EPL, what EPL? You know when the Murdoch clan’s companies have felt a loss hard by the amount of scorn and ridicule heaped on the offending party, or the person involved, or product lost. The loss of the Australian broadcast and streaming rights to the English Premier League competition to former cable TV rival, Optus, has sparked a fair amount of sour grapes.
On Friday, News Corp CEO Robert Thomson questioned the value of the world’s most famous football league. Speaking during an analysts’ briefing for News Corp’s weak first-quarter results, Thomson defended the decision not to outbid Optus, saying:
“You can buy any right as long as you’re prepared to pay any price. But, sometimes, by our reckoning, any price is not appropriate for us or our shareholders … There are some EPL fans in Australia, there’s no doubt about that, but we’re certainly not talking about prime time. The 3pm kickoff in UK is 2am in Australia … Hardcore fans of anything in Australia are called tragics, but the sweet spot for EPL at 2 in the morning [is]: tragics are insomniacs.”
US dollar’s rise hurts. Perhaps the performance of Fox Sports was forefront in the CEO’s mind and thinking. Here’s how News described Fox Sports performance in the September quarter in its quarterly report filed with the US SEC on Saturday morning, our time:
“For the three months ended September 30, 2015, revenues and Segment EBITDA at the Cable Network Programming. fluctuations, which more than offset higher affiliate and advertising revenues. The decrease in Segment EBITDA was primarily the result of increased programming costs related to the Rugby World Cup and the negative impact of foreign currency fluctuations, which more than offset the higher affiliate and advertising revenues noted above. The impact of foreign currency fluctuations of the U.S. dollar against the Australian dollar resulted in a revenue decrease of $29 million, or 21%, and a Segment EBITDA decrease of $7 million.”
And with the US Federal Reserve looking to lift interest rates next month after the very strong October jobs report, the US dollar’s strength is going to continue and hit News Corp’s revenue and earnings, especially in its news and information, real estate and cable sports programming assets in Australia. — Glenn Dyer
What about the NRL? The big test for Thomson and Fox Sports lies ahead — the new NRL pay-TV contract. Those rights have to be retained, or else the value of the 50% stake in Foxtel will fall sharply. And there’s an associated problem that emerged on Friday with the report on Fairfax Media’s websites that Telstra has started thinking about whether it wants to be a continuing 50% holder in Foxtel. Telstra wants the NRL rights retained so it can maximise its return on its Foxtel stake (upwards of $2 billion). News knows that the loss of the NRL rights would cripple Fox Sports and lower the value of Foxtel, allowing it to exercise its first right of refusal over Telstra’s stake. But that would entail years of financial misery at Fox Sports and Foxtel, and bad blood with Telstra and other partners — and irrelevance for News Corp’s papers in the NRL states of Queensland and NSW, which would be cut out of their links with Fox Sports and Foxtel. — Glenn Dyer
US rate rise looms, really. Friday’s very strong October jobs report for the US confirms the Fed is on track to make life easier for everyone by lifting rates at the end of its two-day December meeting, and end months of uncertainty. The 271,000 new jobs last month (and 12,000 new ones found for weak August and September) was the strongest rate of job creation thus far this year. The unemployment rate dropped to 5%, half the level it reached during the worst days of the recession and wage growth jumped to an annual 2.5% from 2.2%. The Fed has made clear — both in its statement after its October meeting and chair Janet Yellen’s comments last week in testimony to the US Congress — that a rate hike is firmly on the table at the December 15-16 meeting. That muted cheering you heard this morning came from Martin Place in Sydney, where the Reserve Bank’s management gave thanks to the stronger US economy for settling the uncertainty. Now for the US November jobs report on December 4, one day after the European Central Bank is due to reveal its plans to further expand its quantitative easing. They won’t make any difference. — Glenn Dyer
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