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BOTW: Foxtel's soft landing; No sign of the times for Nine; Football fever
Welcome to Best of the Week, written at the end of an intense couple of weeks around Sydney. I’m running on fumes.
Today: Foxtel’s soft landing (depending how you look at it); reading the runes at the Google news summit and Nine’s brand compromise.
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The delayed Matildas bandwagon gets rolling
Tim Burrowes writes:
Monday saw a diary alignment almost as rare as the transit of Venus across the Sun.
For someone who holds two passports, being able to sit in Cheers bar on George Street, in the correct time zone, and watch England beat Nigeria on penalties, then, in less time than it takes for a pint of Guinness to be ordered and poured, for the Australia-Denmark game to begin, was an occasion of celestial scarcity.
Monday night’s Matildas ratings (nearly 7m reach and an average audience of 3.5m) for Seven suggest that at the last possible moment, we indeed got our shared cultural moment as the country finally got behind the team.
Sponsors who got on board early will be feeling smug at locking in a bargain, while some of the most surprised people in Australia are on on the executive floor at Seven.
Making headlines with Google
One reason for being in town was to visit the Google News Initiative Summit, the first to run in person since the pandemic.
And having last week bemoaned the unwillingness of people to say anything interesting on stage at industry events, Wednesday was a chance to hear from news execs in a closed door, Chatham House Rule session. You can talk about what you learned, but not who you learned it from.
The turnout was impressive. Name the boss of almost any significant media organisation in Australia and they were there.
It was held at Google’s big events space on the ground floor of One Darling Island. The last time I was in that building was a decade or so before when it was still the home of Fairfax Media, a connection commented upon more than once during the day.
The biggest signal from the event - which was mainly focused on sharing some of the publishing experiments being funded by Google across publishers large and small - was the fact that it was actually taking place.
It wasn’t discussed on stage, but those in the room took it as a firm sign that even as Meta is getting ready to seek a divorce from the ecosystem after the shotgun marriage of the News Media Bargaining Code, Google is ready for a recommitment ceremony when the current deals expire over the next year or so.
And my other bigger picture takeout is that Google does not yet have a good answer to the question of how publishers will be remunerated for their content being scraped by the company’s large language model AI systems.
Foxtel toughs it out
Speaking of the news purveyors, yesterday News Corp updated the financial markets with its full financial year performance.
As the company already updates the market each quarter, there were no major surprises.
One new nugget of info yesterday suggests that a float of Foxtel Group, owned by News Corp along with minority partner Telstra, remains a prospect when the IPO markets reopen.
A key factor is new debt financing for Foxtel, with News Corp currently doing the heavy lifting. The company said it was close to an announcement. There wasn’t much new detail about the company’s debt situation in yesterday’s update. We’ll probably have to wait for the publication of the News Corp annual report, usually published in mid-October, for that.
A prepared statement from CEO Robert Thomson in the investor call was a signal though: “We were asked frequently in the past how much more capital we would need to commit to Foxtel, but the question now is how much cash we will receive in coming years.” In other words, he wants Foxtel to be seen as a cash machine again despite the growing content costs it will face.
Foxtel’s streaming growth continued. Sports service Kayo passed 140,000 paying subscribers while Binge crept upwards despite there being less talked-about entertainment content for the quarter.
Overall, Foxtel group has now passed 3m paying subscribers to its streaming services.
Sticking with Foxtel for a moment, revenue and profitability were both up compared to the previous quarter but both down compared to the same period a year before.
The bigger picture was of a 15% reduction in profits across News Corp as a whole, from US$1.7bn to US$1.5bn.
The single biggest reason was a slump in the company’s book publishing arm Harper Collins. Book profits fell 44% for the year from US$306m to $170m. The news media segment, which includes News Corp’s Australian operation, saw profits fall 24% from $217m to $166m for the year.
As is always the case, there are other complications to factor in. It was a 52-week reporting year compared to 53 the year before. And the fluctuating US dollar confuses things when reporting Australian revenue in that currency.
The video segment, which is Foxtel Group, was the only company segment which actually grew its profits for the year, from US$491m to US$579m.
Another contradiction which points to the tight margins in the business of news: The news media segment is News Corp’s biggest in terms revenue (US$2.4bn) and its smallest in terms of profit.
The quarterly numbers were better for the company’s news media division, which was split out from the company’s news & info services division back in 2020. Thanks mainly to redundancies and other cost cutting, the news division had its best fourth quarter for profitability (the red line below) since the switch.
The News Corp update augers reasonably well for the Australian reporting season which starts properly next week. News Corp shares were up 3% this morning.
Red Hat, red face
On Thursday evening I took a stroll down memory lane, or, rather, down the Pacific Highway, close to my former home of Mumbrella who had, shall we say, a difficult week.
