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Print writedowns push News’ revenue down 2pc

News Corporation full year total revenues have slipped 2 per cent from $US8.29 billion in 2016 to $US8.14 billion in 2017, with writedowns on Australian and UK newspaper assets a key driver, despite solid gains in its real estate businesses.

Continuing operations fell significantly in the 2017 fiscal year, with total losses reaching $US643 million compared to $US235 million in 2016.

The company reported pre-tax non-cash impairment charges of $US785 million, attributed primarily to its UK and Australian newspaper assets, which include The Australian, The Daily Telegraph and the Herald Sun. Australian subscription television service Foxtel created a pre-tax non-cash writedown of $US227 million.

Revenue from the group’s digital real estate services division, which includes its majority stake in REA Group and Move, rose 14 per cent, or $US116 million, to $US938 million. REA revenue jumped 14 per cent to $US525 million.

Total revenues, however, fell from $US8.29 billion in 2016 to $US8.14 billion in 2017.

The corporation’s earnings before interest, tax, depreciation and amortisation improved by 29 per cent, increasing to $US885 million compared to $684 million last year. Last year’s EBITDA result was impacted by several legal settlements.

News Corporation chief executive Robert Thomson was optimistic about the results.

News Corp CEO Robert Thomson.
News Corp CEO Robert Thomson.

“Fiscal 2017 was a significant year for News Corp as we saw tangible improvement in profitability, powered by the fast-growing Digital Real Estate Services segment, and we charged a premium for premium content while focusing on operating efficiencies,” he said.

“News Corp led the global debate about content value and values, prompting the digital platforms to address a dysfunctional content eco-system, in which the fake and the fraudulent have flourished. We are now in advanced discussions with those platforms over the creation of payment mechanisms for news of verified veracity,” he said.

The fourth quarter results included a summary of the increases in digital revenue for key newspaper titles, compared to the same period last year. Overall, the digital revenue increase, as a proportion of the total News and Information Services segment figures, rose from 23 per cent to 26 per cent over the same quarter last year.

It showed:

  • Closing digital subscribers at News Corp Australia’s mastheads as of June 30, 2017 were 363,600 (including ARM), compared to 271,000 in the prior year (Source: Internal data; adjusted for divested mastheads)
  • The Wall Street Journal average daily digital-only subscribers in the three months the three months ended June 30, 2017 were 1,270,000, compared to 948,000 in the prior year (Source: Internal data)
  • The Times and Sunday Times of London closing digital-only subscribers as of June 30, 2017 were 201,000, compared to 182,500 in the prior year (Source: Internal data)
  • The Sun’s digital offering reached 85 million global average monthly unique users in June 2017, compared to 42 million in the prior year, based on ABCe (Source: Omniture)

Advertising revenue took a hit in the fourth quarter, declining $US86 million, 12 per cent, to $US60 million. This result was linked to weaker print advertising and lower in-store product revenues at News America Marketing.

News Corporation’s total circulations and subscription revenues fell $US97 million to $US2.01 billion in the 2017 fiscal year. The fall was due to $US88 million in negative impact losses from foreign currency fluctuations.

The fall is despite several changes by News Corporation including higher subscription pricing, increases to selected cover prices and contributions from Dow Jones, which should have created an improvement of 1 per cent.

Strong growth in the group’s real estate business totalled 37 per cent of total segment EBITDA, reported at $US885 million.

* At News’ sister company, 21st Century Fox, higher advertising and distribution fees for the company’s cable channels drove up the fourth quarter result, helping it deliver a modest earnings increase. The company reported a 1.5 per cent revenue increase from the year-earlier period. Fox News and the other cable networks drove the revenue growth, making up for continued weakness at the company’s filmed entertainment segment. Revenue rose to $US6.75 billion, from $US6.65 billion a year earlier.


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