Rupert Murdoch’s News Corporation has tumbled to a $US643 million ($817 million) full-year loss after taking a scythe to the value of his cherished newspaper mastheads.
The company plunged into the red from last year’s $300 million profit on the back of almost $1.3 billion in impairment charges across the business, most of which were racked up by the News and Information Services division.
The value of UK and Australian newspapers were written down by $1 billion.
Newspapers in the company’s Australian stable — which includes The Australian, Herald Sun and The Daily Telegraph — had their book value slashed by almost 40 per cent to $310 million.
Another $40 million round of cost-cutting — on top of last year’s $40 million in cuts — was flagged in the results for the Australian business.
News Corp also wrote down the value of its 50 per cent stake in Foxtel by $290 million.
The results pointed to a further erosion of the importance of traditional newspapers, with digital revenues accounting for 25 per cent of the News and Information Services segment revenues, compared to 22 per cent in 2016.
Overall sales revenues slipped 2 per cent, although earnings before tax, depreciation and amortisation rose 29 per cent to $1.1 billion.
Digital business driving News growth
Digital Real Estate Services was the big growth driver in News Corp, generating 37 per cent of all pre-tax earnings.
The company’s majority-controlled Australian real estate portal REA reported a 19 per cent slide in net profit to $206.3 million, although the result was weighed down by a big write-down in its Asian business.
Stripping out one-off items, REA’s profits rose 12 per cent to $204.3 million.
“I think it’s fair to say on the digital advertising front that in the last half of the fiscal year, we didn’t see the growth that we wanted,” News Corp chief executive Robert Thomson told an investor briefing.
“We’re confident there will be an improvement in advertising, coordinated with the improvement in digital audience.”
“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.”
Mr Thomson said News Corporation would make the likes of digital giants like Google and Facebook accountable for the use of its content.
“We are now in advanced discussions with those platforms over the creation of payment mechanisms for news of verified veracity.”