide 36: supencans
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Slide 37: Kayo product
Kayo product ‘AFL-FRIDAY7:20M PORT ADELAIDE RICHMOND. elon Kayo vent Core - § SSheile| SSaee 1 wv on — SS
Slide 38: Kayo viewership on TV-sized screen
Source: Internal Metrics for the 13-month period ending September 2021. 38 of total Kayo viewership is on a TV-sized screen 68%
Slide 39: Kayo product
Kayo product 39
Slide 40: Kayo product suite
BASIC PAY-PER-VIEWPREMIUM Kayo product suite 40 2 streams, HD 3 streams, HD Pay-per-view (boxing, UFC, WWE) Monetised through ads
Slide 41: Kayo sales strategy and channel partners
Kayo sales strategy and channel partners 41 Promotional partners Brand awareness & acquisition Product & sport targeted Low cost per acquisition, direct marketing
Slide 42: Kayo is growing and engaging sports fans
Kayo is growing and engaging sports fans 42 Winter codes and Telstra Live Pass Sport returned during COVID COVID hit Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 1.1M Total subscribers Total closing Kayo subscribers as at 30 June 2021, which includes 1,054K paid subscribers, with the remaining 25K bein
Slide 43: Strong Kayo subscription revenue growth
Strong Kayo subscription revenue growth 43 FY19 FY20 FY21 +87% YoY Financial Year End 30 June. Includes Kayo subscription revenue only.
Slide 44: Kayo subscribers watch multiple sports
of Kayo subscribers watch 3 or more sports 23% watch more than 8 62% Number of sports watched over the last 12 months by all subscribers active, as at 30 June 2021. 44
Slide 45: Kayo marketing
Kayo marketing 45
Slide 46: BINGE subscribers and content hours
As at 30 June 2021. Total closing BINGE subscribers as at 30 June 2021 includes 733K paid subscribers, with the remainder being trialists. 10,000+ hours of content ~830K total subscribers 46
Slide 47: BINGE product
BINGE product RS — a THe Patan’ oo Bea = Sl PS EY ——
Slide 48: BINGE product suite
STANDARDBASIC PREMIUM BINGE product suite 48 2 streams, HD 4 streams, HD1 stream, SD
Slide 49: BINGE sales strategy and channel partners
BINGE sales strategy and channel partners Other promo partners Content focused Mix of tentpole and performance marketing 49
Slide 50: BINGE has grown rapidly in its first year
BINGE has grown rapidly in its first year Total subscribers Jun-20 Dec-20 Jun-21 ~ Total closing BINGE subscribers as at 30 June 2021, which includes 733K paid subscribers, with the remainder being trialists. 50
Slide 51: BINGE subscription revenue growth since launch
BINGE subscription revenue growth since launch 4x Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 51 Financial Year End 30 June 2021. Includes BINGE subscription revenue only.
Slide 52: BINGE subscribers come for new releases, but stay for the binge-worthy bests
BINGE subscribers come for new releases, but stay for the binge-worthy bests Vigil Zack Snyder’s Justice League Mr. Inbetween New releases driving acquisition Mare of Easttown Friends: The Reunion The Undoing A Discovery of Witches The Act Superstore Game of Thrones NCIS Deep library driving retenti
Slide 53: BINGE subscribers watch multiple series
of BINGE subscribers watch 3 or more series in a month watch more than 8 in a month Number of unique series viewed over the last 30 days of active subscribers as at 30 June 2021. 53
Slide 54: Flash: breadth of news partners
Breadth of partners Global and local news sources, offering diversity of opinion and perspective First of its kind Dedicated live news streaming service offering live and on demand A clear opportunity Ability to serve segments across news consumers The biggest news brands on a leading streaming plat
Slide 55: Flash product
Deep dive into the stories that matter to you Follow unfolding events from multiple perspectives with multi-screen viewing. Jump to the big moments in news Curate content and notifications based on channel, category or topic Flash product 55 SplitView FlashPoint FlashNav Personalisation
