The coronavirus pandemic began to impact News Corp’s revenues towards the end of March, with the company expecting continued drag into the next quarter.
News Corp reported total revenue of US$2.266 billion for the third quarter, down by 8% compared to the year prior.
Its News and Information Services division reported revenue of US$1.13 billion, also down by 8%. Revenues at News Corp Australia fell by 14%.
News says its advertising business was hit by the pandemic, with ad revenues across News and Information Services down by 14% compared to the year prior, 2% of which was related to the negative impact from foregin currency fluctuations.
The remainder of the decline was driven by weakness in the print advertising market, lower revenue at News America Marketing and the $14 million estimated negative impact from the COVID-19 pandemic.
The decline was partially offset by growth in digital advertising, and digital revenues now make up 36% of News and Information Services revenues, compared to 31% the prior year.
In April, advertising revenue at News Corp Australia and News UK fell by more than 45% as a result of COVID-19.
News says it expects the pandemic to continue to have adverse effects on advertising and single-copy sales revenue as a result of widespread business closures, social distancing measures and economic uncertainty.
But despite the hit by COVID-19, chief executive Robert Thomson says profitability was “relatively stable”.
“Notably, profitability was higher at the News and Information Services segment, fueled by significant digital advertising and subscriber growth at Dow Jones, including The Wall Street Journal, which reached approximately 3 million subscribers in the last week, a new record, with over 2.2 million that are digital-only,” he says.
“The sale of News America Marketing was completed on May 5 and we are continuing to simplify our company to highlight the intrinsic value of our core businesses, including the strategic review of our Australian newspaper holdings, focusing on our larger brands and our digital reach.”
In response to the pandemic, News Corp is taking cost-cutting measures, and Rupert Murdoch, executive chairman, is forgoing his cash bonus for this financial year, while Thompson is cutting his by 75%.
“Clearly the pandemic will have an impact on our results in the fourth quarter, but all of our businesses are embarking on cost-cutting programs intended to deal with short-term need but also to ensure that the company is well-equipped to prosper in a decidedly different business environment after the crisis abates," he says.
Locally, News Corp has cut staff and reduced work hours to deal with the impacts of the pandemic. It’s also suspended the printing of 60 community newspapers, and is shutting the commercial operations for Storyful in Australia.
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