News Corp has released earnings details for the quarter ending December 31, 2022. A dip in earnings saw the company report it was ready to face its latest challenge. One of its strategies to be better placed for the future is reducing staff numbers across the board.
Ahead of the earnings call, News Corp chief executive Robert Thomson explained:
“The second quarter highlighted the progress made in certain of our business segments. Obviously, a surge in interest rates and acute inflation had a tangible impact on all of our businesses. But we believe these challenges are more ephemeral than eternal. Just as our company passed the stress-test of the pandemic with record profits, the initiatives now underway, including an expected 5 percent headcount reduction, or around 1,250 positions this calendar year, will create a robust platform for future growth.
Even in the midst of the obvious global challenges, the professional information business at Dow Jones displayed particular promise, with revenues surging 45 percent year-over-year. That encouraging result highlights the value of our opportunistic acquisitions of OPIS and CMA, and continuing growth at our burgeoning Risk and Compliance business.
In terms of portfolio optimization, as publicly reported, we have been actively engaged in discussions with CoStar Group about a potential sale of Move. Any transaction would be designed to create shareholder value and strengthen Realtor.com’s competitive position.”
During the earnings call to analysts, Thomson talked about the “continuing revival of Foxtel” under current management, and how streaming was now a “core strength”. He referred to the impending launch of an advertising tier at BINGE.
Looking at the news media segment, Thomson referred to the “volatile advertising market”.
News Corp financials: Quarter overview
Second quarter FY2023 total revenues of US$2.52 billion [all amounts US$], a 7% decrease compared to $2.72 billion in the prior year period. The drop was linked to a number of factors including lower book sales at Harper Collins and loses from the new Australian sports wagering platform, Betr.
The company also noted an expense of $6m evaluating the proposal from the Murdoch Family Trust to reunite News Corp and Fox Corp.
See also: Fox-News Corp merger scrapped as Murdoch looks to sell real estate asset
Subscription Video Services
Revenues of $462 million in the quarter decreased $36 million, or 7%, compared with the prior year, due to a $52 million, or 10%, negative impact from foreign currency fluctuations.
Adjusted Revenues of $514 million increased 3% compared to the prior year. Higher revenues from Kayo and BINGE, driven by increases in both volume and pricing, and higher commercial revenues were partially offset by the impact from fewer residential broadcast subscribers and lower advertising revenues.
Foxtel Group streaming subscription revenues represented approximately 26% of total circulation and subscription revenues in the quarter, as compared to 19% in the prior year.
As of December 31, 2022, Foxtel’s total closing paid subscribers were over 4.3 million, a 10% increase compared to the prior year, primarily due to the growth in BINGE and Kayo subscribers, partially offset by lower residential broadcast subscribers. Broadcast subscriber churn in the quarter improved slightly to 12.9% from 13.0% in the prior year. Broadcast ARPU for the quarter increased 2% year-over-year to A$83 (US$55).
Dow Jones
Circulation and subscription revenues increased $61 million, or 17%, which includes the contributions from the acquisitions of OPIS and CMA. Circulation revenue grew 3%, reflecting the continued growth in digital-only subscriptions, primarily at The Wall Street Journal.
Digital-only subscriptions to Dow Jones’ consumer products grew 10%. Total subscriptions to The Wall Street Journal grew 4% compared to the prior year, to nearly 3.8 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 9% to over 3.1 million average subscriptions in the quarter, and represented 84% of total Wall Street Journal subscriptions.
Book Publishing
Revenues in the quarter decreased $86 million, or 14%, compared to the prior year, primarily driven by lower book sales due to slowing consumer demand industry-wide, difficult frontlist comparisons and some logistical constraints at Amazon.
News Media
Revenues in the quarter decreased $59 million, or 9%, as compared to the prior year, driven by a $65 million, or 10%, negative impact from foreign currency fluctuations and lower advertising revenues in constant currency, partially offset by higher circulation and subscription revenues in constant currency.
Within the segment, revenues at News Corp Australia and News UK decreased 13% and 10%, respectively, as both were impacted by negative foreign currency fluctuations. On a constant currency basis, revenues at News Corp Australia and News UK decreased 3% and increased 3%, respectively. Adjusted Revenues for the segment increased 1% compared to the prior year.
Circulation and subscription revenues decreased $20 million, or 7%, compared to the prior year, primarily due to a $31 million, or 11%, negative impact from foreign currency fluctuations and lower print volume. The decline was partially offset by cover price increases and digital subscriber growth.
Advertising revenues decreased $37 million, or 13%, compared to the prior year, primarily due to a $27 million, or 10%, negative impact from foreign currency fluctuations and lower print advertising at News UK and News Corp Australia. The decline was partially offset by growth in digital advertising, primarily at News UK (mainly at The Sun), and higher revenues at Wireless Group, partly due to the FIFA World Cup 2022.
In the quarter, the decline also included approximately $22 million of higher costs related to TalkTV UK and other digital investments, primarily at News Corp Australia, the $21 million negative impact from higher newsprint prices, higher employee costs and higher marketing expenses, partially due to the increased spend in relation to the World Cup at News UK.
Digital revenues represented 37% of News Media segment revenues in the quarter, compared to 34% in the prior year, and represented 35% of the combined revenues of the newspaper mastheads. Digital subscribers and users across key properties within the News Media segment are summarized below:
• Closing digital subscribers at News Corp Australia as of December 31, 2022 were 1,011,000 (924,000 for news mastheads), compared to 909,000 (861,000 for news mastheads) in the prior year (Source: Internal data).
• The Times and Sunday Times closing digital subscribers, including the Times Literary Supplement, as of December 31, 2022 were 489,000, compared to 399,000 in the prior year (Source: Internal data)
• The Sun’s digital offering reached 194 million global monthly unique users in December 2022, compared to 163 million in the prior year (Source: Google Analytics).
• New York Post’s digital network reached 141 million unique users in December 2022, compared to 160 million in the prior year (Source: Google Analytics).