Latest / What the Flux / News Corp's black sheep | McDonald's chicken rules the roost | Spotify's price rise sparks shares

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News Corp's black sheep | McDonald's chicken rules the roost | Spotify's price rise sparks shares · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brettan, I'm justin and it's Monday, eleventh of August.
• 0:09
  Speaker 1: Josey boy. Tomorrow is the big day where the Reserve
• 0:12
  Speaker 1: Bank of Australia's board members will announce their big cash
• 0:14
  Speaker 1: rate decision for August. Will it remain paused? Will it drop?
• 0:18
  Speaker 1: Will it increase?
• 0:19
  Speaker 2: Likely?
• 0:19
  Speaker 1: Does it? Boy? The markets are currently tipping a ninety
• 0:22
  Speaker 1: six percent chance of a cash rate cut, but it
• 0:24
  Speaker 1: was pretty high last month and the RBA held firm
• 0:27
  Speaker 1: two thirty pm tomorrow.
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  Speaker 2: That is right, be man, and you can guarantee that
• 0:31
  Speaker 2: Flux will be there with you as soon as it happens.
• 0:33
  Speaker 2: We'll have the breakdown of the decision, why the RBA
• 0:36
  Speaker 2: made that call and what it means for you. To
• 0:38
  Speaker 2: make sure to download the Flux app and check it out.
• 0:40
  Speaker 1: Three riveting stories today, Juzzy boy, Let's do it for
• 0:44
  Speaker 1: our first news. Corp has seen a fourteen percent jump
• 0:47
  Speaker 1: in Ebitt Dart for the full year, but parts of
• 0:49
  Speaker 1: its Australian operations have become a bit of a family embarrassment.
• 0:53
  Speaker 2: I believe they called these results sterling very on brand
• 0:56
  Speaker 2: for a company that owns The Times in the UK,
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  Speaker 2: so tell me more so.
• 0:59
  Speaker 1: News Coop is the global media in publishing behemoth that
• 1:02
  Speaker 1: was founded way back in nineteen eighty.
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  Speaker 2: It owns newspapers all over the world, from the Wall
• 1:06
  Speaker 2: Street Journal to the New York Post to The Times
• 1:09
  Speaker 2: in the UK and.
• 1:10
  Speaker 1: In Australia we'd been talking the Australian Herald's, Sun, Daily
• 1:14
  Speaker 1: Telegraph and several others.
• 1:16
  Speaker 2: Yep. Not to forget, it owns a sixty one percent
• 1:18
  Speaker 2: chunk of Ozzie real estate Giant, Aria.
• 1:20
  Speaker 1: Group and Juseyboy. Overall, the year panned out pretty well
• 1:24
  Speaker 1: for News Corp yep. Sor it's four year revenue jump
• 1:27
  Speaker 1: two percent not bad, and it's earning for interest, tax,
• 1:30
  Speaker 1: appreciation and amortization or EBIT dark jumped fourteen percent. They
• 1:34
  Speaker 1: tipped their hat off to Aria Group as well as
• 1:36
  Speaker 1: their US publication dow joone.
• 1:38
  Speaker 2: Yep, But they man it was News Corp's og Ozzie
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  Speaker 2: publications that really let them down. Yep.
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  Speaker 1: In FY twenty five, Melbourne's Herald Sun and Brisbane's Courier
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  Speaker 1: Mail and Adelaide's The Advertiser they all lost paid subscriber couch.
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  Speaker 2: But in good news for News Corp, The Australian and
• 1:52
  Speaker 2: Sydney's Daily Telegraph jumped five percent in subscriber.
• 1:55
  Speaker 1: Base and Juzzie Boy subscriber churn on its media division
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  Speaker 1: is an ongoing challenge that you News Corp just needs to.
• 2:00
  Speaker 2: Manage yep, So what is the key learning here?
• 2:03
  Speaker 1: Subscription churn is the number or percentage of customers who
• 2:06
  Speaker 1: stop paying for a subscription service during a specific period.
• 2:10
  Speaker 2: For media companies, churney is a critical metric because their
• 2:13
  Speaker 2: subscriber revenue is recurring.
