Revenues for News Corp’s Australian newspapers have continued to freefall, numbers for the company’s first US financial quarter suggest.
According to a filing to the US Securities and Exchange Commission, the company’s global revenues dropped by $171m between July and September, and most of this was because of the company’s problems in Australia. It revealed: “Australian newspaper revenues declined 22 per cent and accounted for the majority of the revenue decline compared to the prior year.”
The company has been racing to remove much of the centralisation of sales operations put in by former CEO Kim Williams which coincided with a collapse in the company’s revenues.
The 22 per cent fall in the first quarter may signal that the decline in the company’s has accelerated so far in this financial year, although the number also looks worse because of fluctuation between the US and Australian dollars.
Full year numbers released in September, revealed that the company’s revenues had dropped by $350m in the last financial year, a fall of 15 per cent.
Last week Fairfax Media told the market that its metro newspaper revenues were down by nine per cent and its regional newspaper revenues by ten per cent.
Williams was ousted as Australian CEO in August and replaced by Julian Clarke.
Last week News Corp’s global boss Rupert Murdoch blamed “ignorant consultants” for the company’s woes.
Globally the company reported an EBITDA profit of $141m, up on last year largely thanks to the numbers for Fox Sports, which it now wholly owns, being included in the numbers.
Fox Sports Australia had revenues of $132m and an operating income of $39m, for the three months ending in September 30 2012, and experienced growth in advertising revenues from improved ratings and increased government election spending and an increase in subscription revenues.
The company said there were lessons to learn from the Wall Street Journal in the US and The Sun in the UK on how the company drives its digital subscriptions locally.
“It’s very early days, as you know, and we have a new management team in place in Australia, under the great leadership of Julian Clark.
“Julian is looking at that strategy at the moment, what we’re able to do as a company is learn from each other so there will be lessons from the Wall Street Journal, there will be lessons from Sun Plus, and that genuinely is one of the advantages of the new News.”
The company said there had been good growth in digital subscriptions such as the Wall Street Journal and potentially strong growth in digital advertising because of the “genuinely premium audience” who are paying to access the content.
Bedi Singh, News Corporation’s chief financial officer, said the 22 per cent fall – reported in US currency – was worsened on the balance sheet because of currency fluctuations.
“News and information services revenues declined $171m or 10 per cent versus the prior year and Australia accounted for $121m or around 70 per cent of the segment decline, of which almost half was due to foreign exchange.
“In Australia the advertising revenue declined around 22 per cent which included a 10 per cent negative impact from foreign currency and in terms of the cost side of the equation we expect cost saving to continue.
“Over the past three or four years we have done significant amounts of restructuring across our businesses, mainly on the newspaper side. I think the total over the last four years are something around $500m.
“Clearly we keep looking at operational efficiencies as we go forward, but you have to realise a substantial amount of efficiencies have been taken out. We will keep continuing to look at natural operating efficiencies as we roll out the common publishing system, but I don’t think we have any particular targets or slash and burn type of cost reductions in mind as we go forward.
“Expenses are on the right track while the revenues remain under pressure. We have been candid about some of the headwinds we face, particularly in news and information services. We continue to view 2014 as a transition year as we balance our operational efficiencies with prudent investment and focus on stabilising top line performance.”
News Corp shares slid after the first quarter results were released and fell below Wall Street estimates, with Class A shares falling by 2.4 per cent to $17, while Class B shares declined 2.1 per cent to $17.41.
Megan Reynolds and Tim Burrowes