News Corp profit falls as company hit by 'sluggish Australian economy'
Rupert Murdoch's News Corp has been knocked by a "sluggish Australian economy", reporting falls in revenue and profit for the December quarter.
News Corp posted a $US103 million ($153.1 million) profit for the three months through December, down from $US119 million in the prior year. Revenue declined 6 per cent to $US2.48 billion.
News Corp boss Robert Thomson said the Australian economy had affected the global media giant’s results.Credit:AAP
Subscriber numbers at its pay TV service Foxtel – which includes streaming services Kayo and Foxtel Now – softened to 2.952 million, down from 3.065 million at the end of September. Sports streaming service Kayo's paying subscriber base was 350,000, down from 402,000 on November 5 last year. As of December, Kayo had 372,000 subscribers in total.
Chief executive Robert Thomson said the results were affected in part by a "sluggish Australian economy".
"We expect improvement in the second half as real estate markets show signs of gradual recovery, Dow Jones benefits from content licensing arrangements and higher digital subscribers, and HarperCollins capitalises on an exciting slate of new releases," Mr Thomson said in a statement to the sharemarket on Friday morning.
Lower subscription sales at Foxtel also brought down revenue for the quarter, News Corp added.
Revenues from subscription video services fell by 11 per cent to $US61 million, which News Corp said was driven by the impact of changes in the subscriber package mix. News Corp said the figure had been offset by higher revenues from Foxtel’s streaming products Kayo and Foxtel Now.
Although Kayo’s subscriber base fell for the December quarter, News Corp said that as of February 5 there were more than 370,000 paying subscribers. The fall in Kayo subscribers have been attributed to international cricket tours which reduced local interest and the end of the Rugby World Cup. Foxtel Now's paying subscribers for the December quarter were 334,000, down from 358,000 the previous year. Subscriber churn increased slightly due to lower-value customers, whose contracts expired, the company said.
Revenue for news and information services – which includes the media group's newspapers such as The Australian and the Dow Jones newswires – softened by $US16 million, brought down by the Australian market, which dropped by 9 per cent. Advertising sales fell by 5 per cent, driven by weakness in Australian print advertising as well as lower home delivery revenues.
News Corp Australia’s newspaper subscriber base hit 566,000 at December 31, an increase from 460,300 the previous year.
News Corp said Foxtel earlier this month entered a loan facility agreement with Telstra, which has a 35 per cent stake in the business. The arrangement will give Foxtel up to $170 million to cover its costs of cable transmission. At News Corp's first-quarter results in November, the company said its loans to Foxtel had increased to $700 million as it awaited an agreement with external lenders to restructure the payment schedule for the pay TV business $2.3 billion in debts. The company successfully refinanced $1.1 billion of debt later that month.
REA Group, majority owned by News Corp, posted revenue of $440.3 million for the six months to December 2019, a 6 per cent fall from the previous corresponding period. Net profit fell by 13 per cent to $152.9 million, the real estate site said in a separate statement earlier in the morning.
REA's earnings before interest, tax, depreciation and amortisation fell by 8 per cent to $272.1 million, but the company maintained it had delivered a "resilient" performance in a "challenging market".
More to come.Source: Read Full Article