9 key quotes from 21CF’s fiscal Q3 2018 earnings call

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Cable networks strength, FOX upfront, Hotstar’s stellar growth in India, more

Yesterday, 21st Century Fox announced its fiscal Q3 2018 financial results. Afterward, the company held an earnings call featuring Executive Chairman Lachlan Murdoch, CEO James Murdoch and CFO John Nallen. It was an opportunity for them to discuss a wide range of topics, including the strong performance of 21CF’s cable networks, Hotstar’s impressive growth in India, the FOX upfront presentation, the benefits of a growing DMVPD universe, Fox News’ resiliency and more.

Here are some key comments from Lachlan and James:

On the continued strength and momentum of the business: “With three quarters behind us in the fiscal year, we’ve made considerable progress on a lot of different fronts, and we feel that the business is in very good health. As Lachlan and John said, we’re focused on moving all of our businesses forward; driving improvements in the viewer experience; making our content more available, not less, both inside and outside the home; and pushing ourselves creatively to build long-term value with our IP while driving up the value of our overarching video brands, and more importantly, creating a more engaged advertising experience.” – James

On the strength of 21CF’s cable networks: “The segment delivered 16 percent growth and its highest EBITDA quarter ever. Much of this strength was driven by continued double-digit affiliate revenue growth at both our domestic and international channel business. This growth reflects the strength of our video brand to distributors and audiences. Cumulative domestic subscribers grew year-over-year driven by subscriber gains at our younger channels, as well as the continued ramp in new virtual MVPD subscriptions.” – Lachlan

On business as usual: “We’re operating the business to drive it forward. We’ve got a regulatory process that is unfolding with respect to these transactions, and in the meantime, we’re running the business on a business-as-usual basis in terms of focusing on the velocity of focusing on new product development as well as executing across the world in what’s a pretty diverse and dynamic business. So there’s no shift in what we’ve been doing vis-à-vis these transactions.” – James

On the strength of 21CF’s live sports and news programming: “We saw continued strength in sports and news, demonstrating the competitive advantage of our outstanding brands and content that are primarily viewed live. The Fox News Channel achieved its highest quarterly EBITDA in its history. Its younger sibling, Fox Business Network, beat its competition in viewership for the sixth consecutive quarter.” – Lachlan

On Hotstar’s strong growth and viewership: “Our sports channels are growing at a fast clip, including driving massive scale of our mobile platform, Hotstar, which saw its reach exceed 140 million in the month of April and is currently showing more than 2.5 times growth in IPL watch time over last year. Overall, Hotstar continues to thrive as the go-to digital video platform and is now seeing 1 billion minutes of daily watch time regularly. To put Hotstar scale into perspective, we had 7 million concurrent live streams during a single IPL match this season, which is likely the highest ever for a sporting event on a streaming service in the world.” – James

On the FOX upfront (Monday, May 14): “We couldn’t be more excited going into Monday with the schedule that we’ve put together. I think last year, we coined the term and made the promise that Fox would ‘own the fall,’ particularly with the strength of our [football], and Major League Baseball and post-season. This year, we’re going in with Thursday Night Football, so we’ll be in an even more stronger and more enviable position. And as I said, the schedule, which is just being finalized now, couldn’t be stronger, and I think we’ll have a tremendous autumn. We will be selling as we have in past years aggregate across both the broadcast network and the cable assets as well.” – Lachlan

On the growing DMVPD universe and its positive effect on affiliate revenue: “At this point, so this is a little bit after the close of the quarter, we were seeing a good bit over 4 million [U.S.] digital MVPD customers. And I would say from what we can tell, the cable deterioration is not as fast as the direct broadcast satellite and telco deterioration in subscriber bases. How much of that is shifting to digital MVPDs and how much is new customers in the market – I think it’s split. We’re also seeing a lot of the so-called cord-nevers acquiring really attractive bundles from the new entrants, particularly YouTube TV and Hulu Live, which continue to grow really well. So we couldn’t be more excited about the affiliate universe. I think it just goes to show that new competition and lower barriers to entry drives real innovation for customers, and that competition can expand the overall marketplace. We would expect it to continue.” – James

On Fox News’ impressive year-over-year performance: “In terms of the Fox News comp, I think one of the important things to mention is that the comp is difficult when you compare it to a year ago – the first 100 days of this presidency and what were record-breaking ratings. I should say though, that if you look April to April – it’s actually just outside of this quarter we’re reporting – last April was the last month where Bill O’Reilly was leading our primetime before he left the channel. And if you look April to April, we’ve held our ratings incredibly well. We’re basically flat with last year, and I think that’s a real testament to the strength of the brand and, obviously, the strength of the talent on air. In terms of D2C, obviously, the advertising on the D2C platform when we launch it – we expect it to be able to drive significantly higher CPMs.” – Lachlan

On Sky: “Now, as the founding shareholder of Sky, we remain committed to our bid to buy the remaining Sky shares we do not own and expect to receive U.K. regulatory approval in a month or two. Comcast has just begun its regulatory process, and we think it’s very reasonable for Comcast to undergo a robust regulatory review which could take months. The Comcast review would be appropriate, given the important role of Sky and Sky News play in the U.K. media market.” – James