News Corporation’s full-year profit has been more than halved as revenue from its Australian newspapers continues to slide.
The company made a net profit of $US237 million ($A256.42 million) for the year to June 30, down 53 per cent from $US506 million in 2012/13.
However, the 2012/13 result was boosted by a one-off gain from the sale of its stake in New Zealand’s SKY Network Television.
Earnings from the company’s news and information division fell 16 per cent in 2013/14 to $US130 million, mostly due to weakness in its Australian newspapers, which suffered an 18 per cent slide in revenue, of which 10 per cent was related to the foreign currency impact.
The company’s Australian mastheads include the The Advertiser, Herald Sun, The Daily Telegraph and The Australian.
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News Corp’s full-year revenue fell four per cent to $US8.57 billion.
Meanwhile, the UK hacking scandal continued to weigh on News Corp, which spent $US72 million in fees and costs linked to the matter during the year (net of indemnification by 21st Century Fox).
Earnings from News Corp’s cable network programming business, which includes Foxtel, increased 52 per cent to $US491 million, chiefly due to the inclusion of Fox Sports Australia in the division. Segment EBITDA was $US128 million.
The company’s digital real estate subsidiary REA Group, which runs realestate.com.au, lifted earnings 27 per cent to $US214 million while earnings from its book publishing business, HarperCollins, were up 39 per cent to $US197 million.
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News Corp chief executive Robert Thomson said the company had performed well in challenging conditions.
“While we are operating in a challenging advertising environment, our results highlight the diversification of our portfolio and our cost discipline, leading to improved free cash flow and a firm foundation for sustained growth,” he said.
Fusion Strategy media analyst Steve Allen said advertisers had ditched the print medium at almost twice the rate of the decline in circulation.
“Advertisers and their media agencies basically turned their back on print and we saw really severe declines which are only just starting to slow,” he said.
But he said while advertising revenue is likely to flatten out at some point, the company, it was likely the decline in circulation would continue.
“For News it has been more an advertising problem than a circulation problem but they will face a circulation problem,” he said.
“Our view would be that as the losses of advertising revenue start to stem, it’s likely there will be an increase in the rate of decline in circulation and cover revenue.”
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