The News Corporation building in New York. File picture: Keith Bedford The News Corporation building in New York. File picture: Keith Bedford
New York - News Corp, the Wall Street Journal and New York Post publisher controlled by billionaire Rupert Murdoch, reported quarterly sales that missed analysts’ estimates, dragged down by lower advertising revenue at its news division.
Revenue fell 2 percent to $2.14 billion, the New York-based company said on Wednesday in a statement. That compared with analysts’ projections of $2.18 billion. Profit excluding some items was 7 cents a share in the fiscal fourth quarter, topping the 5-cent average of estimates compiled by Bloomberg.
Boosting digital and international revenue has been a priority to compensate for falling print revenue in the company’s news division as readers increasingly get their news online. The company said it was taking a $371 million impairment charge related to its Amplify education business led by former New York City schools Chancellor Joel Klein.
News Corp is in “the final phase of negotiations with a potential acquirer” of Amplify, Chief Executive Officer Robert Thomson said during a conference call to discuss the company’s earnings.
Chief Financial Officer Bedi Singh added that sales for the new school year for Amplify’s digital curriculum had been “disappointing” and the marketplace was “much slower to develop than we initially expected”.
News Corp shares rose 1.2 percent to $14.12 at the close in New York. The stock has dropped 10 percent this year.
News unit
Sales at the news unit, which contributes two-thirds of revenue, dropped 10 percent to $1.4 billion, led by a 13 percent slide in advertising revenue and a 5 percent decline in circulation sales. In June, the Journal said that it would reduce staff and eliminate some positions, as well as introduce a global edition for readers in Europe and Asia.
Gains in publishing and digital real estate services helped offset the slump in the news division. At the book unit, which accounts for about 20 percent of revenue, sales rose 8 percent to $390 million, helped by acquisitions.
Revenue for digital real estate services jumped 67 percent to $189 million. In September, News Corp agreed to buy the owner of Realtor.com for $950 million.
Amplify aimed at capitalising on the shift to digital formats in schools, and News Corp invested more than $1 billion in the unit, whose products included a tablet computer, digital curriculum and testing services. The company has been winding down tablet sales after few schools bought them.
Amplify writedown
The Amplify writedown led the company to report a net loss of $379 million, or 65 cents a share, in the fourth quarter, from net income of $12 million, or 2 cents, a year earlier.
News Corp said its quarterly revenue was also hurt by adverse foreign currency fluctuations.
Murdoch split his company in two in June 2013, separating 21st Century Fox. News Corp’s shares have decreased 7.4 percent since the split, while Fox gained 4.6 percent. Both underperformed the Standard & Poor’s 500 Index, which rose 30 percent in the period.
News Corp declared its first semi-annual cash dividend of 10 cents a share, payable on Oct. 21 to shareholders of record as of September 16.
Bloomberg LP, the parent of Bloomberg News, competes with News Corp in providing financial news and services.
* With assistance from Laura Colby in New York
BLOOMBERG