Revenues for News Corporation’s Australian newspapers dived by 22% year-on-year over the most recent quarter, dragging down total revenues for the global publishing giant.
Total revenues for the company — whose assets include The Wall Street Journal, The Sun and publishing house Harper Collins — declined by 3% year-on-year to $2.07 billion.
Overall, News Corp posted net income of $38 million for July to September, compared with a net loss of $83 million the previous year. That turnaround is attributed to the company’s increased stake in Foxtel (up from 25% to 50%), the growth of online real estate arm REA and lower costs from the fallout from the News of the World phone hacking scandal. The latter had a major impact on the company’s bottom line: costs “related to the UK Newspaper Matters” dropped from $61 million to $17 million.
The figures were revealed by News Corp in the company’s first quarterly financial statement since Rupert Murdoch split his entertainment and publishing divisions into separate companies (21st Century Fox and News Corp).
The 22% decline in Australian newspaper revenues — described by analysts as worse than expected — helps explain why New York Post editor Col Allan was sent to Australia for editorial guidance and why the company is undoing the centralisation of sales led by former CEO Kim Williams. Total advertising revenues declined by 12%, due largely to weakness in Australia. Circulation and subscription revenues declined by 6%.
News Corp reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $141 million, up 58% on the previous year. But EBITDA fell by 5% when you strip out phone hacking costs and the impact of acquisitions, divestitures and foreign exchange fluctuations.
Commenting on the results, News Corp CEO Robert Thomson said:
“Our first quarter as the new News was the beginning of a journey in the digital development of the company. There are certainly headwinds in Australia, magnified by inauspicious foreign currency movements, but we have been consistently cost conscious and are transforming our publishing operations longer-term into multi-platform businesses. We are vigorously pursuing a strategy to improve our revenue prospects and we look forward to updating all in future quarters.”
Revenues for News Corp’s digital real estate services division, based around the REA Group, increased by 11% year-on-year and earnings by 26%. Book publishing revenues were down 7%, but earnings improved by 8%.