News Corp revenue boost lifts the bottom line

MEDIA heavyweight News Corp has posted a 13 per cent jump in pre-tax earnings for the past quarter, helped by a surge in revenue.

It came largely due to the consolidation of its Australian television operation Foxtel, as well as strength in the group’s digital real estate and book publishing operations.

News Corp booked a 21 per cent increase in revenue to $US2.63 billion ($3.7 billion) for the three months to December, in line with estimates.

Second-quarter earnings before interest, tax, de- preciation and amortisation of $US370 million were up from $US328 million a year earlier.

Chief executive Robert Thomson said the results across the company’s newspaper, television and digital publishing businesses highlighted “the power of premium content and authenticated audiences in a fact-challenged world that craves credibility”.

Mr Thomson called out the impact social media companies and search engines were having on media players and welcomed moves by regulators around the world – including the Australian Competition and Consumer Commission – to scrutinise the activity of the technology companies.

Over the past year, players such as Google, Facebook and Amazon have come under pressure from competition regulators and governments in Europe, Britain, Australia and the US for their activities – from misuse of personal data to using their dominance to stifle competition.

The moment for “regulatory reckoning” had come for digital, Mr Thomson said.

“Although our teams have been diligent in pursuing revenue opportunities, the digital platforms, which arbitrage algorithmic ambiguity, remain dysfunctional,” he said. “There has been a regulatory awakening and the time has come for a regulatory reckoning.”

The company’s second quarter net profit of $US119 million compared with a loss of $US66 million for the same period a year earlier.

For the six months to December, News Corp’s earnings before interest, tax, depreciation and amortisation clocked in at $US728 million – up 22 per cent on the same half a year ago. Revenue for the half was also up 22 per cent, at $US5.15 billion

News Corp reported strong paid digital subscriber growth at its newspapers, which include the Gold Coast Bulletin.

Digital subscribers accounted for more than 35 per cent of the publishing business’s total subscriber base.

News Corp Australia’s mastheads had 460,300 digital subscribers at the end of September, up from 389,600 a year earlier.

For the first time, the company also revealed audience numbers for its Kayo Sports streaming service since its launch late last year, with 115,000 subscribers.

Mr Thomson told investors those numbers were expected to lift sharply in the lead-up to Australia’s winter sport season.

At the end of December, Foxtel’s total subscribers were about 2.9 million, which was an increase on the same time last year.

News and information services earnings fell 15 per cent, but the book publishing unit posted a 13 per cent jump.

Earnings at its subscription video services were $US84 million – more than double the $US33 million a year earlier.

News Corp wrapped up the merger of Foxtel and Fox Sports Australia last April, with the group emerging with a controlling stake in the enlarged pay-TV company.