News Corp’s chief executive Robert Thomson has pointed to “angst-ridden” advertisers and visibility issues as reasons for a five per cent dip in ad revenues in its latest quarter.
Visibility was outlined as an issue for the group, which chief financial officer Bedi Singh told analysts on a call yesterday “continues to be limited” in the bloated ad space. Yet Thomson drew on “instability in the ad market itself” as the more fundamental issue, saying “a lot of advertisers are questioning the return on investment”.
“There's an angst-ridden debate in the advertising world about the viewability of ads,” the News Corp boss continued.
Newspaper groups have been at stress to prove the value of print over digital amid a slow down in the margins advertisers can get from the latter. Simultaneously advertisers have grown wary about whether or not their online ads are being seen, thus pushing them to look at other forms of media like native and video. Publishers believe print could play a role here too.
“As I've said before and it's worth emphasising again, every print ad is a 100 per cent viewable.”
Advertising revenues, which include $17m of negative impact from foreign currency fluctuations, declined 5 per cent, primarily due to the weakness in the print advertising market. At News UK, advertising revenues declined 16 per cent, or down 10 per cent in local currency.
This decline was partially offset by NewsCorp’s aggressive growth in digital - both in ad revenues and subscriber base - which now accounts for 23 per cent of segment revenues, up from 19 per cent last year. This is most pronounced at Dow Jones, with digital revenues representing 53 per cent of total revenues in the fourth quarter.
Across the board NewsCorp’s titles have reported a growth in digital subscribers, which now account for approximately 45 per cent of the subscriber base. The Wall Street Journal has reached 948,000 digital-only subscribers this year, compared to 753,000 in the prior year.
At News UK, the Times and the Sunday Times have a combined digital subscriber base of nearly 182,500, compared to 172,000 in the prior year. The Times saw high-single-digits paid volume growth, likely benefiting from Brexit coverage, the company said. The Sun has been regrowing its digital audience, now reaching 42m global average monthly unique users compared with 15m uniques last September before the lifting of the paywall.
Circulation and subscription revenues, which include $16m of negative impact from foreign currency fluctuations, increased five per cent due to an additional $39m from the extra week in the quarter, growth in paid digital subscribers across the mastheads, higher subscription pricing, and selected cover price increases in the U.K. and Australia.
Commenting on the results, Thomson said: “With the advertising marketplace in upheaval and, rightly under increased scrutiny, we believe the need for trusted content and premium audiences will only increase. We are confident that News Corp’s unique portfolio and global distribution, combined with our focus on cost efficiencies, mean we are uniquely positioned to capitalize on broader social and commercial trends, and drive long-term value for investors."
On 30 June 2016, NewsCorp put forward an offer of approximately £220m to acquire Wireless Group, which owns radio stations TalkSpot and Virgin Radio.
In the earnings call Thomson called the proposed acquisition of Wireless Group "a revenue opportunity", and an opportunity to develop the Sun platform; "because you can see a wonderful overlap of demography".
"What you have in Wireless Group and, obviously, the acquisition is pending, is a series of radio stations, websites, and global sports audio rights that very much complement not only the strength of The Sun but those of The Times," Thomson added.
What’s more, Thomson said the group’s bid for Wireless Group demonstrates “a clear sign of our confidence in the UK” post-Brexit, despite the ensuing economic uncertainty.
"It's our hope that the U.K. Government will take advantage of the opportunity to introduce policies that are pro-growth," he said, "And if that's the case then we would expect all of our businesses to thrive and for us to be in a position to take advantage of that circumstance."