News Corp has never put a number on the swingeing job cuts across its Australian newspapers and Foxtel this year — in fact it refuses to do so.
But we got an idea of just how large they were with details of a sharp fall in employee numbers at June 30 contained in its 10K filing with the US Securities and Exchange Commission which is, essentially, its annual report for 2019-20.
It discloses that staff numbers fell by a massive 4500, or more than 16%, as it sold assets and lopped more than 1000 jobs in Australia alone. Revenues fell by nearly US$4 million a week, and more in the closing months of the year thanks to COVID-19 whacking advertising revenues and newspaper sales (only partially offset by higher digital subscriptions).
News said its total staff number fell from about 28,000 at the end of June 2019 to about 23,500 at June this year.
Job numbers in the United States fell to 7500 from about 10,000 (thanks to the sales of Unruly, a digital ad business, and News America Marketing, a catalogue and coupon business for retailers). UK numbers rose to 4500 from 4000.
But Australian jobs fell 15% — or 1500 — to 8500 in June 2019. Chief executive Robert Thomson said in the results briefing last Friday that the company had “unfortunately implemented hundreds of redundancies” in Australia. In fact it was far more than “hundreds”.
At Foxtel 17% of the workforce of full- and part-time workers and contractors were chopped This has helped — along with lower sports rights payments — lop A$100 million a year from the pay TV business’ cost base going into 2020-21.
And there was a big cost: News said that of the US$140 million in restructuring charges in the year, 60% — or US$84 million — were costs in the News media division (predominantly the Australian newspapers followed by the UK papers and then the New York Post, now that Dow Jones and The Wall Street Journal have been broken out).
That was up from US$68 million in restructuring charges in 2018-19 of a total of US$92 million.
Much of the other restructuring charges were accounted for by the closing, merging or conversion to digital platforms only of 112 local and regional Australian papers. Hundreds of the Australian jobs cut occurred in these businesses.
“The increase in restructuring charges was primarily as a result of initiatives undertaken by the company in response to COVID-19,” News Corp said in its report.
Broad details of how News Corp Australia performed in 2019-20 tells us why the axe was swung so heavily. Australia (including Foxtel and REA Group) accounts for 39% of News Corp’s annual revenues worldwide.
Revenues fell 16% to US$1005 million for News’ financial year ended June 30, 2020, a drop of US$192 million compared with fiscal 2019 revenues of US$1197 million.
“Advertising revenues decreased $149 million, primarily due to the $121 million decrease in print advertising revenues, primarily driven by weakness in the print advertising market and the suspension of printing operations for approximately 60 community newspapers across Australia, as well as the $33 million negative impact of foreign currency fluctuations, partially offset by a $12 million increase due to the acquisition of an integrated content marketing agency,” News said.
“Circulation and subscription revenues decreased $24 million driven by the $24 million negative impact of foreign currency fluctuations, as print volume declines were offset by cover price increases and digital subscriber growth.”
It warned: “As a result, the company’s business, results of operations and financial condition may be adversely affected by negative developments in the Australian market, including, for example, weakness in the Australian residential real estate market which has led, and may continue to lead, to lower listing volumes at REA Group.”
News is moving to what is known as a shared services model across the entire company, concentrated in New York and overseen by Damian Eales, the former News Corp Australia (and David Jones) executive.
It said it was looking for US$100 million in savings from this huge revamp (which will see all services based in new York — accounting, HR, technology etc) by its 2022 year.
No wonder Thomson warned during Friday’s results briefing that the company has more cuts up its sleeve.