News Corp hit by 15pc revenue fall
In its annual report presented to the US Securities and Exchange Commission overnight on Friday, the company said advertising and circulation revenue from its Australian titles fell by $US350 million - or 15 per cent - from the previous year.
It also revealed it was hit by $US270 million worth of restructuring and redundancy costs due to cuts made at its Australian and US newspapers during the period.
Like its competitor, Fairfax Media, owner of BusinessDay, Rupert Murdoch's News Corp has been forced to write down the value of its Australian newspaper mastheads as the prevalence of online news outlets dilutes the power of traditional print media.
The company said in its filings it had cut the value of its Australian and US mastheads - which include The Australian, Herald Sun, The Daily Telegraph as well as The Wall Street Journal - by $US1.4 billion, as it had flagged in May. It said $US860 million of this accounted directly for the intellectual property value of the mastheads and the rest was for related assets.
Analysts said the results were possibly weaker than expected, but largely in line with what the company had flagged earlier in the year.
News Corp historically has preferred not to break out the results of its Australian newspaper business for competitive reasons. Instead it reports them as part of its News and Information Services segment, which takes into account its Dow Jones news service as well as News UK (formerly News International), the New York Post and News America Marketing.
It has also frustrated analysts and investors by failing to disclose what it makes from digital advertising and now digital subscriptions, a revenue stream that has come to life since many of its papers went behind a paywall.
While revenue for the news and information segment rose by 3 per cent for the year "increases were partially offset by lower revenues at the Australian newspapers of $US350 million". This mainly reflected lower revenues at Dow Jones and a "challenging economic environment in Australia".
News Corp, based in the low-tax jurisdiction of Delaware in the US, reported a global net profit of $US506 million for the financial year, a turnaround from a reported loss of $US2.1 billion in 2012. This was helped by income gains on acquisitions such as the $2 billion it paid for James Packer's Consolidated Media stake in Foxtel in the first half of the year.
The company's Australian newspapers were folded into News Corp's publishing business ("new News Corp") after the demerger separated its film and television business into a second listed entity, 21st Century Fox. It also includes its Foxtel business, which reported a $229 million net profit after tax - up 15 per cent from a year earlier.
Frequently Asked Questions about this Article…
News Corp reported that advertising and circulation revenue from its Australian titles fell by US$350 million (about 15%) for the year to June. The company cited a challenging economic environment in Australia and the broader shift to online news outlets, which has weakened traditional print advertising and circulation.
News Corp said it cut the value of its Australian and US newspaper mastheads by US$1.4 billion. Of that, US$860 million related directly to the intellectual property value of mastheads (like The Australian, Herald Sun and The Daily Telegraph) and the remainder to related assets. For investors, this is an accounting recognition that the carrying value of those print assets has fallen because of market conditions.
The company reported US$270 million of restructuring and redundancy costs linked to cuts at its Australian and US newspapers during the reporting period.
No. The article says News Corp has frustrated analysts and investors by failing to disclose separate figures for digital advertising and digital subscriptions, even though many of its papers have introduced paywalls and those revenue streams have grown.
Revenue for the News and Information Services segment rose by 3% for the year, but those increases were partially offset by lower revenues at the Australian newspapers amounting to US$350 million, and by lower revenues at Dow Jones.
News Corp reported a global net profit of US$506 million for the financial year, a turnaround from a reported loss of US$2.1 billion in 2012.
News Corp paid US$2 billion for James Packer’s Consolidated Media stake in Foxtel during the first half of the year. The Foxtel business reported a US$229 million net profit after tax, up 15% from the prior year, and gains on acquisitions helped the company’s overall results.
News Corp typically does not break out results for its Australian newspaper business separately for competitive reasons. Instead, those titles are reported within the broader News and Information Services segment, which also includes Dow Jones, News UK, the New York Post and News America Marketing.
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