News Corp’s shrinking advertising revenue in a 'digital revolution'

Chris Pash
By Chris Pash | 10 May 2024
Credit: Curioso Photography via Unsplash

News Corp has renewed its content deal with Google, cementing a significant revenue stream and marking the company’s  digital transformation.

CEO Robert Thomson noted the deal when announcing the company’s March quarter results.

He stressed this was a renewal and nothing to do with payment for GenAI use of content. Negotiations for that would come later.

Major publishers have been pushing hard to be compensated for the use of their content to train AI. 

News Corp has not revealed the commercials behind the current Google deal, reportedly to be as much as $US100 million a year.

Revenue at the global media group fell 1% to $US2.42 billion in the March quarter, driven by sliding advertising. Taking into account foreign currency fluctuations, the result was flat.

Thomson, in a briefing to analysts, noted that News Corp digital now accounted for more than half total revenue.

Advertising revenue across the group fell almost 9% to $US358 million in the March quarter. That’s about 14.8% of total revenue.

And in the Nine months to March, circulation and subscriptions accounted for 45% with advertising at 16%.

Ten years ago, advertising was almost half of News Corp’s revenue.

“Most tellingly, advertising in news media (division) … now accounts for only 8% of total revenue,” Thomson said. "I should repeat that number 8%. And half of that figure is now digital advertising.”

He sees that trend continuing.

“We are in the midst of an exponential digital revolution and our own company has continued to change significantly and profitably,” Thomson told the analysts.

“Importantly, we are working to promote our quality journalism in the age of generative AI and are gratified that the most enlightened leaders in the industry appreciate the commercial and social value of that content. separately. 

“To that end, we have this week extended our existing partnership with Google.”

The slide in advertising is noticeable across the group.

In the News Media unit, revenue at News Corp Australia fell 10% to $US219 million in the Mach quarter, driven by lower advertising but also a 4% negative impact from foreign currency fluctuations.

Subscription and circulation revenue was down 6% to $US105 million and advertising dropped 16% to $US83 million.  

Print advertising was down at News Corp Australia and digital also fell due to a decline in traffic at some mastheads from platform-related changes.

However, digital subscribers continue to climb. At the end of March, News Corp Australia reported subscriptions up 7% to 1.113 million (966,000 for news mastheads), compared to 1.043 million (937,000 for news mastheads) in the same three months last year.

Analysts see advertising markets staying challenging in Australia and the US. 

March ad spend, as measured by media agency bookings, fell 6.6%. News publishing was down 13%.

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