News Corp’s annual revenue falls as the company looks to digital subscriptions
News Corp reported a 2% income decline in its 2017 fiscal year, with digital real estate services being the main growth driver as revenues declined across the publishing and news arms of the business.
Chief executive Robert Thomson, said the company is exploring new revenue opportunities with online platforms as services look to offer news of “verified veracity” through subscription plans.
In a statement on the ASX, News Corp reported pre tax non cash impairment charges of US$785m (AU$998m), attributing the decline to the write down of its fixed assets, and the lower equity earnings of affiliates, including a $227m write down of the company’s share in Foxtel and revaluations of its Australian and UK mastheads.
The company reported total revenue of US$8.14 billion (AU$10.35 billion) last year, despite writing down the value of Australian and UK mastheads.
However, the company’s EBITDA [earnings before interest, tax, depreciation and amortisation] was US$885m (AU$1.12 billion), a 29% increase compared to US$684m (AU$869m) the previous year.
Revenue from news and information decreased by 5%, at US$269m (AU$342m), and advertising revenue continued to suffer, with revenue at US$202m (AU$257m) (-7%).
The company said the loss in advertising revenue reflected “the weakness in the print advertising market.”
Circulation and subscription revenues were down US$97m (AU$123m) – down 5% – to US$2.01b (AU$2.55b).
A breakdown of News Corp’s FY17 results
News Corp said the result came following the US$88m (AU$112m) “negative impact” of foreign currency fluctuations, and the US$39m (AU$50m) impact from the absence of the additional week in the previous year.
They assured excluding those impacts, revenue would have been up 1%.
Despite the decline in revenue from news Thomson said of the results: “Fiscal 2017 was a significant year for News Corp as we saw tangible improvement in profitability, powered by the fast growing Digital Real Estate Services segment, and we charged a premium for premium content while focusing on operating efficiencies.
“News Corp led the global debate about content value and values, prompting the digital platforms to address a dysfunctional content eco-system, in which the fake and the fraudulent have flourished,” he added.
Fiscal 2017 “a significant year for News Corp” says Thomson
Thomson noted News Corp was in advanced discussions with digital platforms about the creation of payment mechanisms for news of “verified veracity.”
While the company’s newspaper suffered decline, it was more positive for News Corp’s other investments, REA Group and Fox Sports Australia.
REA Group posted “record revenues” according to Thomson, up 14% year on year to US$116m (AU$148m), which was attributed to higher traffic and improved yields.
Cable Network programming revenues increased by US$10m (AU$13m) – up 2% – thanks to the $20m impact of the acquisition of Australian News Channel, operator of Australia’s Sky News Network.
Other reasons for revenue increase were lower affiliates revenues for Fox Sports Australia and the absence of US$10m from an additional week in the prior reporting year.
Commenting on Fox Sports’ results, Thomson said:”Fox Sports Australia reinforced its leadership in Australia with the successful launch of Fox League Channel and by extending its domestic soccer rights for another six years.”
“Foxtel and Fox Sports Australia are capitalising on the growing SVOD market with the recent rollout of its rebranded Foxtel Now streaming service, which has been well received and is improving subscriber volume.”
Earlier this year, News Corp reported it had lost AU$287m from continuing operations.
Amusing that News wants people to pay for the “veracity” of its reporting. This from the publisher of people such as Graham Richardson (today on the ethics of politicians and his own grubbing) and a choir of acapella apologists for denialism on climate science, religious privacy and often common decency.
If Robert Thomson wants money from readers he’d better start respecting them.
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If Robert Thomson thinks News can succeed by having people pay for what we see in his Australian papers then he’s got rocks in his head. Why do I get the feeling that his real game in classic Rupert; get the governments of the world to force Google etc to pay him (when News could, if serioous, simply block the aggregators).
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