Rupert Murdoch is in Australia this week for the News Ltd journalism awards tomorrow night. News won’t say if he’s staying past next Wednesday when News Corp is due tor reveal its first-quarter earnings.
Overnight we had a taste of what might be ahead for News when Comcast, America’s biggest cable TV group, revealed a fall in earnings despite higher revenues and advertising income.
Comcast said net profit fell 8.2% to $US867 million, down from $US944 million. That was on a 7.3% rise in revenue to $US9.5 billion. Ad income rose 11.3% to $US1.3 billion across its cable networks. The reason for the profit fall, fewer video customers, which outweighed the up-selling of existing consumers to more expensive internet products, such as high-speed broadband.
In fact, Comcast lost 275,000 basic cable customers in the quarter. Some of the profit fall came from these losses, and the costs of the purchase of NBC.
But ordinary Americans are cutting back on spending in all areas, from food, to travel, cars, housing, credit and now pay (or cable) TV, which analysts had long though resistant to such cuts. (Just as they thought food and gambling were recession proof, not any longer).
The New York Times reports that the average cable television bill at Comcast is now $US129.75 a month, up from $US107.20 in 2008. That’s a rise of 21% at a time when American personal income has fallen, the economy remains trapped in a low inflation, high unemployment vice. No wonder Comcast has lost subscribers, even though it managed to boost revenues by convincing others to buy more expensive services.
“Comcast executives said the subscriber losses did not reflect customers canceling cable to watch programming on the internet — the so-called cord-cutting phenomenon.
“Instead, they blamed the weak economy for the losses and said that many who cut service did not flee to a competitor — like Verizon or DirecTV — but instead opted for free, over-the-air television,” the Times reported.
Comcast did add more than 200,000 high-speed internet customers and a similar number of phone customers, but the growth for the company has been driven in the past by cable subscribers.
News Corp has been getting earnings and revenue drive out of its cable business, especially Fox News. The downturn at Comcast could be a warning for News, especially as the cable business has seen a net decline in subscriber numbers since early in the June quarter. Will News break out this level of detail (subscriber numbers) next week?
Figures out this week showed that Murdoch’s two main US papers, The Wall Street Journal and New York Post, had mixed half-year circulation reports.
The Wall Street Journal was one of just two reporting a daily circulation gain, up 1.82% to 2.06 million for the six months to the end of September.
But that includes its paid online subscribers. The WSJ‘s print circulation eased 0.3% to about 1.6 million, but this was more than offset by growth in its digital editions, up 10% to 449,139. Its national competitor, USA Today sold 1,830,594 weekdays. That was down 3.7%.
Murdoch’s New York Post, edited by Australian Col Allan, again lost sales, but the sharp slumps of the previous 18 months (more than 25% in that time) slowed to less than 2%.
The week day New York Post sold an average of 501,501 weekday copies, down 1.3%, and 339,115 on Sundays, down 1.2%.
But the big story in US media has been the very sharp fall in ratings of Murdoch’s Fox TV network, as this report from Bloomberg highlights. Fox has led the US free-to-air TV ratings for the past six years, now its fallen behind.
Prime-time ratings for the key 18-49 age group are down 17% to last week since the current US TV season started last month. Fox usually makes a slow start but the baseball finals series (the World Series starts tonight our time) and American football broadcasts usually keep ratings from sliding too far before American Idol starts in January and sends viewer numbers soaring.
But that’s not happening this year. Audiences for Fox stalwarts such as House are down more than 30% while The Simpsons has loft 12%. Fox is in third place in 18-49s behind CBS and NBC (which is owned by Comcast, subject to Government approval).
Small city teams in the baseball finals (It’s the Texas Rangers and San Francisco Giants in the World Series), have clipped audience numbers. A year ago, Fox was leading the ratings, thanks in part to the New York Yankees being in the World Series and strong figures for House, The Simpsons and other programs.
And there can be no certainty that Idol will work its magic in early 2011. Its 2010 ratings were down 9% in the key demographic and at times finals for Dancing With The Stars (ABC), had more viewers in total than the finals of Idol and gave it a run in the 18-49s. Up to last year, no other program topped Idol’s finals in total viewer numbers in the previous seven years.
Fox’s TV station and audience figures are being hurt by the News Corp brawl with Cablevision pay TV around New York. Fox cut off Cablevision’s 3 million New York-area subscribers on October 16 because Cablevision wouldn’t pay higher retransmission fees demanded by the News subsidiary..
Bloomberg reported that according to Nielsen ratings figures “Overall in prime time, CBS is on top year-to-date, averaging 4.4 million viewers ages 18 to 49, up almost 1% from a year earlier, Nielsen data show. General Electric Co.’s NBC is second with 3.75 million, a 3.9% increase, while Fox is third, down to 3.73 million from 4.47 million. Walt Disney Co.’s ABC is last, averaging 3.65 million viewers, a 7.6% decline.” Glee’s audience however is up 39% and is the hottest program this year again so far in the 18 to 49 demo.”
Fox will be helped by having the Super Bowl to broadcast next year, but that is a one-off benefit and will make the 2012 comparison tougher as well. But Idol won’t have Simon Cowell has the main judge in the new series.
BSkyB in the UK is doing very well with nearly 10 million customers and soaring profits. No wonder Murdoch wants to buy it and no wonder the various newspaper groups and the BBC are lobbying the UK Government to block it.
The foreign earnings for News Corp (especially from India, Australia and the UK in film, TV and newspapers) will be boosted by the drop in the value of the US dollar in the quarter, with Australia looking very good and helping paper over the slide in sales and circulation revenues and the weak growth in other ad revenues, especially job ads.