Media agencies ‘more focused on fashion than function’ says News Corp boss as revenues fall

The CEO of News Corp Robert Thomson has suggested media agencies are following digital fads in how they spend their clients' advertising budgets.

Thomson: Agencies chasing fashion over function

Thomson: Agencies chasing fashion over function

The CEO of News Corp Robert Thomson has suggested  media agencies are following digital fads in how they spend their clients’ advertising budgets.

In a comment contained within the company’s quarterly global financial results announcement released this morning, Thomson said that one reason the company’s advertising revenues are down is because brands and agencies are “experimenting” with where they invest their ad dollars. He said:

“With the advertising market in the midst of upheaval, advertisers and agencies are experimenting with their spend. We believe that premium mastheads and audiences are currently undervalued by agencies, some of which are more focused on fashion than function.”

The company’s reported profits were hit by problems at its News America Marketing division leading to a drop in revenues of $72m.

Overall, the company’s revenues dropped by 8%, while profits were down by 5% compared to the same quarter a year before.

News Corp’s Australian operations include The Australian, The Daily Telegraph, Courier Mail, Herald Sun,, Fox Sports and a 50% stake in Foxtel.

While the company does not break down the performance of its Australian operations in detail, it said that thanks to growth in paying digital subscribers, digital advertising revenues and cost cutting, profits had grown locally.

However, the update pointed to a continuing decline in print revenues.

Global revenues for its news and information services division fell by 9% to $1.2bn in the quarter. Revenues for the first nine months of News Corp’s financial year are also down 9%.

Because of the News America Marketing problems leading to a pre-tax charge of $280m, the segment reported a loss of $187m for the quarter, compared to a profit of $113m the year before. For the first nine months of the financial year, the company is showing an 88% decline in profits in its news and information businesses from $434m last year to $54m this year.

Thomson was more optimistic about the current quarter, which is almost half way through. He said: “We believe, however, that the company is on track to see improvements in the fourth quarter, with the expansion of digital real estate business, foreign currency comparisons hopefully beginning to ease, and cost saving initiatives taking firmer root.”

Tim Burrowes


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