It’s been a tough week for News Corp and the Murdoch clan. Last weekend, youngest son, James, quit News’ board citing “disagreements” over editorial, largely believed to be its newspaper and TV operations’ stance on environental issues and support for the Trump presidency. And now the company has reported a 20 per cent drop in earnings brought on by the impact of the coronavirus on advertising spends.
News Corp, that reports out of New York, has just reported a $US1.5 billion ($2.1 billion) net loss for the fourth quarter to June 30.
The numbers skewed by a $US1.69 billion writedown on the book value of Foxtel and its US marketing business, News America Marketing.
News’ subscription video segment, which is primarily made up of Foxtel in Australia, saw its revenue fall 14 per cent for the full year to $US1.8 billion.
In the six months to June, revenues declined 11 per cent to $US9 billion, taking earnings before interest, tax, depreciation and amortisation (EBITDA) down to $US1 billion.
Not that News’ Aussie assets have been thriving for a while now. As reported on The Australian Financial Review on Tuesday, the only real profitable section of its local operations is its 62 per cent stake in the real estate business, REA Group.
However, REA has warned new pandemic restrictions in Victoria will hurt near-term revenue, even as its annual net profit lifted seven per cent on lower impairment charges compared to a year earlier.
In late May, chairman of its Australian operations, Michael Miller, announced that 100 of News’ regional titles would go digital-only, leading to the loss of an unspecified number of jobs.
Commenting on today’s numbers, News Corp CEO Robert Thomson said: “The closure in Australia of many of our storied print editions and the renewed emphasis on digital was evidence of our willingness to be decisive at a historic inflection point.
“One result of our candid approach on costs was that, despite the COVID-19 impact, our cash position strengthened to $US1.5 billion from $US1.3 billion as of December 31st. We also saw increased profitability at Foxtel and our campaign to reset sports rights prices was successful. Just this week, we crossed the one million OTT paying subscribers mark, setting a new record thanks to our expanded streaming strategy,” Thomson said.
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