Rupert Murdoch’s global media empire, News Corp, lost US$1bn in the three months to the end of March and is expecting more financial pain as the economic fallout from the coronavirus crisis continues.
The chief executive, Robert Thomson, said there was a fresh wave of cost-cutting ahead for the group, including a “strategic review of our Australian newspaper holdings” that could signal further job losses at the company’s smaller mastheads.
He said he was giving up three quarters of his bonus, while Murdoch, who is executive chairman, had forgone his entire bonus.
News Corp said the mammoth loss was primarily driven by the company’s decision to slash the valuation of its troubled Australian subscription TV business, Foxtel, which has been struggling to compete against streaming services, and reclassify its US coupon business News America Marketing as an asset held for sale. (The business was sold earlier this week, after the end of the quarter.)
However, revenue also fell 8% compared with the same period last year, to US$2.27bn, due to falls in news advertising revenue, lower subscription revenue from Foxtel and the weak Australian dollar.
Thomson said the results “demonstrate the strength of News Corp and the power of our premium content”.
He said the company had US$1.4bn in “cash and cash equivalents” on hand and the ability to borrow an additional US$750m.
Following the sale of News America Marketing the company was “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”, he said.
“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.”
The hunger for information about the coronavirus has sent readership numbers skyrocketing during the pandemic, but many news organisations have struggled to convert the extra attention into dollars due to the devastation the shutdown has wrought on big advertisers such as retailers.
News Corp last month suspended printing 60 regional Australian titles after real estate, event and restaurant ads dried up.
In March the chief executive of News Corp Australasia, Michael Miller, warned staff it was “clear that some job losses will be inevitable” due to the crisis.
To cut costs, some staff have also been asked to take leave or work a shorter week.
However, Thomson said subscriptions were up at News Corp’s Dow Jones division, which includes its financial masthead, the Wall Street Journal. The Journal “reached approximately 3 million subscribers in the last week, a new record, with over 2.2 million that are digital-only”, he said.