I’m going to disappoint the many people who texted asking if I’ll be writing about it today. I can’t offer an inside track on what lies behind the abrupt exits of the two most senior members of Mumbrella’s editorial team, so I’ll leave you to choose between the official version of events and Crikey’s theory.
On my walk, a new sight for North Sydney since I was last in town is the signage on top of Nine’s headquarters.
The squat black tower in Denison Street, which became the new home of Nine nearly three years ago is now the Red Hat building. Red Hat, in case you’re wondering, is some sort of software company.
Nine, as anchor tenant, would have had first call on the signage rights and passed. Given the timing of Nine’s move into the building, that would have been a decision of previous CEO Hugh Marks.
Unlike free to air rival Ten, whose signage overlooks the Western Distributor, and Seven, whose Eveleigh branding can be seen from as far away as Chippendale, Nine’s power base will remain anonymous.
Of course there’s a rationale. Seven had issues with protests during Sunrise’s live shows from its old Martin Place studio so security might be a consideration. And signage rights come at a cost. Plus, what brand to choose from within Nine’s house of brands? (Nine. Of course.)
It’s a mistake. There’s plenty of evidence that physical presence builds brand. That’s why banks used to be built with marble pillars. It was a way of creating confidence in customers that they were permanent fixtures, going nowhere.
Declining the opportunity suggests that when it comes to the sort of big brand building Nine wants its customers to invest in, it’s not really a believer.
As dusk became night and I walked to my appointment with delicious fajitas in Kirribilli, my puzzlement became amusement. Further down the highway, SBS has got in on the act too. The old Bayer sign (or for those with longer memories, Konica Minolta) is now held by SBS, and its ad-supported streaming service SBS On Demand.
Back when that Bayer slot became available in 2017, Mumbrella reported the rights were up for grabs for less than a million dollars.
SBS gave me this statement: “SBS is using this North Sydney site as a way to increase brand awareness for our SBS On Demand platform, which is available free to all Australians.”
“As a hybrid funded public broadcaster, operating in a competitive market, SBS undertakes a broad range of marketing activity to ensure all Australians are aware of our diverse content offering.
“Marketing activity like this supports SBS in reaching a wider audience, and we consulted with our media agency as we do with all opportunities to ensure they deliver value for money for all Australians. The decision to make use of the prominent North Sydney site was made after comparing alternative options, and this opportunity represents good value given it is one of the most trafficked parts of Australia.”
Imagine having to look at the SBS sign from the Nine - sorry, Red Hat - building. It’ll be a nice daily branding masterclass.
Unmade Index falls back below 700
Seja Al Zaidi writes:
After it climbed above 700 points on Thursday for the first time in months, the Unmade Index - which measures how ASX-listed media and marketing stocks are performing - dropped 0.51% to 696.8 points.
even West Media fell a sizeable 5%, while Nine dropped 0.92%. Enero Group had a fall of 0.28%.
ARN Media was the winner of the day, climbing 2% while Domain came in at a close second, rising 1.92%.
Campaign of the Week: It’s Time to Play Better
In each edition of BOTW, our friends at Little Black Book Online highlight their most interesting advertising campaign of the week.
LBB’s AUNZ reporter Casey Martin writes:
This week's campaign comes from Hopeful Monsters for PARK. In light of the Women’s World Cup and conversations around women's sports being at the forefront of people's minds, PARK saw the opportunity to start the conversation around women's sport gear, sharing that 96% of women play in men's kits.
Together with Hopeful Monsters they created a campaign that highlights this issue with insights from professional and grassroots athletes.
In case you missed it:
On Monday, Abe Udy, Seja Al Zaidi and Tim Burrowes discussed why people say such anodyne things at industry events, and the unexpected exit of Mumbrella’s editor:
StW: TV lobbying machine hits Canberra; earnings season predictions; Editor suddenly exits Mumbrella
On Tuesday, Seja Al Zaidi crunched the numbers behind the pullback in betting ads on TV:
On Wednesday, we revealed that Coles is bringing back the bid red hand as it tries to recapture the low prices high ground:
On Thursday, we talked to Thinkerbell about agency philosophy and life after PWC
And on Friday, we previewed what to expect in earnings season:
Time to leave you to your Saturday.
Just like the transit of Venus, which comes in pairs, I’ve a big night of football viewing ahead. England take on Colombia at 8.30pm at Sydney Olympic Park. A few minutes ago, we managed to grab tickets. I yelped.
And before then, there’s the small matter of Australia versus France, taking place at 5pm in Brisbane. I’ll be watching on the big screens at Olympic Park.
I’m heading back to Tasmania tomorrow and will be with Abe Udy on Monday for Start the Week. If my voice holds out.
Have a great weekend.
Publisher - Unmade