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News Corp labels troubles ‘ephemeral’ as income falls 75 per centEdmund Tadros and
Mark Di StefanoUpdated Nov 9, 2022 – 10.54am,first published at 10.50am
News Corp’s CEO Robert Thomson has labelled book publishing and foreign currency issues buffeting its business as “transitory” and “ephemeral” after the company’s income fell 75 per cent.
The firm’s net income was $US66 million ($101.5 million) in the first quarter of fiscal 2023 with growth in digital subscriptions at the company’s Dow Jones division offsetting lower book sales and the strong US dollar lowering the value of its international income.
Overall revenue at the company was down one per cent, to $US2.48 billion, while operating earnings across the company’s main divisions were down 15 per cent to $US350 million compared to the first quarter of last year.
Chief Executive Robert Thomson said economic conditions were “more volatile” and blamed much of the decline on foreign currency fluctuations and a decision by Amazon to slash its book inventory levels.
“Our results follow two success years of record profits at News Corp and it is important to keep that unprecedented success in mind, especially as we encounter what we expect to be ephemeral challenges,” he said. “Our company has changed the digital terms of trade and we expect the current situation to be transitory.”
“As for Amazon it’s fair to say it’s ephemeral, not eternal, but meaningful for the first quarter, as it’s the combination of both inventory adjustment and warehouse closures”
The company’s Dow Jones business, which includes
The Wall Street Journal and
Barron’s, was the standout performer within the company with segment operating earnings up 19 per cent to $US113 million.
The result was driven by digital-only subscriptions across the publications increasing by 13 per cent to 4.1 million compared to the first quarter of last year, digital advertising increasing by 11 per cent and the acquisition of two businesses – the Oil Price Information Service and Chemical Market Analytics.
Binge up, cable downOperating income at the company’s subscription video services business, which houses Foxtel, was down three per cent, to $US111 million. The decline was primarily due to the strong US dollar as well as “higher sports programming rights costs, driven by the timing of sports events, notably in motorsports, and contractual increases, as well as higher marketing costs at Binge.”
The number of residential Foxtel cable subscribers was down to 1.44 million compared to the end of the first quarter of last year, while the number of commercial cable subscribers was down to 219,000.
The number of pay subscribers to the Kayo Sports streaming service was up to 1.3 million compared with 1 million the end of the first quarter of last year. The number of Binge subscribers was up 1.34 million compared to 802,000.
The company makes much more per subscriber from its cable service than its streaming services, and announced last month it would soon introduce advertising into its
Binge service. It already offers advertising in Kayo Sports and its cable service.
The average revenue per user for cable subscribers increased by one per cent to $83 a month, while the income per user for the company’s streaming services ranges between $10 to $35 a month. Streaming income now represents about 25 per cent of the division’s income, up from 19 per cent in the first quarter of last year.
Amazon cuts warehousesNew Corp’s book publishing division, which includes HarperCollins, was hit by online retailer Amazon cutting down on its warehouse space which reduced book order volumes and led to higher book returns.
Operating revenue in book publishing, which was down 54 per cent to $US39 million, was also hit by the high US dollar cutting the value of international income. The company noted key titles for the quarter included
Portrait of an Unknown Woman by Daniel Silva,
Live Wire: Long-Winded Short Stories by Kelly Ripa and
Breaking History by Jared Kushner, the son-in-law of former US president Donald Trump.
Operating income at the company’s news media division, which includes local publications
The Australian,
The Herald Sun and
The Daily Telegraph, as well as
The Times of London and
The New York Post, was down 47 per cent to $US18 million.
Circulation and subscription revenue was down by $US16 million, mainly due to the strong US dollar. This was offset by price hikes and an increase in the number of digital subscribers at many mastheads.
Advertising revenue was also down by almost 50 per cent compared to the first quarter of last year, partially offset by increased digital advertising in the UK publication
The Sun and “the recovery of print advertising at News Corp Australia”.
Digital subscriptions at News Corp Australia were up more than 9 per cent, to almost 930,000 for the company’s news publications, compared to 850,000 at the end of the first quarter last year. Digital subscriptions of
The Times were up almost 25 per cent to 468,000.
Operating income in News Corp’s digital real estate division, which houses REA Group, were down 14 per cent, due to reduced transaction volume as higher interest rates slows the local real estate market and the strong US dollar cutting the value of Australian income.
