The Murdoch clan faces renewed pressure from some non-family shareholders to further split the company after reporting weak revenue and earnings from all but its real estate and book publishing businesses in the December quarter this morning.

News Corporation revealed that it had been forced to make a US$587 million (A$700 million) write down of value of its 50% stake in Foxtel, and the book value of its struggling Australian newspapers, a move which sent the company deep into the red in the second quarter. News lost US$219 million for the quarter, a US$325 million slump from the final three months of 2015. For the six months to December, news reported a loss of US$305 million against a profit of US$215 million for the first half of 2015-16.

“This quarter’s results were impacted by non-cash charges because of a change in the carrying value of Foxtel and an impairment of the print-related fixed assets at our Australian newspaper business,” News CEO Robert Thomson said in the earnings statement issued this morning. It would seem that Foxtel directors, including those from Telstra, took the outlook for the pay TV operator has worsened and it is not worth as much as it was. Presumably (and we won’t know until next week) Telstra has cut its book value of its 50% stake in Foxtel as well. But it looks like the value has been hit by the rise of streaming services such as Netflix, and the failure of its knock off in Presto (with Seven West Media). 

Details of the performance of the company’s various newspapers in the UK, Australia and the US were not given except for remarks about the rise in digital subscriptions, especially in the Wall Street Journal.

In fact had it not been for another solid performance by REA Group and the company’s US online property businesses, plus Harper Collins books, the underlying performance would have been very weak. As it is, REA Group’s surging profit growth of the past two years slowed dramatically to only 6% in the quarter as real estate listings dropped off the back of the slowing Australian housing boom.

News reported second quarter total revenues of US$2.12 billion, compared to US$2.16 billion in the December quarter of 2015. “Reported revenues reflect a negative impact from foreign currency fluctuations of US$53 million. Adjusted Revenues (which exclude the foreign currency impact and acquisitions and divestitures as defined in Note 1) decreased 1% compared to the prior year, as growth in the Digital Real Estate Services and Book Publishing segments was more than offset by lower advertising revenues at the News and Information Services segment,” the company said.

As is the case with both News and Fairfax, the real estate sections of the business have the most promising results, meaning pressure to spin off REA Group will be reinforced by comments like these from Robert Thomson in today’s statement and subsequent analysts briefing: “Our core platform has been bolstered by our rapid expansion in digital real estate, which is well on the way to becoming the largest contributor to our profitability. This segment posted another very strong quarter, with a 16% year-over-year revenue increase, improved margins and robust audience gains.” — Glenn Dyer