News Corp has revealed it intends to cut costs worth $40 million in Australia over the next year to 18 months, after a weak quarter resulted in the global company shedding millions of dollars in revenue and profits a week. The Australian cost-cutting, only part of a global belt-tightening, comes on top of a US$80 million cost-cutting (A$103.65 million) announced earlier this year.
The cuts were not mentioned in the official release from News. So far as Australia is concerned, the existing cost-cutting program has already resulted in the closure of seven local papers in and around Melbourne mid-year and other cuts in newsprint, ink and associated expenses as paper sizes are shrunk. What will be interesting is whether the cuts extend to an include the loss-making Australian newspaper. News Corp got rid of at least 55 journalists in 2015. In this morning’s briefing, no figures were given for any cost of retrenchments in Australia. Shortly after the briefing, The Australian published a piece heralding a “modest redundancy program” at News Corp Australia to reduce the size of the workforce.
Print ad revenues in Australia slid 11% in Australian dollars, though the rising Australian dollar meant this wasn’t as costly when converted for the US balance sheet. Print ads in The Wall Street Journal fell 22% over the year, while UK the papers suffered a fall in ad revenues in the “mid-teens”.
CEO Robert Thomson said in a statement that “the print advertising challenges were partially offset by higher digital revenues and disciplined cost initiative”:
“We continue to push digital, which accounted for 24% of segment revenues this quarter, up from 20% in the prior year. While we invest in high quality, premium content, this will be balanced with ongoing cost initiatives, as is evident from Dow Jones’ planned strategic reduction in spending and its focus on growing digital subscribers.”
In Australian pay TV, Fox Sports had revenues rise 3% due to “higher advertising revenues”. Foxtel experienced a $21 million loss for the quarter, but Thomson said the pay-TV company experienced “a modest increase in subscriber numbers”. Total subscriber numbers were given at just over 2.9 million, up 1% from a year ago, but seemingly unchanged from the end of the 2015-16 financial year. The loss was attributed to the decision to close the Presto streaming video joint venture with Seven West Media. Foxtel’s underlying performance had a small fall in profit for the quarter compared to a year earlier. — Glenn Dyer
Correction: An earlier version of this story said News Corp was cutting $US40 million in local operations. The correct figure is $AU40 million.
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