Slide 56: Placeholder – video
Placeholder – video 56
Slide 57: World Class Technology
World Class Technology Les Wigan 57
Slide 58: A tech stack with 21st century streaming, ad tech, and customer lifecycle capability
A tech stack with 21st century streaming, ad tech, and customer lifecycle capability Scalability Reliability Customer- centric 58
Slide 59: Investing in major technology projects
Investing in major technology projects streaming tech stacks and operations Provide best in class Kayo and BINGE experience on Foxtel products and modernise broadcast infrastructure Increase resilience and reduce costs with latest cloud-based technology Foxtel customer management and marketing syste
Slide 60: Technology at the Foxtel Group
Technology at the Foxtel Group 60 Highly scalable, reliable, and customer-centric streaming tech stack 1 Modernising existing platforms and systems that support core Foxtel products2 Proven track record in delivery3
Slide 61: Placeholder – video
Placeholder – video 61
Slide 62: Strengthen Foxtel
Strengthen Foxtel Hilary Perchard 62
Slide 63: Residential Broadcast subscribers
Residential Broadcast subscribers Total closing Residential Broadcast subscribers as at 30 June 2021 63 1.6M+ Net revenue and customer lifetime value Differentiated, premium, aggregated experience
Slide 64: Differentiated, premium, aggregated experience
Differentiated, premium, aggregated experience Net revenue and customer lifetime value 64
Slide 65: Revolutionary new iQ5 set top enables a streaming-led future
Revolutionary new iQ5 set top enables a streaming-led future Fully self-install • Plug and play, instant viewing • IP enabled, no cable or satellite hardware required • Opens Foxtel experience up to new customers Streaming enabled • Leverages our investment in streaming • All your apps in one ecosys
Slide 66: Enabling a better customer experience
Enabling a better customer experience 66 Enhanced viewing experience with even more features – voice remote, record, personalization, enhanced search, UHD, the best service Premium features and service Live and on demand, from Foxtel and global apps – providing the best of linear and VOD Content our
Slide 67: Differentiated, premium, aggregated experience
Differentiated, premium, aggregated experience Net revenue and customer lifetime value 67
Slide 68: Maintaining strong retention rates with premium subscribers
Maintaining strong retention rates with premium subscribers 68 39% of base 11% of base 50% of base Residential Broadcast churn rate by subscriber ARPU 0% 10% 20% 30% 40% 50% 60% 70% Jul-20 Aug-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 <$50 $50 to $99 $99+
Slide 69: Broadcast business has focused on high lifetime value subscribers
Broadcast business has focused on high lifetime value subscribers 69 Residential Broadcast subscriber ARPU 11% <$50 ARPU 39% $99+ ARPU 50% $50-99 ARPU 13% <3 years 58% 8+ years 29% 3-8 years Residential Broadcast subscriber tenure Total closing Residential Broadcast subscribers as at June 2021.
Slide 70: Maximising value of the subscriber base has stabilised revenue declines
Maximising value of the subscriber base has stabilised Residential Broadcast revenue declines 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 0 50 100 150 200 250 300 350 400 450 500 550 Q4 FY20Q3 FY 20Q2 FY20 Q1 FY21Q1 FY20 Q2 FY21 Q4 FY21Q3 FY21 Residential Broadca
Slide 71: Commercial business is strong, stable and diverse
Commercial business is strong, stable and diverse Small BusinessLicensed Venues Accommodation Mining Health & Corporate Q1 Q2 Q3 Q4 FY20 FY21 FY20 FY21 FY20 FY21 FY20 FY21 FY20 FY21 COVID impact COVID impact COVID impact Commercial revenue by sector 71 Financial Year End 30 June.
