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Chase Carey: Low Cost Rentals Becoming Less of a Force

8 May, 2013 By: Erik Gruenwedel

Sales of digital movies coupled with a strong Blu-ray Disc market and a steady DVD business are negatively impacting lower-cost rental options such as kiosks, News Corp. COO and president Chase Carey told analysts.

Speaking May 8 in a fiscal call, Carey said 20th Century Fox Home Entertainment generated first-quarter (ended March 31) revenue that exceeded the industry’s reported first-quarter 5% year-over-year growth. He said primary factors include wider consumer adoption of early release digital sellthrough and transactional video-on-demand.

Indeed, since the launch of FoxDigitalHD.com, the studio has seen a 400% uptick on sales of digital titles released ahead of packaged media.

“Home video has some nice momentum,” Carey said. “The real driving force is digital, which is increasingly getting traction. These pre-DVD digital releases have been a real success for us.”

He reiterated that the overall home entertainment continues to grow as DVD sales stabilize and Blu-ray absorbs declines in the older format. The COO said better marketing, pricing and product availability is underscoring the turnaround.

“I think some of the really low priced rentals [are] becoming less of a force,” Carey said. “I think we’re excited that after a period of a couple of years where you were digesting a resettling of the home video business, we got some nice health growth to that business.”

Meanwhile, strong global home entertainment and theatrical sales of Life of Pi, Taken 2 and Ice Age: Continental Drift contributed to 20th Century Fox Studios reporting third-quarter (ended March 31) operating income of $289 million — up 6% from operating income of $272 million during the previous-year period.

The studio generated $2 billion in revenue in the quarter, up more than 17% from revenue of $1.7 billion last year.

The studio surpassed $1 billion in operating income through the first nine months of its fiscal year, up about 6% from the same period last year.

The quarter also included theatrical release costs for the release of The Croods, the first feature in Fox’s DreamWorks Animation distribution deal. The film has grossed more than $500 million in worldwide box office to date.

News Corp. said it plans to finalize separation of its publishing and media segments in June, with the latter now called 21st Century Fox.

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