Rupert plucks another chicken — this time the Australian gambling group Tabcorp, which has revealed the expensive start to life of Sun Bet, Rupert’s attempt to slow the decline of The Sun in the UK by relieving readers of the country’s biggest selling newspaper of some of their hard-earned cash.
Tabcorp’s December half-year report revealed this morning that Sun Bet had revenue of just $1.5 million and the business recorded an earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $21.3 million. Tabcorp said its result for the second half of fiscal 2017 is expected to be an EBITDA loss of about $15 million, meaning a total loss for the year of more than $35 million, or close to $100,000 a day. On top of that, Tabcorp also revealed it had spent $17.9 million on it Sun Bet, which started offering its products last August. Tabcorp said it had 85,000 customers at the end of December. Given that the paper has a daily circulation of around 1.6 million and a monthly readership of over 10 million, that is not a stunning success.
Tabcorp has given us the tip as to how it views Sun Bets — a bit of a longer-term punt, with a low chance of making an early profit. It has classed the $21.3 million as a “significant item” and excluded the from the results of its wagering division for the half year. That had the effect of improving the topline figure because they were not included in earnings before interest, tax, depreciation and amortisation. Seeing a further loss has been forecast for the current half year, we can presume this accounting treatment will be repeated. The phrase financial millstone comes to mind.
So will News Corp CEO Robert Thomson and CFO Bedi Singh mention this back hole when the company holds its second quarter results briefing a week tomorrow? Just imagine if the projected $35 million loss were invested in journalism? — Glenn Dyer