Finance Finance News News Corp moves into loss, flags more job cuts

News Corp moves into loss, flags more job cuts

News Corp loss.
News Corp slips to loss. Photo: Getty
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Rupert Murdoch’s global media organisation, News Corp, has fallen into the red, reporting a loss of $US15 million ($A19.48 million) in the quarter, compared with a profit of $US175 million ($A227 million) in the same period last year.

The group warned of $A40 million in job and cost cuts over 2016-17 in Australia, in response to falling advertising revenue and a shift to digital.

Advertising revenue at News Corp Australia fell 11 per cent in local currency in the first quarter, which was relatively similar to the same period last year, News Corp chief financial officer Bedi Singh told investors.

Circulation revenue increased on a local and reported currency basis. News Corp reports in US dollars.

“While we continue to benefit from the cost-reduction program that News Australia announced in the second half of fiscal 2016, which totalled around 5 per cent of the cost base, we are now embarking on further cost initiatives,” Mr Singh said.

“We expect an additional $A40 million in cost savings this fiscal year while we continue to push digital initiatives more broadly.”

In Australia, the Foxtel pay TV business also went negative, turning an $US9 million ($A11,7 million) profit for the first quarter last year into a $US11 million ($A14.3 million) loss.

That came as a result of the closure of the Presto video streaming operation which had 130,000 customers and cost News $US 20 million ($A13 million) to shut down.

Foxtel had 2.9 million customers at September 30 and its revenues rose 1 per cent in Australian-dollar terms.

It has been hit by churn rates which have increased to 15.5 per cent from 10.1 per cent across the September quarter last year.

Earnings in its News and Information services business, which houses its newspapers such as The Wall Street Journal, The Australian and The Times of London, dropped 45 per cent. Newspaper revenue fell 5 per cent to $US1.2 billion ($A1.56 billion), Fairfax has reported.

Advertising revenue fell 11 per cent, after being hit by weakness in the print market. It comes amid job cuts at The Wall Street Journal and elsewhere.

“The print advertising challenges were partially offset by higher digital revenues and disciplined cost initiatives. We continue to push digital, which accounted for 24 per cent of segment revenues this quarter, up from 20 per cent in the prior year,” News Corp chief executive Robert Thomson said.

“While we invest in high quality, premium content, this will be balanced with ongoing cost initiatives, as is evident from Dow Jones’ planned strategic reduction in spending and its focus on growing digital subscribers.”

EBITDA in its digital real estate business, which includes REA and Move, grew 18 per cent, or $US10 million ($A13 million) to $US67 million ($A87 million).

But News Corp’s majority-owned REA Group Australian real estate listing site has warned that soft listing volumes in the first quarter are expected to continue through the first half of the financial year despite the real estate boom on the east coast.

REA said  first quarter revenue was up 16 per cent to $A170 million, driven by the acquisition of iProperty, revenue from which was reported for the first time.

REA said it achieved a 14 per cent increase in its Australian residential business revenue in the first quarter despite an 8 per cent decline in listing volumes, focused on Sydney and Melbourne.

The company said listing volumes remain low throughout the quarter after initially being weak thanks to uncertainty around the Australian Federal election.

Listings remained at these levels in October are are expected to continue low for the rest of the half.

“This has been a strong first quarter for REA Group given the softer market conditions in Australia. Our focus on continuously improving consumer experience and creating value for our customers saw us deliver an increase in depth revenue,” REA chief executive Tracey Fellows said.

“We are continuing to build our global network and invest in new and innovative ways to change the way the world experiences property. We are creating future revenue streams across the entire property journey which allow us to deliver the most immersive, personalised and engaging property experience.”

News’ overall loss was unmasked after the absence of a $US106 million ($A137.67 million) tax benefit resulting from the sale of lose making education business Amplify the previous year made itself felt.

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