There was nowhere to hide for the Murdochs’ News Corp in the three months to September 30.
Every part of the business saw double digit falls in earnings as a perfect storm of negatives hit the company hard, including, as CEO Robert Thomson described it, “a sluggish Australian economy” and “harsh economic conditions”.
It was not a quarter to boast about, with some of the only positives being a rise in digital subscriptions for Dow Jones and for the Foxtel streaming service Kayo.
There were plenty of negatives to highlight (not that News will): more write-downs (US$273 million, or $A395 million), this time in the value of its News America marketing business; the weak Australian economy and real estate; weak earnings in books; more financial problems at Foxtel; and a loss of broadcast subscribers. Plus, currency headwinds are are now a constant for the company thanks to the strong US dollar.
The end result for the quarter was a loss of US$211 million (A$305 million) against a profit of US$128 million (A$185 million) in the same quarter of 2018.
That’s a swing of US$339 million — close to half a billion dollars, a big ouch by any measure.
Revenues fell 7% to $2.34 billion. Even by News’ own unique non-standard measure of “Total Segment EBITDA” (earnings before interest, tax, depreciation and amortisation) it was a rotten quarter, with every segment reporting double-digit falls in earnings to the point where the total plunged 38% to US$221 million from the Steptember 2018 quarter’s US$358 million.
News and information services (including the Australian, US and UK papers) saw a 49% slump in Total Segment EBITDA to US$49 million from US$109 million. Digital subscription services (Foxtel/Fox Sports/Sky News) saw a fall of 28% to US$81 million from US$113 million.
Book publishing (Harper Collins mostly) saw its contribution drop 28% to US$49 million, while digital real estate — the main growth business — in Australia and the US saw a 22% slide to US$82 million from US$105 million.
Revenues at News Corp Australia fell 11% in the quarter as revenues at Foxtel also fell US$53 million, or 9%.
News America is on the market and Thomson said there could be a possible buyer, deciding to put its Unruly/Adtek business under review for possible sale.
Thompson made it clear other businesses could be reviewed for sale as News continues what he called “its simplification process”.
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