Soft print advertising revenues and a lagging subscription model has led to News Corp's overall revenue dropping by 2.1% to hit $US2.12bn in the first quarter of 2017 compared to US$2.16bn in 2016, despite a strong performance by REA.
With ad revenue down 9%, the results are further evidence that the publisher is continuing to struggle to offset declines in its traditional print advertising revenue.
Circulation and subscription revenues decreased 5%, which News Corp equates to higher subscription pricing and cover price increases in Australia and the UK.
Revenue from its digital properties is up 5% on last year, now accounting for 27% overall. News Corp’s Australian mastheads grew digital subscribers from 255,800 to 309,200 as of December 2016.
News Corp chief executive Robert Thomson, said the company was aggressively transitioning to digital in all aspects of its operations digital was “well on the way to becoming our strongest contributor”.
“In the second quarter, we saw the efficacy of our strategic reinvestment and digital diversification. Both were evident in our significantly increased operating profitability in the quarter, despite continued headwinds in print advertising," he said.
"Results were driven by strong performance at our digital real estate services segment and meaningful revenues at HarperCollins, along with appropriate and ongoing management of the cost base at our news mastheads.
“Our core platform has been bolstered by our rapid expansion in digital real estate, which is well on the way to becoming the largest contributor to our profitability. This segment posted another very strong quarter, with a 16% year-over-year revenue increase, improved margins and robust audience gains."
REA rakes it in
REA, News Corp’s real estate offering, has proven again to be a valuable revenue stream for the publisher, with revenues in the quarter increasing 16% year-on-year to $337.3 million.
Australia was one of the most successful markets for REA, growing revenue by 12%. Its media business recorded 14% revenue growth due to increased media display products and the inclusion of recently acquired flatmates.com.au.
The revenue growth is attributed to a 13% growth in the Australian residential business, however Sydney and Melbourne saw the largest decreases in listing volumes.
“We’ve been able to deliver strong revenue growth in spite of lower listing volumes. We’ve done this through the success of our premium listing products and through innovations across our business,” REA CEO Tracey Fellows says.
REA has been ramping up bets on emerging markets in Asia, recently acquiring 15% strategic stake in Indian digital real-estate marketing platform PropTiger for $67.9m. It plans to enter more markets where it sees the potential for rapid growth, and exiting more mature regions, to counter tougher conditions in Australia.
Correction: This story originally referenced the loss as $400m instead of $40m.
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