News Corp Australia lost $60.7 million last year, but subscription revenue is growing -
11th November 2021

News Corp Australia is run by executive chairman Michael Miller. CREDIT: JESSICA HROMAS

By Zoe Samios

Rupert Murdoch’s News Corp Australia posted a $60.7 million loss in the last financial year as it closed hundreds of print editions and transitioned the mastheads to digital-only websites.

News Corp has publicly disclosed the performance of its local publishing arm to the Australian Securities and Investment Commission(ASIC), giving new insight into the state of the local operation which also runs magazines such as Vogue Australia and Delicious and online websites including news.com.au.

The company reporting earnings [before interest, tax, depreciation and amortisation] of $48.6 million, down from $61.7 million the previous year. But it is now making more money from its subscriptions than from advertisers.

The disclosure comes after a reorganisation of News Corp’s legal ownership structure, which resulted in the creation of two entities - one for Foxtel Group Australia and another for News Corp Australia. The last time the financial performance of News Corp’s local publishing arm was disclosed was in 2014, when Crikey obtained confidential operating account documents.

The company reported a net loss after tax of $60.7 million, which was an improvement from the $151.4 million the previous year. The loss can largely be attributed to almost $776 million in operating expenses and a further $600 million in sales and administrative costs.

News Corp Australia paid just $8.2 million in tax ($4.5 million of which was deferred). By comparison, Nine Entertainment Co (publisher of this masthead) paid $95.6 million in tax, while Kerry Stokes’ Seven West Media’s total tax expense was $127.5 million for the last financial year. Both companies posted a net profit.

News Corp has been criticised in the past for paying too little in tax. In 2015, News Corp was the only company in the highest risk category for tax avoidance.

Total revenue for 2021 fiscal year was $1.4 billion, a decline of 6.7 per cent. The fall was due to a 21 per cent decline in advertising revenue to $610.6 million, which it said was caused by the closure or transition of community and regional newspapers in May 2020.

News Corp made more money from circulation and subscription revenue, which climbed from $542.8 million to $636.4 million (up 17 per cent) year-on-year. This was driven by a 25 per cent increase in digital subscribers, but the results are not split out by newspaper. Restructuring costs were $24.1 million, down from $87.4 million in the previous year.

News Corp’s parent company, News Corporation, last week posted its first quarter results for fiscal year 2022, which prompted a 7 per cent bump in its share price. The results said News Corp Australia had grown its first quarter revenue by 14 per cent. The company now has 897,000 paying subscribers (850,000 of which are to the news mastheads).

In a further sign of its ambitions to grow the company through consumer contributions, News Corp is preparing to launch a sports-focused subscription website in an attempt to expand the way it covers key sporting events and Australian players.

The publisher is expected to launch the new platform, Code, by November 17 in what many believe to be a local version of closely watched international subscription website, The Athletic. It will be run by former Cricket Australia communications boss Alex Brown and will feature long-form journalism about sports such as rugby league, cricket and the AFL. It will also focus on Australians that play sport overseas.

Industry sources, who spoke on the condition of anonymity, said Code will charge $10 per month for its content, which will feature coverage from Maria Recouvreur, former editor of the NRL’s magazine Big League, The Age’s Daniel Cherny and AAP’s Pam Whaley.

Journalists at other News Corp mastheads that report on sport at The Daily Telegraph and Brisbane’s Courier-Mail are not expected to be part of the platform. However, Code is expected to be cross-promoted with News Corp-controlled streaming service, Kayo Sports, which already has more than 1 million paying subscribers.

News Corp declined to comment.

(The Sydney Morning Herald)