News Corp’s advertising revenue falls over 50% in fourth quarter, as company posts US$1.5bn loss

The decline in advertising revenue at News Corp in the March to June quarter was stark, down 51.6% to US$332m, the company’s financial results have revealed. For the financial year, advertising revenue at News Corp fell 19.9% to US$2.193bn.

Overall, the company posted a US$401m loss for the quarter, after a US$42m loss in the corresponding quarter last year. For the full financial year, the loss amounted to US$1.545bn, down from a profit last year of US$228m.

The amount of money generated from News Corp’s news media segment also fell from US$830m to US$490m in the final quarter of the 2020 financial year. For the full financial year, revenues for the segment were down 18% to US$2.801bn.

CEO Robert Thomson conceded it had been a difficult year, involving cost-cutting, changes to publications, and hundreds of redundancies.

News Corp revenues by segment [Click to enlarge]

“In Australia, apart from migrating publications to digital only, we also sold our investment in the Australian Associated Press newswire, and unfortunately implemented hundreds of redundancies. The end of the relationship with AAP was both necessary and historic, as the service was founded in 1935 by Sir Keith Murdoch.”

Revenue for subscription video services, such as Foxtel, was down 24% in Q4 to US$407m, and down 14% for the year to US$1.884bn.

Subscribers to Foxtel totalled 2.777m, down 12% year-on-year. This includes subscribers to both Binge and Kayo, its entertainment and sports streaming offerings. On the Foxtel platform alone, there were 1.989m subscribers as at 30 June, 2020.

Foxtel Now, Foxtel’s streaming option, had 313,000 paying subscribers, down from 446,000 last year. News Corp conceded the final of Game of Thrones had played a role in the decline.

CEO Robert Thomson noted that despite the decline, profitability at Foxtel had increased, thanks in part to its campaign to “reset sports rights prices”.

Revenue from digital real estate services, including Australia’s, was down 16% for the quarter to US$238m, and down 8% across the year to US$1.065m.

Across all business segments, revenue from circulation and subscriptions was US$906m for the quarter (down 10.8%), and US$3.857bn for the year (down 6%).

Operating expenses declined as the business grappled with how to offset the revenue fall, down 26.8% to US$1.028bn for the quarter, and down 11.3% for the year to US$5.0bn.

News Corp’s full financial results [Click to enlarge]

“We are continuing to focus on acquiring digital subscribers and audience, while right-sizing our business to be digital first, which is necessarily resulting in significant cost reductions. The closure in Australia of many of our storied print editions and the emphasis on digital was further evidence of our willingness to be decisive at an epochal moment,” he told investors.

The impacts had also hit the big end of town, he noted.

“All of our executives understand that these are testing times, and many of our executives around our businesses internationally have volunteered hefty cuts to their bonuses which form a large part of their compensation,” he said, noting Rupert Murdoch would not take a bonus at all this financial year.


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