The print advertising market has taken another downturn with Fairfax Media and News Corp both revealing declining revenue in the first quarter of the 2015-16 financial year.
The numbers suggest that after a period of relative stability, print revenues have returned to a downwards trajectory. However, both publishers pointed towards good progress in their real estate operations.
In its trading update presented to its AGM on Thursday, Fairfax Media said publishing revenues for its metro division – which includes the Sydney Morning Herald and The Age – were down by 9 per cent for the quarter, with its regional operation down 11 per cent.
Hywood: Conditions difficult
“Metro print advertising conditions remain difficult, reflecting the ongoing structural change being experienced globally and weak consumer confidence domestically,” CEO Greg Hywood told shareholders.
“Regional and rural advertising markets are challenged, while macro-economic conditions are weighing on the broader New Zealand business.” The company’s New Zealand business revenue is down around 9 per cent, including currency impact.
Fairfax Media is currently going through another round of restructures of its regional operations, which has seen it cut jobs across a variety of its suburban and regional papers including the Newcastle Herald. Hywood said: “The restructuring plan will deliver $60m of annualised cost benefits by the end of FY16, while maintaining a strong footprint for local news, content and sales capability.”
However, Fairfax’s Metro Media, including real estate platform Domain, was up around 10 per cent, with Domain’s overall revenue up by 68 per cent.
Meanwhile, News Corp revealed this morning that it had seen its global revenues drop for the quarter, decreasing by US$161m (11 per cent) compared to the year prior.
News Corp is Australia’s largest publisher, including national title The Australian and metro titles The Daily Telegraph in Sydney, The Herald Sun in Melbourne and The Courier Mail in Brisbane.
Total segment advertising revenues declined by 13 per cent primarily due to negative foreign currency fluctuations and weakness in the print advertising market, News Corp said. Although the figures do not break down News Corp’s Australian revenues in detail, the update cited “weakness in the print advertising market, most notably in Australia”.
News Corp’s real estate business REA Group posted increased revenues due to improved listing volumes in Australia.
Subscription TV platform Foxtel, which News Corp owns half of with Telstra, saw its profits halve compared to this time last year, dropping from US$81m to US$42m. This was despite Foxtel revenues increasing by three per cent due to a growth in subscribers. The company blamed the drop in profits on increased programming costs and the launch of its broadband offering.
News Corp CEO Robert Thomson said in a statement: “News Corp is on track in its transition to a more digital and global future, having successfully integrated several recent acquisitions and built a powerful platform for future growth.
“Foreign exchange fluctuations negatively impacted reported results, but this should not obscure the progress at many of our businesses.
“In fact, News Corp’s revenues, excluding the effect of currency, grew four per cent this quarter, underscoring the value of our shift to higher growth businesses and our prudent reinvestment strategy.”