News Corp revenue boosted by book publishing, digital real estate

Rupert Murdoch’s media empire News Corporation has posted a 2 per cent lift in revenue, with its chief executive Robert Thomson trumpeting “high quality journalism attracts high quality revenue”.
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But journalism had nothing to do with News Corp’s revenue rising to $US2.28 billion in the quarter ending December 31, beating analysts estimates of $2.27 billion.

The bulk of their growth came from book publishing and digital real estate sales, the revenues of which rose $78 million, or 20 per cent, and $51 million, or 50 per cent, respectively.

But revenue from its newspaper business, the titles of which include The Wall Street Journal, New York Post and The Times of London, slumped 6 per cent or $89 million.

Its Australian papers, which include The Australian, Herald Sun and Daily Telegraph, reported a greater revenue decline, shedding 8 per cent. The company attributed the decline to “negative foreign currency fluctuations and modest advertising revenues”.

Advertising revenue across its entire newspaper business plunged 9 per cent “driven primarily by weakness in the UK print advertising market”.

Citi analyst Justin Diddams was concerned about the British slump, asking Mr Thomson during a conference call how the company planned to flip the 16 per cent advertising revenue fall in that market.

“I don’t think we can sustain that kind of decline for much longer, so I’m wondering what the strategy is for the UK business,” Mr Diddams said.

Mr Thomson said: “There’s no doubt that the advertising market in the UK is a volatile one, the winds are flukey.”

He said New’s UK chief executive Mike Darcey was focusing on digital advertising “where we do believe there is room for growth”, and circulation revenue.

Mr Thomson said the sales team were arguing the value of News’ British mastheads, particularly The Times which he said was the only UK paper to increase its print circulation.

“At a time of media transformation with a flood of low-grade listicles and cheesy charticles, it is clear that high quality journalism attracts high quality revenue and reader engagement across all platforms.

“The Times is doing very well, and that message when advertisers hear it and understand it, will resonate not only with advertisers but with potential consumers.

“So Mike [Darcey] and the team are very much on the case and they certainly have levers to pull”.

News’ book publishing revenue surged 20 per cent to $469 million. The company attributed the increase to the inclusion of Harlequin, the world’s biggest romance book publisher, which it bought for $415 million in 2014.

Revenue from its digital real estate business jumped from $103 million to $154 million because of the inclusion of third ranked US property site Move, which it bought with REA Group for $950 million last October.

“Although we don’t yet have a full quarter performance, it is fair to say that the expansion of our digital real estate portfolio should provide a firm foundation for future growth,” Mr Thomson said.

Profit for the entire company, excluding some items, was 26¢ a share in the fiscal second quarter, compared with the 24¢ analysts estimated on average, according to data compiled by Bloomberg.

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