News profit up, paper revenue slides
News Corporation says its Australian newspapers are suffering from weak advertising markets and the shift of readers online.
The global media company has tripled its net profit for the three months to September 30, 2012, making $US2.23 billion ($A2.16 billion), up from $US738 million ($A715.50 million) in the prior corresponding period.
The result was boosted by the sale of News Corp’s stake in software company NDS in July 2012, which produced a $US1.4 billion ($A1.36 billion) gain.
But News Corp’s publishing unit, which includes News Ltd mastheads such as the Herald Sun and The Australian, posted a significant fall in earnings as advertising revenues continued to fall.
‘‘In Australian publishing, the decline in display and classified advertising has clearly hit these businesses,’’ News Corp chief operating officer Chase Carey told analysts.
‘‘As discussed previously, we have major plans already being undertaken by our management team to address these shifts.’’
News Corp’s Australian arm, News Ltd, in June said it would consolidate its newsrooms and reduce staff, cutting its 19 divisions on Australia’s east coast to five.
News Corp’s total publishing business earnings before interest and tax (EBIT) fell 48 per cent from the previous year to $US57 million ($A55.26 million).
Mr Carey said ‘‘most of our other businesses’’ were on target, including the benefits of a new Sunday edition of The Sun newspaper in the UK, which had started to flow through.
‘‘That said, these businesses continue to face challenges stemming from lower advertising revenues as readers continue to migrate to digital platforms,’’ Mr Carey said.
The company also incurred $US67 million ($A64.96 million) in costs related to the phone hacking scandal in the UK.
Another $US5 million ($A4.85 million) in costs were booked for News Corp’s proposed separation of its publishing and entertainment business.
News Corp chief financial officer David DeVoe said earnings before interest and tax (EBIT) were expected to grow in the ‘‘high singles to low double digit range’’ in 2012/13, from an adjusted $US5.6 billion ($A5.43 billion) in 2011/12.
The media group’s cable network programming division posted the strongest growth in first quarter earnings, generating $US953 million ($A923.94 million) in EBIT, up 23 per cent from the prior corresponding period.
Its film and television divisions also posted earnings growth.
News Corp’s total revenue in the three months to September of $US8.14 billion ($A7.89 billion) was up two per cent from $US7.96 billion in the prior corresponding period.
Chairman and chief executive Rupert Murdoch did not attend Wednesday’s results presentation.
‘‘Even against considerable currency headwinds due to a stronger dollar, we were able to increase News Corp’s revenue and adjusted segment operating profit over the prior year quarter while continuing to make key investments to position us for future growth,’’ he said in a statement.