News Corp full-year profits halved as Australian newspaper revenue drops
News Corporation’s full-year profit has been more than halved as revenue from its Australian newspapers continues to slide, the company’s full-year results reveal. The company made a net profit of US$237m (A$256.42m) for the year to 30 June, down 53% from US$506m in 2012-13.
However, the 2012-13 result was boosted by a one-off gain from the sale of its stake in New Zealand’s Sky pay TV operation.
Earnings from the company’s news and information division fell 16% in 2013/14 to US$130 million, mostly due to weakness in its Australian newspapers, which suffered an 18% drop in revenue, of which 10% was related to the foreign currency impact.
Total advertising revenues across the news divison declined 10%, driven primarily by weakness in the print advertising market. Circulation and subscription revenues declined 5%, but this was partially offset by cover price increases for several Australian and US mastheads, and online subscriptions.
The company’s Australian mastheads include the Herald Sun, the Daily Telegraph and the Australian.
News Corp’s full-year revenue fell 4% to US$8.57bn.
Meanwhile, the UK hacking scandal continued to weigh on News Corp, which spent US$72m in fees and costs linked to the matter during the year (net of indemnification by 21st Century Fox).
Earnings from News Corp’s cable network programming business, which includes Foxtel, increased 52% to US$491m chiefly due to the inclusion of Fox Sports Australia in the division. Segment EBITDA was $US128m.
The company’s digital real estate subsidiary REA Group, which runs realestate.com.au, lifted earnings 27% to US$214m while earnings from its book publishing business, HarperCollins, were up 39% to US$197 million.
News Corp chief executive, Robert Thomson, said the company had performed well in challenging conditions.
“While we are operating in a challenging advertising environment, our results highlight the diversification of our portfolio and our cost discipline, leading to improved free cash flow and a firm foundation for sustained growth,” he said. Fusion Strategy media analyst Steve Allen said advertisers had ditched the print medium at almost twice the rate of the decline in circulation.
“Advertisers and their media agencies basically turned their back on print and we saw really severe declines which are only just starting to slow,” he said.
But he said that while advertising revenue is likely to flatten out at some point, it was likely the decline in circulation would continue.
“For News it has been more an advertising problem than a circulation problem but they will face a circulation problem,” he said.
“Our view would be that as the losses of advertising revenue start to stem, it’s likely there will be an increase in the rate of decline in circulation and cover revenue.”
theguardian.co.uk