News in loss but upbeat
Health hike ‘to force people out’
NEWS Corp posted a loss in the second quarter amid a challenging print advertising environment for its newspaper and information services unit and foreign currency headwinds.
The company, which publishes the Gold Coast Bulletin as well as other newspapers in Australia, the US and UK, reported a loss from continuing operations of $US219 million, compared with a profit of $US106 million a year earlier.
Revenue fell to $US2.12 billion from $US2.16 billion a year earlier as the company saw a 7 per cent drop in revenue at the news and information services segment, which accounts for roughly two-thirds of its total revenue.
The publisher was forced to write down the value of fixed assets at Australian newspapers by $US310 million.
Results were also weighed down by a negative impact from foreign currency fluctuations of $US53 million.
Overall adjusted revenues declined 1 per cent on the prior year as 16 per cent revenue growth in digital real estate partially offset lower advertising revenues at the news and information services segment.
Book publishing unit revenue pushed 4 per cent higher.
To make up for lost print advertising revenue amid changing market conditions and to position the company for long-term growth, News Corp is boosting digital revenue streams even faster.
Digital revenues account for 27 per cent of revenues at the news and information services segment, compared to 22 per cent in the prior year.
“In the second quarter, we saw the efficacy of our strategic reinvestment and digital diversification. Both were evident in our significantly increased operating profitability in the quarter, despite continued headwinds in print advertising,” chief executive Robert Thomson said in a statement.
“Results were driven by strong performance at our digital real estate services segment and meaningful revenues at HarperCollins, along with appropriate and ongoing management of the cost base at our news mastheads.”
News Corp’s earnings before interest, taxes, depreciation and amortisation were $US325 million, compared to $US280 million a year ago.
As marketers grapple with the lack of transparency and trustworthy measurement in online advertising and social networks become mired by “fake news”, Mr Thomson said consumers and advertisers were preferring mastheads.
“Audiences are craving integrity, which is why so many of our mastheads have reported strong growth in readers and subscribers this quarter.
“Advertisers need a trusted canvas and real results, not the muddled, muddied metrics of many digital platforms.” HEALTH insurance funds and shareholders have been warned they will lose more customers if they keep increasing premiums and reducing benefits, as the Government yesterday approved an average 4.84 per cent price increase.
Consumer lobby groups said premium increases had totalled 55 per cent during the past eight years.
“They are pricing people out of the market. Private health insurance goes up, their co-payments go up and people get to the position where there is no value in it for them,” Health Care Consumers Association boss Darlene Cox said.
The Consumers Health Forum of Australia said premiums had been rising above inflation every year for the past 17 years.
“At the same time, the coverage of many health policies has tended to shrink,” forum chief executive Leanne Wells said.
Consumer advocate Choice said the hike would force many households to “downgrade to poor-value junk policies”.
However, insurance lobby group Private Healthcare Australia said the average 4.84 per cent increase was justified and was “the lowest increase in a decade”.
Chief executive Dr Rachel David said health costs were rising faster than inflation. Health funds kept 13.9¢ in every dollar paid in premiums and paid out 86.1¢ in benefits, she said.
Medibank Private chief executive Craig Drummond said the company intended to increase premiums by 4.6 per cent while not-for-profit HCF said it would increase premiums by 3.65 per cent.