There’s no shame at News Corp Australia. Its propaganda outlets complain about the evils of inflation and Labor’s economic mismanagement, while its various arms — Foxtel and REA Group — gouge consumers for millions of dollars extra a year in higher charges.
Indeed, recent price rises from Foxtel and REA are good examples of exactly the kind of “sticky inflation” that worries the Reserve Bank so much. REA Group, 61% owned by News Corp and a major profit earner for the company, managed to raise prices by 13% for home buyers using its listings service and 8% for renters. This is what REA said in its half-year financial report to the ASX yesterday:
Australian residential revenue increased 19% to $505.5 million with a 19% increase in buy yield and 4% increase in national listings. Buy yield benefited from a 13% average national price rise, increased Premiere+ and total depth penetration, and a 3% positive impact from geographical mix due to outperformance of the higher yielding Sydney and Melbourne markets. Rent revenue increased with an 8% average price rise and growth in depth penetration, partly offset by a 2% decline in listings.
The 13% rise was three times the CPI of 4.1% in the December quarter and the 8% rise for renters was twice the CPI. And they fed into housing costs, a key area of continuing inflationary concern for the RBA.
Foxtel — 65% owned by News Corp — also got in on the act in the December quarter:
Revenues of $470 million in the quarter increased $8 million, or 2%, compared with the prior year, driven by higher revenues from Kayo and BINGE from increases in both volume and pricing, despite a more difficult Summer sports season and inflationary pressures.
“Pricing” is such an anodyne word without any attendant numbers. Foxtel’s main growth businesses now are BINGE and Kayo. Together they make up more than half of Foxtel’s (reduced) total subscribers of 4.317 million, down from 4.650 million paid at June 30 last year. Foxtel last year lifted the cost of BINGE by $2 a month to $18 a month — an increase of 12.5%, which is three times the rate of consumer price inflation. But the increase is bigger if you go back to 2022, when the price was lifted from $14 to $16 a month. That means that from mid-2022 to October last year, Foxtel has lifted the price by 28.5%.
Kayo is an even more egregious example of price gouging. It is lifting the cost of its basic stream to $A35 a month from $30 from February 14 (Happy Valentine’s Day to subscribers!). That price rise comes just before the big attractions of the year, the winter AFL and NRL competitions.
There are plenty of victims of this gouging. At December 31 last year, News Corp said Binge had 1.471 million paying customers, and Kayo had 1.173 million.
Foxtel is also engaging in shrinkflation: it is limiting the number of streams existing Kayo Premium subscribers can have from three to two and migrating them to the Basic offering of $35 a month (which they are paying anyway). That means a shift from three streams at nearly $12 each to two streams at $17.50 each, which is an effective price rise of almost 50%.
All up that’s more than $105 million a year in extra revenue for Foxtel and News Corp, its controlling shareholder which wants to float Foxtel on the ASX if it can this year.
The cost of Foxtel Plus is also going up more than 30% to $70 a month; movies are going up 32% to $95. No wonder Foxtel residential subscriber numbers fell more than 100,000 in the 18 months from the end of 2021-22 financial year to the end of December.
Foxtel’s not alone — Disney lifted the price of its Disney+ stream for Australian users by 30% from next month. But you don’t get Disney banging on about the cost of living and how someone should do something about it…
