News Corp today told the market that its global revenues continued to slide in the second quarter of the current financial year, with lower print advertising revenues in the company’s news and information services partially to blame.
The company, which locally publishes newspapers The Daily Telegraph, Herald Sun and The Australian and owns half of Foxtel, reported second quarter revenues of US$2.16bn – 4% down compared with the same time period the year prior.
The publishing company reported a second quarter total EBITDA profit of US$280m – 20% down on the US$352m from the year prior.
Robert Thomson, CEO News Corp
Robert Thomson, News Corp CEO, warned in today’s earning update of tough economic conditions:
“Macro-economic conditions in most of our markets have not been auspicious.”
However, he also pointed to the company’s accelerating shift to digital products. He said: “News Corp is evolving rapidly into a more digital and increasingly global company with a diverse revenue mix that we believe will drive long-term growth in profits and shareholder returns.
“In our News and Information Services segment, print advertising remained challenged, but we are seeing growth in digital advertising and circulation revenues.”
He also hinted that News Corp staff face further job losses locally, saying: “We are particularly focused on cost reductions and sharing services around News Corp to streamline operations at newspapers in Australia and the UK.”
News Corp’s News and Information Services segment – which includes most of the company’s Australian operation – was the hardest hit, with revenues for the second quarter of the financial year down US$123m (8%) compared with the year prior. Total advertising revenues for the segment dropped by 12% with the company blaming weakness in print advertising, negative foreign currency fluctuations and lower revenues at News America Marketing.
Globally, circulation and subscription revenues declined by 5%.
The News and Information Services segment’s EBITDA profit decreased US$58m in the quarter (27%) compared with the year prior.
The best news for the company appeared to come from Foxtel, which it jointly owns with Telstra.
Foxtel revenues increased by 5% thanks to higher subscriber numbers. The company said total subscribers, as of December 31, rose to 2.9m. It did not break down how many of those were to Foxtel’s pay TV service and how many were to the company’s joint venture streaming service with Seven, Presto.
Foxtel’s revenues were also helped by a lower percentage of subscribers dropping the product – which fell from 11.8 to 10.3%.
However, Foxtel’s profit declined by 7% “due to planned increases in programming costs to support subscriber growth, costs associated with higher sales volumes, the public launch of Triple Play and continued investment in Presto”.
News Corp’s digital real estate services business (which in Australia is the REA Group), saw its revenues grow 35% to US$54m compared with the year prior.
REA Group’s EBITDA profit increased by U$16m (28%) compared with the previous year.
The company’s book publishing saw its revenues decline by 5% to US$23m compared with the year prior, with the segment’s EBTIDA for the quarter decreasing by US$20m (26%).