11 key quotes from 21CF’s fiscal Q4 2018 and full-year earnings call

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FOX’s robust NFL schedule, growth of cable network brands, big viewership gains for Star India

Yesterday, 21st Century Fox announced its financial results for fiscal Q4 2018 and the full fiscal year. 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 an important update on the proposed Disney transaction and spinoff of new “Fox,” continued strength for Fox News and Fox Business Network, a strong year for FOX Sports, prospects for FOX’s NFL schedule this fall, and more.

Here are some key comments from Lachlan and James:

On the prospects of new “Fox”: “Progress in forging the new ‘Fox’ as a standalone entity has been substantial. Anchored by the No. 1 news channel across of all of basic cable and a sports network that captures 40 percent of all NFL viewership, the new ‘Fox’ will boast the schedule of America’s most engaging sports news and entertainment programming.” – Lachlan

On the successful growth strategy for 21CF’s cable network brands: “We just delivered our fourth consecutive quarter of double-digit domestic affiliate fee growth, reflecting subscriber increases in both digital MVPD services and our younger underpenetrated channels. These gains more than offset declines in traditional subscribers. For 21st Century Fox in the U.S., we have more subscribers today than we did a year ago. And in fact, for our networks that are carried on all virtual MVPD services, revenue from subscriber additions on those services are now exceeding revenue declines from subscriber churn on traditional platforms. And these achievements, I think, are part of a growth strategy and a business agenda we’ve executed against really for the better part of the decade. The Disney merger and separation transaction we’re getting to the finish line and the value they unlock for shareholders clearly underscore this point.” – James

On the continued strength of Fox News and Fox Business Network: “Our cable network portfolio continues to be led by the strength of Fox News, which, this quarter, maintained its position as the No. 1 cable network. Also, the Fox Business Network achieved its highest-rated year ever this past fiscal year. In fact, the Fox Business Network beat CNBC in the business day for the past 14 consecutive months, and Fox News has been No. 1 in total day and total viewers for 25 months straight.” – Lachlan

On the creative success of 21CF’s film and TV studios: “I’m particularly proud of the creative excellence and unique experiences we delivered to customers across our businesses. We’re pleased with the turnaround of our film studio, which delivered a solid performance by any measure. It led the industry in awards, including the Best Picture Academy Award for Fox Searchlight’s ‘Shape of Water’; and on top of this, we ended the year with the box office success of ‘Deadpool 2,’ which has exceeded $730 million in worldwide receipts. Our television studio has three shows that were No. 1 on their respective networks, and four of the top 10 new dramas of the broadcast season – ‘9-1-1,’ ‘The Orville,’ ‘The Gifted’ and ‘The Resident’ – driving multiplatform audience growth for entertainment on the broadcast network.” – James

On a strong year for FOX Sports: “Equally as impressive, FOX Sports had its highest viewership ever in calendar 2017 on the combined strength of our sports programming across the broadcast network and the cable networks: FS1 and FOX Sports 2. Live sport is clearly the most valuable content in our industry, and FOX Sports is the leader in live events. We are thrilled with the performance of our first FIFA Men’s World Cup, which set new viewership marks for non-U.S. matches in the Group Stage round of 16 quarterfinals and semifinals, all despite the absence of the U.S. national team and a challenging time difference between Moscow and the United States. In addition to exceeding our financial expectations, the World Cup also vaulted FOX Sports 1 ahead of ESPN2 in total day viewership for the calendar year-to-date and puts FOX Sports 1 on track to achieve a fifth straight year of growth in total day viewership.” – Lachlan

On significant viewership gains for Star India: “At Star India, the addition of the 60-match Indian Premier League on Star Sports has yielded dramatic results. The tournaments are almost a 30 percent increase in viewership over last year and the target audience on TV. Average match reach and engagement has increased by double digits, 15 percent and 13 percent respectively. We also saw the IPL dramatically increase viewership on our Hotstar mobile platform. To give you one data point: With 10.3 million concurrent live viewers during the IPL final match, it was the most concurrently watched live digital event in the world ever.” – James

On anticipation for FOX’s upcoming NFL programming: “Looking forward, the launch of NFL Thursday Night Football in September will enhance FOX Sports’ already dominant position in television’s highest-rated programming. FOX’s 38 regular-season NFL windows will be the most ever on a single network, and FOX will command approximately 40 percent of all regular-season NFL viewing. We also expect that our NFL will account for three of television’s five highest-rated programs of this fall, and that “America’s Game of the Week” will remain TV’s No. 1 show for a 10th consecutive season.” – Lachlan

On the reasoning behind the investment in Thursday Night Football: “The reason we chose to do that is really around the incredible promotional platform that gives us not only for sport and for news, but also for entertainment. So if you look at the night, if you think about next year when we also have WWE on Friday nights, you actually have a schedule in the fall. We are only programming entertainment Monday through Wednesday and Sunday nights. And I think that gives us an incredible opportunity and, honestly, an incredible advantage in terms of how we can really focus our programming choices onto those nights assisted by the country’s best promotion platform in our sports lineup.” – Lachlan

On 21CF’s international direct-to-consumer positioning: “We remain very, very enthusiastic about the prospects for Hulu, and I think we and the other partners in Hulu are eager to invest and continue to grow the platform… The volume growth is very, very strong. We’re very excited about that business and the dimension that it adds to the overall company. And then, sort of more generally with respect to direct-to-consumer businesses, you’ve seen our affiliate, Sky, continue to grow well; and the incredible strength in Asia, particularly with Hotstar at India, which is the mobile direct-to-consumer over-the-top business. We think it’s been a real core competence of the company and one that has put us in good stead as it invested in content and this digital vertical integration has really paid dividends for us.” – James

On finding the right home for programming: “We try to find the best result for the program and the best result for us and our partners in terms of finding a home in terms of downstream licensing of that. Sometimes, that’s the best thing to do that is in-house. Sometimes it’s to seek partnership elsewhere, which we’ve done in some cases, where it’s clearly the right strategy. So we remain flexible and open-minded around what the right thing to do with each program and with each of our partners is.” – James

On shareholder approval of the proposed Disney transaction and spinoff of new “Fox”: “It is pleasing to report that our shareholders overwhelmingly endorsed our recommendation of this transaction with over 99 percent voting in favor. Shareholder approval is a key milestone towards the deal completing. In late June, the U.S. Department of Justice entered into a consent decree with Disney and 21st Century Fox. We are now focused on obtaining regulatory approvals outside of the United States and on track to close our transaction in the first half of calendar 2019.” – Lachlan

Note: 21CF will not hold a fiscal Q1 2019 earnings call due to the pending merger with Disney.