Slide 72: World Class Content
World Class Content Amanda Laing 72
Slide 73: Years of delivering premium content to Australians
25 years 73 of delivering premium content to Australians, all in one place
Slide 74: Placeholder – video
Placeholder – video 74
Slide 75: Securing deals with long-term partners
Securing deals with long-term partners with us from the start 75
Slide 76: Group-wide content strategy
Group-wide content strategy Foxtel Originals Channel partners 76 TV and movie studio deals Local and global apps Australian and international sport
Slide 77: A diverse and exciting pipeline of new and returning titles
NewReturning A diverse and exciting pipeline of new and returning titles 77 Peacemaker LOVE, ME
Slide 78: Placeholder – video
Placeholder – video 78
Slide 79: The trusted long-term partner for sports
20212000 2005 2010 2015 C u m u la tiv e y e ar s o f p ar tn e rs h ip 26 23 20 19 18 16 12 4 6 5 79 The trusted long-term partner for sports
Slide 80: A full slate of sports coverage year round
A full slate of sports coverage year round JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 80 NRL CRICKET AFL MOTORSPORTS BASKETBALL SURFING FA CUP WNBA NFL NFL NBA NBA NCAA COLLEGE BASKETBALLNCAA COLLEGE BASKETBALL NBL UFC BOXING WWE BEIN SPORTS - TENNIS BEIN SPORTS - RUGBY RUGBY BEIN SPORTS - FOOT
Slide 81: Financial Overview
Financial Overview Stuart Hutton 81
Slide 82: Strong financial performance
Strong financial performance c.$2.8bn Revenue c.$460m EBITDA #1 Australian Media Company by Revenue(1) Financial Year End 30 June 2021. All figures presented in A$ under US GAAP. (1) Ranked by total LTM revenue to 30 June 2021. 82
Slide 83: Revenue stabilised and repositioned for growth
Revenue stabilised and repositioned for growth FY20 FY21 Financial Year End 30 June. All figures presented in A$ under US GAAP. (1) Advertising revenue of $261 million in FY20 comprised of c. 98% Broadcast and 2% Streaming and $281 million in FY21 comprised c. 94% Broadcast and c. 6% Streaming. Broa
Slide 84: Transforming the cost base
-10% • Right-sized functional areas and consolidated capabilities • Renegotiated rights and focused on premium sports and entertainment rights • Lighter operational costs, right-sized for streaming era • Streamlining and digitizing process flows – some savings reinvested in new streaming products •
Slide 85: Delivery of consistent EBITDA positioned for growth
Delivery of consistent EBITDA positioned for growth FY20 FY21 85 EBITDA ($m) 17% 475 462 17% Financial Year End 30 June. All figures presented in A$ under US GAAP. (1) News Corporation Subscription Video Services (SVS) Segment EBITDA margin for the fiscal years ended 30 June 2020 and 2021 were 17% a
Slide 86: Cost to install a subscriber falls as business transforms
Financial Year End 30 June 2021. Capex cost to install a new subscriber includes total box and installation expenses. Traditional Satellite iQ5 Streaming Capex cost to install a new subscriber, by platform $630 - 650 $320 - 340 c. $0 86 As the business transforms to new technology, the cost to insta
Slide 87: Transition to a capital light model from digital strategy
Transition to a capital light model from digital strategy 87 Capital Expenditure as a Percentage of Revenue (%) 14% 10% 7% 2% 2% 1% FY19 FY20 FY21 Total Capex % of Revenue Maintenance Capex % of Revenue • Transition from traditional to digital technology lowering overall asset intensity • Switch to
Slide 88: Highly cash generative
Highly cash generative 88 Financial Year End 30 June. All figures presented in A$ under US GAAP Note: Numbers may not sum due to rounding (1) Refer to Slide 94 for a reconciliation of Foxtel EBITDA to News Corporation SVS Segment EBITDA calculated in accordance with US GAAP EBITDA less Capex ($m) EB
Slide 89: Summary & Takeaways
Summary & Takeaways Patrick Delany 89
Slide 90: Foxtel Group is repositioned for growth
Foxtel Group is repositioned for growth Premium capital lite IP-led company with over 4 million subscribers Multiple and growing revenue streams with strategic pricing flexibility Diverse and innovative streaming products growing rapidly Strengthened Foxtel business with loyal, high value subscriber
Slide 91: Q & A
Q & A 91
Slide 92: Appendix
Appendix 92
Slide 93: Foxtel Group Revenue
Foxtel Group Revenue 93 June Year End (A$m) FY20 FY21 Broadcast(1) 2,287 2,110 Streaming(2) 216 343 Subscription 2,504 2,453 Broadcast(1) 256 265 Streaming(2) 4 17 Advertising 261 281 Other 37 32 Total Revenue 2,801 2,767 Note: Numbers may not sum due to rounding. All figures presented in A$ under U
Slide 94: EBITDA Reconciliation: US GAAP to IFRS
EBITDA Reconciliation: US GAAP to IFRS Note: Numbers may not sum due to rounding. Translation from USD to AUD based on sum of quarterly financial information at respective quarterly exchange rates as reported in News Corp’s FY21 earnings release filed on Form 8-K (the FY21 Release. (1) As reported i