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Shares in Rupert Murdoch’s News Corp tumbled by more than 11 per cent on the ASX after the company’s quarterly financial results disappointed investors and raised concerns about the impact of volatile economic conditions on the media company.
News Corp, which owns local mastheads The Australian, Herald Sun and The Daily Telegraph and owns stakes in Foxtel and wagering company Betr, reported a 75 per cent fall in quarterly net income to $US66 ($101.6) million from $US267 million a year earlier, with revenue falling 4 per cent to $US2.48 billion.
News Corp executive chairman Rupert Murdoch and global chief executive Robert Thomson.Credit:Snapper Media
The stock fell 11 per cent to $23.04, its lowest level since July.
“I think the market was shocked by the magnitude of the earnings falls in news media and books, and management’s understandably cautious near-term outlook,” Morningstar analyst Brian Han said. “There’s likely to be some consensus downgrades, but I don’t think News Corp’s sustainable earnings power is compromised that much.”
The dip in revenue was attributed to the higher US dollar, which reduced the value of its international income, and weakness in book publishing, caused by Amazon cutting book inventory levels. Adjusted revenue increased 3 per cent. News Corp chief executive Robert Thomson said the issues were “ephemeral, not eternal”.
There were green shoots in Australia though, with the local arm of News Corp hitting 1 million digital subscribers for the first time and increasing revenue by 1 per cent in the first quarter, which ended on September 30. News Corp Australia executive chairman Michael Miller said the advertising market was short, but he expected more money to come from car manufacturers and the financial sector as refinancing became more prevalent.
He said hitting the milestone showed the business was sustainable and claimed the company had no plans to change the price of subscriptions.
“I do think that people are accepting that prices are increasing as costs are increasing,” Miller said. “You want to have an audience that stays with you – you don’t price them out of the market, but Australians have shown they are prepared to pay as well.
“We continue to review that. We have no plans at the moment, but we do see competitors in the broader recurring revenue market – Disney, Amazon Prime – increasing prices, so you’ve got to look at that as being an indicator.”