News Corp takes hit

Sluggish economy key factor

NEWS Corporation is blaming a sluggish Australian economy and uncharacteristic softness in book publishing for a 4 per cent dip in second quarter earnings.

The publishing giant said it had $US355 million ($A527 million) in earnings before interest, tax, depreciation and amortisation in the three months to December 31, down from $370 million ($A550 million) during the same period in 2018. News Corp’s net income for the second quarter was 13.4 per cent lower at $US103 million ($A153.1 million), down from $US119 million last year.

The company’s first-half earnings are now down by 21 per cent on a year ago at $US576 million, driven by firstquarter impairments against its advertising business.

The firm said overall revenue dropped 6 per cent to $US2.48 billion for the quarter, with revenue from its Australian news mastheads including the Australian, Daily Telegraph, Herald Sun and Gold Coast Bulletin down 9 per cent compared with the same quarter a year ago. While print advertising revenue was down, News Corp said it was seeing good progress with its online initiatives.

Digital subscribers to its Australian mastheads grew 4.5 per cent in the quarter to 566,000, up 23 per cent yearon-year. The company says Kayo Sports, the $25-a-month sports streaming service that Foxtel launched in Australia in November 2018, had 370,000 paying subscribers as of Wednesday, up from 364,000 as of September 30.

But thousands who apparently subscribed just to see the Rugby World Cup finals didn’t stick with the service, as Kayo had 402,000 paying subscribers on November 5.

CEO Robert Thomson told analysts that while cricket had its “fascinating, sometimes antediluvian” appeal, Aussie rules and rugby league were more popular in Australia and he expected paying subscribers to pick up once those winter sports begin.

“There’s no doubt that Kayo is an absolutely world class OTT (over-the-top, or streaming) offering,” he said.

“There’s also no doubt it has a hell of a runway.”

News Corp declared a semiannual dividend of 10 US cents per ASX CHESS Depositary Interest (CDI), unfranked, unchanged from a year ago. News Corp’s Asx-listed shares were up 1.89 per cent to $21.55 at 12.55pm (AEDT).