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News Corp's plunging revenues concealed by subtle accountancy News Corp's plunging revenues concealed by subtle accountancy
(1 day later)
News Corp, having filed its fourth quarter results late on Friday in the United States, enables the world to see how it did over the full year up to 30 June 2013. But seeing is not the same as believing.News Corp, having filed its fourth quarter results late on Friday in the United States, enables the world to see how it did over the full year up to 30 June 2013. But seeing is not the same as believing.
Significantly, there was no investor briefing, no press statement and no explanatory commentary (as there was with Rupert Murdoch's other division, 21st Century Fox).Significantly, there was no investor briefing, no press statement and no explanatory commentary (as there was with Rupert Murdoch's other division, 21st Century Fox).
There are two ways of reading the figures. So let's begin with…There are two ways of reading the figures. So let's begin with…
The positive spin: annual revenue grew 2.7% to almost £5.5bn on a rise in circulation and subscription revenue. Net income for the year was £316m million compared with a loss of £1.3bn in the previous year.The positive spin: annual revenue grew 2.7% to almost £5.5bn on a rise in circulation and subscription revenue. Net income for the year was £316m million compared with a loss of £1.3bn in the previous year.
In the fourth quarter alone, Rupert Murdoch's company reported a 10% rise in revenue to £1.44bn, but with a loss of £686m due to an £873mm impairment charge.In the fourth quarter alone, Rupert Murdoch's company reported a 10% rise in revenue to £1.44bn, but with a loss of £686m due to an £873mm impairment charge.
The negative spin: News Corp lost almost £500m in the course of the year. It concealed this loss by using the £1.25bn spent buying a stake in Foxtel to create a one-off book gain so large that it offset a big write-down in the value of the company's Australian newspaper assets (that analysis comes courtesy of the Australian website Crikey).The negative spin: News Corp lost almost £500m in the course of the year. It concealed this loss by using the £1.25bn spent buying a stake in Foxtel to create a one-off book gain so large that it offset a big write-down in the value of the company's Australian newspaper assets (that analysis comes courtesy of the Australian website Crikey).
The company's financial situation was also helped by the profit from a major asset sale — £187m from the Sky NZ sell-off — and the fact the company paid little or no tax.The company's financial situation was also helped by the profit from a major asset sale — £187m from the Sky NZ sell-off — and the fact the company paid little or no tax.
The reality: News Corp's subtle accountancy cannot conceal that advertising revenue, which makes up half of its total revenue, fell almost 9% to £1.7bn.The reality: News Corp's subtle accountancy cannot conceal that advertising revenue, which makes up half of its total revenue, fell almost 9% to £1.7bn.
Its Australian newspaper division saw ad revenue plunge by £137m. This was in addition to that £873m write-down for the Australian newspapers.Its Australian newspaper division saw ad revenue plunge by £137m. This was in addition to that £873m write-down for the Australian newspapers.
Restructuring costs for the British and Australian newspaper groups amounted to £172m.Restructuring costs for the British and Australian newspaper groups amounted to £172m.
No paper, even one as profitable as the Wall Street Journal, has been safe from falling revenues. Its were down £47m.No paper, even one as profitable as the Wall Street Journal, has been safe from falling revenues. Its were down £47m.
It is also fair to say that back in May, the company did announce that it would write down the value of its Australian and US publishing assets. Even so, the underlying story here is anything but healthy.It is also fair to say that back in May, the company did announce that it would write down the value of its Australian and US publishing assets. Even so, the underlying story here is anything but healthy.
Consider the fact that three major titles - The Times in Britain, the New York Post and The Australian - together lose a reputed £160m a year.Consider the fact that three major titles - The Times in Britain, the New York Post and The Australian - together lose a reputed £160m a year.
Note also the falling revenue at every other title, including the two other British papers, the Sunday Times and The Sun.Note also the falling revenue at every other title, including the two other British papers, the Sunday Times and The Sun.
It was very noticeable that Murdoch quickly raised the cover price of the Sun on Sunday last week after Trinity Mirror had hiked the prices of the Sunday Mirror and the Sunday People. It was a sign of News Corp neediness to raise the SoS's price the week after a relaunch.It was very noticeable that Murdoch quickly raised the cover price of the Sun on Sunday last week after Trinity Mirror had hiked the prices of the Sunday Mirror and the Sunday People. It was a sign of News Corp neediness to raise the SoS's price the week after a relaunch.
Looking at the twin spins, the negative one surely reveals a truer picture than the positive one.Looking at the twin spins, the negative one surely reveals a truer picture than the positive one.
Sources: Reuters/Business Wire/Crikey/Financial Review *Two other nuggets from the report I previously overlooked: the phone-hacking legal bill over a two-year period was £238m. And News Corp estimates it could be liable for a further £42m in costs this year.
The pay package for the company's chief executive, Robert Thomson, totalled £1,665,000, which included £621,000 in salary, a bonus of £626,000 and the rest was an increase in the value of his pension. (This accords with Mark Sweney's prediction of Thomson's take last December).
Sources: Reuters/Business Wire/Crikey/Financial Review Full report here
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