News Corp’s revenue has fallen for the fourth successive quarter, illustrating both its own problems and those besetting newspaper industries in advanced economies. That has the hallmarks of a recession, does it not?
Now it would appear that cuts are inevitable at the company’s major titles in Britain and Australia following worse-than-expected second quarter results.
Chief executive Robert Thomson hinted at the need to consider cutbacks in saying: “Cost cutting has a short-term cost and a long-term benefit.”
That sounds ominous for staffs at the Times, Sunday Times and the Sun as well major titles in Australia and, quite possibly, in New York too.
Ever since Rupert Murdoch agreed to split the old News Corporation into two, placing the lucrative entertainments division into a separate entity, 21st Century Fox, the publishing group, new News Corp, has found things tough.
It was always going to be the case, of course, because newspapers are no longer able to generate anything like the cash of the pre-digital age.
As has been said ceaselessly for years, the old business model in which papers were funded by advertising, no longer works. And no-one has found a viable new business model, based around monetising online access, to replace it.
Murdoch put a great deal of faith in charging audiences to read his papers’ digital products but that strategy hasn’t proved to work, not yet anyway. He also had to change tack at the Sun by pulling down its paywall as numbers went into severe decline.
Although he may be a little more heartened by the Times/Sunday Times performance, the digital readership is anything but sparkling.
Even so, his News UK operation in Britain is clearly doing better than News in Australia, where revenue fell badly. Thomson didn’t conceal his disappointment when speaking to investors: “For our Australian mastheads, it was clearly a difficult quarter in advertising.”
That would suggest cost-cutting of some kind at the Australian, the Sydney Daily Telegraph and the Brisbane Herald Sun.
Note also another Thomson phrase about “sharing services around News Corp to streamline operations at the newspapers in Australia and the UK.”
The numbers do look frightening, given that there is no sign of an upturn. News Corp’s first half profits, in the six months up to 31 December 2015, fell 18.5% compared with the first half of the previous financial year, dropping from $546m (£378m)to $445m (£308m).
One possible saving, if slight, will be the tailing off of costs caused by the phone-hacking scandal. These rose 40% to £4.8m in the second quarter compared to the previous three months but, despite a trial ahead, that could well be the last big tranche.