News Corp posts $306m loss as Robert Thomson blames ‘sluggish’ Australian economy for downturn

In May, the media giant was forced to inject cash into Foxtel after it failed to find external lenders to refinance its debt amid concerns about its transition from a traditional pay TV provider to lower margin streaming service such as Kayo.

News Corp said Australia’s sluggish economy and property slump have weighed on its earnings after reporting a $US211 million ($305.8 million) net loss for the first quarter after writing down the value of its US marketing business.

But the media company expressed its optimism about new content deals it struck last month with social media giants Facebook and Apple.

News Corp chief executive Robert Thomson said the quarterly result was affected by “pronounced currency headwinds, a particularly sluggish Australian economy and property market”, and $US273 million in write-downs to account for the declining value of News America Marketing, its newspaper ad inserts business which is in structural decline. It compares with a prior-year result that had been boosted by a one-off gain from exiting the company’s UK betting venture.

Currency headwinds and the Australian operations dragged on earnings at Rupert Murdoch’s News Corp.Credit:AP

Higher costs at Foxtel further helped drag down earnings before interest, tax, depreciation and amortisation (EBITDA), which slumped 38 per cent to $US221 million, with the rise in expenses associated with cricket rights and an accelerated amortisation of programming costs.

Revenue declines at Foxtel were driven by currency movements and the failure of the pay TV provider’s new streaming services to offset declines from its traditional subscription service.

News said Foxtel’s subscribers totalled 3.065 million for the quarter, up 6 per cent on the prior year, but the number of subscribers to its traditional pay TV service softened to 2.326 million from 2.4 million in June. The remaining customers accessed content through streaming options Foxtel Now and Kayo Sports.

The result was affected by ‘pronounced currency headwinds, a particularly sluggish Australian economy and property market’.

Revenue at News Corp Australia declined 11 per cent for the quarter, which weighed on the overall revenues from the media giant’s news division. News said the revenue weakness in news was driven by “weakness in the print advertising market, primarily in Australia.”

But there are positive signs for the business, according to Mr Thomson, thanks to recent deals the company has done with Apple in March and Facebook last month for its premium content like The Wall Street Journal, which will start to make an impact this financial year.


“With the dominant platforms under intense regulatory scrutiny, there has been a fundamental shift in the content landscape, highlighted by Facebook’s decision to pay a significant premium for our premium journalism,” Mr Thomson said.

“This development establishes a precedent that changes the terms of trade and we expect a positive financial impact at our news and information services segment, beginning this fiscal year.”

In other news, Mr Murdoch’s Fox Corp beat analysts’ estimates for quarterly profit on Thursday as it collected higher fees from cable and satellite operators, online distributors and digital television content licensees.

The company also announced a stockholders agreement with the Murdoch Family Trust (MFT) where the Murdoch family collectively do not own more than 44 per cent of the voting power of the Class B shares.

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