• 2:14
  Speaker 1: So that means losing a paying reader isn't just a
• 2:17
  Speaker 1: one off hit, it's an ongoing loss of income and
• 2:20
  Speaker 1: be man In news Corp's case, the one to two
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  Speaker 1: percent drop in subscribers across their tabloids means thousands of
• 2:25
  Speaker 1: people canceling and improving retention by just five percent can
• 2:28
  Speaker 1: boost profits by anywhere between twenty five percent and even
• 2:32
  Speaker 1: up to ninety five percent, but.
• 2:33
  Speaker 2: They man The flip side is that acquiring a new
• 2:35
  Speaker 2: customer can cost five to seven times more than retaining
• 2:38
  Speaker 2: an existing one, and for News Corp, there aren't enough
• 2:41
  Speaker 2: new subscribers that are offsetting the churned one and this
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  Speaker 2: compounds over time.
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  Speaker 1: So unless News Corp. Can stop the churn, and they'll
• 2:48
  Speaker 1: be stuck in a pretty expensive game of marketing to
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  Speaker 1: sustain their subscriber numbers.
• 2:52
  Speaker 2: For our second story, McDonald's has bounced back in the
• 2:55
  Speaker 2: most recent quarter. It's going full Klonel Sanders in the
• 2:58
  Speaker 2: Chicken Wars.
• 3:00
  Speaker 1: Macide's flipping burgers and flipping their fortunes as well. What
• 3:03
  Speaker 1: the Ronald McDonald is going on here?
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  Speaker 2: Okay? So McDonald's found back in nineteen forty in California
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  Speaker 2: and has become the world's largest fast food chain.
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  Speaker 1: Get this, McDonald serves over sixty five million customers daily
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  Speaker 1: across more than one hundred countries and then man.
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  Speaker 2: In May this year, McDonald's gave a complete mayor of
• 3:19
  Speaker 2: an earnings update.
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  Speaker 1: Yes, I do recall that macas warned of its worst
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  Speaker 1: results since the pandemic. So this quarter, investors and shareholders
• 3:25
  Speaker 1: and obviously McDonald's customers were eagerly awaiting the results and
• 3:29
  Speaker 1: the next collab or new product announcement.
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  Speaker 2: And it was good news for all because they quarterly
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  Speaker 2: revenue hit six point eight four billion US dollars, which
• 3:36
  Speaker 2: beat expectations of around six point seven bill.
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  Speaker 1: And net income increased to two point twenty five billion
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  Speaker 1: US dollars, up from just over two billion US dollars
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  Speaker 1: last year.
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  Speaker 2: Even the Grimma's milkshake flop couldn't slow it.
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  Speaker 1: Down, and does it wait? The secret to its turnaround
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  Speaker 1: in profit comes from its push into chicken.
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  Speaker 2: Which has really appealed to its value customers because it
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  Speaker 2: can charge value prices.
• 3:56
  Speaker 1: So what is the grimms milkshake key learning?
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  Speaker 2: Here at fast who joins? Many choices aren't just about taste,
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  Speaker 2: They're about what fattens the bottom line.
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  Speaker 1: In a cost of living crunch. Macca's reckons that value
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  Speaker 1: has become a non negotiable for customers.
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  Speaker 2: And the man, last time I checked it, you can't
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  Speaker 2: offer value on beef products.
• 4:12
  Speaker 1: We'll get this juzzi boy. According to US government data,
• 4:15
  Speaker 1: the average price of a whole chicken in the US
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  Speaker 1: was one dollar ninety nine per pound, and that was
• 4:20
  Speaker 1: in October twenty twenty four, while a.
• 4:21
  Speaker 2: Pound of ground beef was five dollars fifty nine.
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  Speaker 1: And in Australia, beef is roughly four and a half
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  Speaker 1: times more expensive than chicken as an average retail price,
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  Speaker 1: and that's according to Rabobank.
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  Speaker 2: So Mackidee has capitalized on that price differential and chicken demand.
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  Speaker 1: We're talking the chicken, Big Mac and the crispy range,
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  Speaker 1: which is more affordable for customers but also better for
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  Speaker 1: Maca's own margins.
