Secret documents reveal News Corp is bleeding money, with The Australian in the worst shape. But Rupert’s favourite plaything seems to have been inoculated against the staff and budget cuts that hit the company’s other assets. Paddy Manning and Myriam Robin report.
User login status :
News Corp operating accounts confirm The Australian is a protected species — at the expense of every other Murdoch masthead in the country.
The Australian, whose editor-in-chief Chris Mitchell admits has not been profitable since 2008, was relatively insulated from the massive cuts to newsrooms around the country in 2012-13, with only 54 jobs cut. That’s 12% of the workforce — far less than the redundancies of the metros in Brisbane (295, or 45% of the workforce), Melbourne (241, or 36%), Adelaide (195, 39%), or Sydney (167, 33%). If you count the 52 staff members feeding copy into The Australian who officially work for Business Spectator or the Eureka Report (bought by News Corp in 2012), the Oz’s staff numbers didn’t move much at all over the year.
And the insulated status of The Australian shows up in the wage bill, too. The Australian’s average wage per employee was $174,000 — well above the pay levels at the metropolitan bureaux, including next-best Sydney ($141,000), Melbourne ($132,000), Brisbane ($125,000) and Adelaide ($115,000).
With such high wages, it’s it is no wonder the Oz lost $27 million before depreciation in 2012-13, or an operating loss of $30 million — a blowout of more than three times the loss targetted in that year’s budget, of $11 million. During the previous year, 2011-12, the paper lost $26 million, and well-placed sources say the broadsheet has lost almost $100 million in the last three years.
The News Corp operating accounts show the Oz’s circulation revenue stable at $46 million — readership declines were offset by cover price increases during the week (from $1.70 to $2) and on the weekend (from $2.60 to $3), while advertising revenue across display, classifieds, colour magazines and inserts fell 33%, from $87 million to $58 million. The colour magazines were a particularly bad performer, with operating losses more than doubling from $1.3 million to $2.9 million — in a year when they were supposed to turn around and become profitable.
Digital subs revenue grew rapidly, from $1.8 million to $5.5 million, but it’s chicken feed compared to the print circulation revenues. And digital advertising actually fell 9% from $7 million in 2011-12, to $6.4 million in 2012-13.
A problem highlighted in the accounts for The Australian is the high digital costs of $13 million, which, though down on the previous year’s $15 million, outweighed combined revenues from digital subs and ads of $12 million. Among the costs were significant recharges for editorial, advertising and marketing.
Total revenue at the Oz fell 17% to $120 million, with expenses cut just 9% from $169 million to $148 million. But the losses widened.
In further comments to Mumbrella, Mitchell said the commercial costs for printing and the like charged internally by News Corp to The Australian added to its losses while shoring up the balance sheets of other parts of the business:
“Saying that you haven’t made a profit — that means that after all the retail print costs, etc, it takes you into the red.”
“But that is very different from saying if the Oz didn’t exist News Corp would be better off without that loss. In fact it would be $30m worse off because people (other elements of the News Corp Australia business) charge us commercial rates for printers.”
A fortnight ago News Corp trumpeted a turnaround of sorts at The Australian, but the paper is certainly coming from a long way behind.
News chief Robert Thomson said the Oz, which recently celebrated its 50th birthday and is the only newspaper founded by Rupert Murdoch himself, now had “more paying customers than at any time in its history”, with more than 200,000 digital subscriptions.
Worldwide, News reported modest growth in revenue from newspaper circulation in the June quarter, driven by subscription and cover price increases in the March quarter, which offset readership declines.
Chief financial officer Bedi Singh singled out News’ flagship foreign mastheads, saying “volume and revenue growth in local currency at The Times and The Australian provide further tangible evidence that our quality newspapers are benefitting from the migration to digital”.
But even though the accounts revealed by Crikey today are a year old, they point to the huge challenge ahead of News in making The Australian profitable.
More recent data is not hopeful. Last week’s Audit Bureau of Circulations data for the June quarter showed The Australian’s print circulation fell 6% to 109,902 copies during weekdays, compared with a year earlier, and fell 9% to 232,243 on weekends. On the advertising side, the negative trend is continuing into the new year, with SMI data showing advertising at News Corp fell 10% in July.