4/04/2013

Foxtel’s Solid Financial Pro-forma Performance in 2012

 

The mid-2012 merger of the metropolitan-based Foxtel with the regional and rural-based Austar subscription television groups created Australia’s most profitable media entity.

The merger-enlarged entity, which retains the Foxtel name and which is now equally co-owned by News Corporation and Telstra, appears to have experienced continued good growth, on a pro-forma basis, in a number of key performance indicators during the year ending 31 December 2012 (CY 2012), despite a slowdown in the overall Australian economy and even though the full synergistic benefits of the consolidation have yet to be realised.

Although Foxtel itself has declined to report on its performance in the most recent six month period ending 31 December 2012 due to the impending split-up of News Corporation’s global assets into two distinct entities in mid-2013, other information released by both Foxtel and its current and former stakeholders has enabled Global Media Analysis (GMA) to construct what it considers to be a reasonably accurate estimate of the broad financial performance of the consolidated Foxtel – Austar group on a pro-forma basis in both CY 2012, and also over the longer six years period commencing in CY 2007.

The main conclusion of GMA’s assessment of the pro-forma consolidation of Foxtel and Austar in both CY 2102 and over the five preceding years is that, unlike more traditional media companies, the consolidated subscription TV entity continued to improve on most key performance indicators throughout the global financial crisis (GFC) albeit at a lesser rate, and more specifically;

  • Residential subscriber numbers increased by about 1.7% in CY 2012 to reach 2.3 million as at 31 December 2012;
  • Total Revenues grew by about 4.7% to exceed $3.0 billion in CY 2012, which was below the 7.5% CAGR experienced between CY 2007 and CY 2012;
  • Perhaps most importantly, estimated Operating Expenses (Opex) of $2.1 billion in CY 2012 represented an annual increase of only 1.8%, which was well below the 5.2% CAGR in Opex which was recorded between CY 2007 and CY 2012; consequently
  • Earnings Before Interest Depreciation & Tax (EBITDA) in CY 2012 rose by an impressive 12.0% to exceed $0.9 billion in CY 2012, not far below the 14.4% CAGR recorded between CY 2007 and CY 2012; and
  • EBITDA profit margins improved for the sixth straight year to reach 30.1% in CY 2012.

Slow But Continued Subscriber Growth
Foxtel’s residential subscribers totalled 2.27 million as at December 2012, which represented a 1.7% annual increase, according to Telstra.

GMA estimates that between CY 2007 and CY 2012 on a consolidated pro-forma basis, and despite the global financial crisis (GFC) which commenced in late CY 2007, residential subscribers to Foxtel increased steadily, albeit often at a declining annual rate, to generate a compound annual growth rate (CAGR) of about 2.2% over entire post-GFC period.


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Report date: 04/04/2013
Industry: Subscription Television
Country: Australia
Topic: Finance
Document Number: GMA2013-03

You can download the full repost here: Download


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