News Corp has recorded a sharp 75% decline in full-year income, as the company remains focused on brokering compensation deals with tech companies for the use of its content to train their artificial intelligence models.
The Murdoch-controlled media company — which owns Dow Jones and HarperCollins, and is the publisher of The Wall Street Journal, The Times in London, the New York Post and The Sun, as well as The Australian, The Daily Telegraph and Herald Sun in Australia — reported on Friday morning a 75% full-year income fall to US$187 million from US$760 million.
Revenue for the year also sagged some 5% to US$9.88 billion from the US$10.39 billion clocked the year before, as the company reckoned with soft performances from its real estate division in the face of challenging housing market conditions in the US and Australia, as well as its book division, which suffered through lagging book sales.
News Corp chief executive Robert Thomson, however, was upbeat with analysts on an earnings call Friday, saying he held hope for 2024 as the company navigates discussions with tech companies over compensation for the use of its content to train generative AI models.
He wouldn’t be drawn into confirming reports the company was engaged in talks with several other large publishers about forming a coalition to address the impacts of AI on the industry, but said discussions with companies building large language models — which at this stage include OpenAI, Google and Microsoft — were proving “fruitful”.
“They understand our collective responsibility, and we are actively individually engaged in fruitful discussions. I can’t be more specific at this moment. But we see a positive financial result through consensual negotiation, not through litigation,” Thomson said.
Revenue booked by the company’s news division fell 6% for the year to US$157 million, which included a 7% hit from foreign currency fluctuations and $36 million lost as a result of the financial year being one week shorter than the last.
Within the company’s news division, revenue at News UK and News Corp Australia fell 8% and 7% respectively as a result of falls in circulation and subscription revenues, falling 6% to US$68 million, which the company said were again hit by foreign currency fluctuations, as well as a decline in print volume, and the shorter year.
The company’s news division also reported a US$98 million decrease in advertising revenues, driven by US$70 million worth of foreign currency fluctuations, lower print advertising take-up at News UK, and falling ad demand at News Corp Australia across both print and digital products.
News Corp Australia closed out the 2022-23 financial year with 1.05 million subscribers, 943,000 of them to news mastheads, slightly up on the 943,000 and 882,000 reported last year respectively. In the UK, The Times and Sunday Times closed out the year with 565,000 subscribers, including those of the Times Literary Supplement, marginally up on the 508,000 reported last year.
The Sun, meanwhile, reached a reported 159 million global monthly readers, while the New York Post reached a reported 145 million unique monthly readers at the end of June, down on the 198 million reported last year.
Thomson’s optimism over the company’s Australian streaming business also carried over into the company’s full-year earnings report, even as streaming division revenue fell 4% to $84 million in the face of foreign currency fluctuations.
Foxtel closed out the year with more than 4.6 million subscribers, the company said, up 5% on the year before, thanks to increased subscriber numbers across its Binge and Kayo platforms.
“While revenues and profit were impacted by foreign currency headwinds, we achieved growth for the fourth quarter and full year on an adjusted basis — a remarkable turnaround from the recent past and a tribute to the team in Australia,” Thomson said.
He wouldn’t be drawn by analysts on whether the company would consider spinning Foxtel out, but left the door open as the company prepares to launch its own iteration of the Sky Glass smart TV, a hardware streaming aggregation product, later this year.
“But what I can say with absolute certainty is that the success we’ve had with Foxtel has given us absolutely the option of optionality.”
The outlook has become well-known to staff at the company’s Australian outpost in recent months, where employees were last week blindsided by the company’s use of AI to produce 3000 hyperlocal articles a week.
In a letter to management last Friday, the national house committee said staff were alarmed by comments made in June by company chair Michael Miller in an address to the World News Media Congress in Taipei, where he made the disclosure.
The letter, written on behalf of editorial staff and seen by Crikey, called for answers to questions about which other areas of the company use AI and how. It also asked in which other segments of the business management planned to roll out the use of AI in the “foreseeable future”. It also asked management to rule out job cuts as a result of the technology’s adoption.
“The use of AI in News Corp should be a discussion all journalists in this organisation are included in, not something revealed by News Corp at the World News Media Congress in Taipei,” the letter reads.
“New technologies have a place in supporting good, accessible journalism, but it is crucial that implementation processes are transparent, ethical and done in consultation with journalists and readers.”
