News Corp’s better than expected March quarter results, with "improved" advertising, showed print suddenly doing better than digital in Australia.
“I'm always shocked how well the news media business continues to hold up,” says Alan Gould, an analyst at Loop Capital Markets.
He was also shocked to see print advertising doing better than digital advertising in the March quarter.
“What is happening there?”
At News Corp Australia revenue fell 5% in the March quarter. But without the strong US dollar, Australia was up 1%, a strong result in a short market.
And digital advertising was lower and print advertising higher. (In the UK, the opposite was true with lower print advertising and growth in digital advertising at News UK.)
News Corp CFO Susan Panuccio, during a briefing of analysts, described the rise of print as a pleasant surprise.
“We've seen this over the last couple of years as it relates to print advertising,” she says.”It really just depends on categories.
“Down in Australia, they've seen a pickup in travel advertising, which has really helped down there as the market has started to open up.
“They do get some good tailwinds through retail, in different quarters as well. So it really is variable each quarter, but it's down to the different categories.”
Digital represented 36% of overall News Media segment revenue in the quarter compared to 35% at the same time last year, and represented 34% of the combined revenues of the newspaper mastheads.
The News Media part of News Corp, in the face of economic uncertainty, reported an improvement in the March quarter with advertising in constant currency increasing 2%. However, when converted to US dollars, the sector was down 5%.
“At News Media, advertising trends remain volatile,” says Panuccio.
CEO Robert Thomson says the increase in advertising revenue was a vastly different outcome to that of most media companies in most countries.
“We are confident that our teams are more skilled in sharing advertising insights across borders and platforms,” he told the analysts.
News Corp’s reliance on advertising has been shrinking. Advertising represented only 16% of total revenues in the March quarter.
And News Corp is cutting costs, shaving 5% of staff numbers, meaning that profitability is expected to improve.
News Corp overall reported a 2% fall in revenue to $US2.45 billion in the March quarter, ahead of market expectations, as returns from “improved” advertising were squeezed by currency fluctuations.
Revenue came in flat when discounting foreign exchange which had a $98 million, or 4%, negative impact
Net income in the quarter was $59 million compared to $104 million in the same three months in 2022.
The company now expects at least $160 million in annualised savings from a previously announced 5% cut in staff.
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