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  Speaker 2: In fact, be Man McDonald's grown its chicken business to
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  Speaker 2: double the size of beef in terms of market.
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  Speaker 1: Share and jusie boy. It's a sign of how much
• 4:48
  Speaker 1: the fast food landscape has shifted.
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  Speaker 2: Yeah, for decades, beef burgers with a crown jewel of the.
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  Speaker 1: Menu, but now it seems like chicken is ruling the roost.
• 4:57
  Speaker 2: For our third and final story, Spotify has warned customers
• 5:01
  Speaker 2: of a price rise for its premium subscription, and a
• 5:03
  Speaker 2: shares jumped eight percent on the news.
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  Speaker 1: This is certainly not music to the ears of Spotify subscribers,
• 5:09
  Speaker 1: so tell me more.
• 5:10
  Speaker 2: Spotify launching Sweden in two thousand and eight and is
• 5:12
  Speaker 2: the world's largest music streaming service.
• 5:14
  Speaker 1: It has nearly seven hundred million total users with two
• 5:17
  Speaker 1: hundred and seventy six million paying subscribers.
• 5:20
  Speaker 2: But then manned. Last month. Spotify shares got whacked after
• 5:23
  Speaker 2: it posted an eighty six million euro quarterly loss.
• 5:26
  Speaker 1: We're talking higher costs of staffing, marketing, and payroll taxes, So.
• 5:29
  Speaker 2: Now Spotify will pull the price leave to recover from
• 5:32
  Speaker 2: some of those losses.
• 5:33
  Speaker 1: Yep, they're planning to raise subscription prices across South Asia,
• 5:37
  Speaker 1: the Middle East, Africa, Europe, Latin America, and Asia Pacific.
• 5:41
  Speaker 2: The only region saved was the US because they've already
• 5:43
  Speaker 2: capped two price rises in the past two years.
• 5:45
  Speaker 1: And Jazi Boy investors have been pushing for more price
• 5:48
  Speaker 1: increases for years.
• 5:49
  Speaker 2: So when they got wind of this news, Spotify shares
• 5:51
  Speaker 2: popped eight percent.
• 5:52
  Speaker 1: Because there isn't expected to be any impact on total
• 5:56
  Speaker 1: subscriber numbers.
• 5:57
  Speaker 2: So what is the key learning here?
• 5:58
  Speaker 1: Pricing power is the ability of a company to increase
• 6:01
  Speaker 1: prices without significantly reducing demand for its product or service and.
• 6:05
  Speaker 2: Be man in subscription based businesses like Spotify. Pricing power
• 6:08
  Speaker 2: can be built on a range of factors.
• 6:10
  Speaker 1: For some subscribers, it might be the playlists or the
• 6:12
  Speaker 1: exclusive podcasts that keep them around despite the price rise.
• 6:15
  Speaker 2: For others, it's more part of a habit formation because
• 6:18
  Speaker 2: Spotify's become an embedded part of their daily life, and
• 6:21
  Speaker 2: with these sticky features, it means subscribers are less likely
• 6:23
  Speaker 2: to cancel when prices rise. This means Spotify can lift
• 6:26
  Speaker 2: prices incrementally while retaining most of its base. But be man,
• 6:30
  Speaker 2: it is a bit of a balancing act.
• 6:32
  Speaker 1: Yeap Raise prices too much or too often, and you
• 6:35
  Speaker 1: risk losing subscribers to rivals like Apple Music or YouTube
• 6:38
  Speaker 1: Music plucks.
• 6:39
  Speaker 2: An two thirty pm tomorrow, the RBA will be announcing
• 6:42
  Speaker 2: their cash rate decision. It might be a pause, might
• 6:44
  Speaker 2: be a point two five percent drop, even a point
• 6:47
  Speaker 2: five percent drop, and the man, We're going to have
• 6:49
  Speaker 2: it all here in the Flux apps. Make sure to
• 6:51
  Speaker 2: download the app if you want to hear about the
• 6:52
  Speaker 2: news first.
• 6:53
  Speaker 1: Thanks for listening, and we'll see you on Wednesday.