Cable Network Programming segment
21st Century Fox’s (FOXA) Cable Network Programming segment is an important growth driver for the company. The Cable Network Programming segment produces news, entertainment, and sports, which are distributed by cable television networks such as Comcast (CMCSA), telecommunication companies such as Verizon (VZ), and online video distributors such as Netflix (NFLX).
In fiscal 2015, the Cable Network Programming segment had revenues of $13.7 billion, an increase of 12% over revenues in fiscal 2014, and an OIBDA (operating income before depreciation and amortization) of $4.6 billion, an increase of 5% from fiscal 2014.
Reason for the increase in revenues
A primary reason for the 12% rise in revenues was affiliate fees. Affiliate fees are the fees paid per subscriber per month to 21st Century Fox by cable companies to carry its channels. As the above chart indicates, domestic affiliate fee revenues increased 17% in fiscal 2015. Around 60% of this increase in affiliate fee revenues was due to higher average rates per subscriber per month for channels such as FS1, RSNs (regional sports networks), Fox News Channel, and FX.
International affiliate fee revenue grew by 3% in fiscal 2015. This was due to an increase in subscribers and higher rates for Fox International Channels, or FIC, in Latin America and the company’s new affiliate agreements for the STAR network in India.
Advertising revenues grew by 4% in the US on the back of higher program ratings for the company’s channels such as FX and higher pricing for advertisers on Fox News in the US. Advertising revenues grew by 14% internationally due to higher pricing for advertisers for STAR channels in India. The higher advertising revenue growth was also due to the telecast of major sports events both in the US and internationally.
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