Murdoch Gives Up Bonus After Write-Down
MEDIA Zoe Samios
Rupert Murdoch’s News Corporation has written down the value of pay-TV operator Foxtel by $1.4 billion as it warned investors the COVID-19 pandemic would have a material impact on its business.
News Corporation chief executive Robert Thomson attributed most of the company’s $US1 billion ($1.5 billion) loss in the quarter to March 31 to an impairment related to goodwill and intangible assets at Foxtel, in which it has a majority stake.
Telstra, which owns 35 per cent of Foxtel, also wrote down the value of its shareholding by $300 million yesterday.
But News Corporation’s finance chief, Susan Panuccio, assured investors Foxtel would not breach banking covenants over the next 12 months and that News Corp had no plans to provide any additional funding. The writedown by Telstra and News Corporation for their stakes means Foxtel is now valued at about $1.3 billion.
‘‘ The value went from $2.1 billion to $1.3 billion. They cut almost 35-40 per cent of the value. I definitely can see that the value of Foxtel is going down, I just don’t know how much goodwill they have on the books,’’ JP Morgan analyst Eric Pan said.
‘‘ It’s a matter of the pace of the decline and whether they expect they can stabilise the business . If they can’t do that, they would have to write down the value of the asset.’’
Foxtel had 2.93 million subscribers as of March 31, a figure driven by growth of its sports subscription service Kayo. The company reported 444,000 Kayo subscriptions for the quarter, 408,000 of which were paying subscribers. The result was an improvement, but Mr Thomson warned the pandemic would have a material impact on fourth-quarter results.
Kayo’s subscriber numbers have fallen since March and hit just more than 272,000 paying subscribers by May 2, including subscribers who received a discount for the service through Telstra.
Foxtel is meanwhile trying to renegotiate the price it pays for sports codes. ‘‘ Obviously, there needs to be a fundamental reset,’’ Mr Thomson said. ‘‘ It’s not just the quantity of games, it’s the quality of the experience, and that has obviously been diminished. And that reset has to apply longer-term to [sports] rights in Australia.’’
Foxtel employed about 2500 staff until February and has announced multiple redundancy rounds this year.
But Mr Thomson and Telstra boss Andrew Penn are both optimistic that a crucial content deal with US entertainment giant WarnerMedia secured by Foxtel earlier this week will help the business . The deal, estimated to be worth between $100 million and $200 million, includes the rights to HBO programs including Game of Thrones, Succession and Big Little Lies and Warner Bros shows such as The Big Bang Theory and Friends.
Meanwhile, News Corporation said its executive chairman Rupert Murdoch would not receive his annual cash bonus this financial year as his executive team tries to mitigate the damage caused by the pandemic . Mr Thomson also said he would forgo 75 per cent of his annual cash bonus after the company warned investors of significant third-quarter revenue declines.
News Corp reported revenue of $US2.27 billion for the three months to March, down 8 per cent from the previous year. Spend from advertisers at News Corp Australia fell by more than 45 per cent in April, with the result also hurt by a 5 per cent hit from the weaker Australian dollar.
....... Me thinks NRL are in trouble as both broadcasters are in financial meltdown.