As News Corp heads into 2019, it is looking to its Australian markets and digital real estate to help drive growth. While the digital real estate division accounts for about 45% of News Corp’s total value, according to Forbes’ estimates, it only accounts for about 14% of total revenue. In early 2018, News Corp saw the writing on the wall. In its second-quarter earnings report, there were signs of optimism. Revenue and earnings per share beat Wall Street expectations. Digital revenues at The Wall Street Journal continued to rise. But News Corp’s financial statements also showed big changes were ahead. Print ad revenue fell 6% year-over-year. While digital resources continued to grow, the company’s news and information brands faced claims from some, including U.S. President Donald Trump, of spreading fake news. “The potential returns for our journalism would be far higher in a less chaotic, less debased digital environment,” said CEO Robert Thomson on the February 2018 earnings call. What do these trends reveal about News Corp’s future?
Read more about News Corp.’s history below.
In October, Australian newspaperman Sir Keith Murdoch dies. His son, Keith Rupert Murdoch inherits the Herald and Weekly Times Ltd.
After acquiring a series of local newspapers across the country, Murdoch makes a big move in May by buying the Sydney Daily Mirror and Sunday Mirror.
The Australian launches. It’s the first newspaper created by Murdoch and the country’s first national daily.
Murdoch wins a bidding war against Robert Maxwell for the News of the World in the U.K. He buys the Sun and relaunches it as a tabloid.
Murdoch makes his first U.S. foray in Texas, buying the San Antonio Express and the San Antonio News.
Murdoch enters an even bigger U.S. market, buying the New York Post for $30 million.
News Corp reorganizes itself as a holding company with Australian, U.K. and U.S. assets.
News Corp buys the UK Times and Sunday Times.
News Corp acquires the Chicago Sun-Times and enters the satellite TV business. Murdoch buys the UK’s Satellite Television and renames it Sky. He also acquires a 6.7% stake in Warner Communications.
News Corp buys half of 20th Century Fox Film Corp. Murdoch is sworn in as a U.S. citizen, paving the way for him to purchase U.S. TV assets.
NewsCorp sells the Chicago Sun-Times and buys Metromedia for $1.9 billion. The entity’s six television stations in New York, Los Angeles, Chicago, Dallas, Houston and Washington become the backbone of the Fox Television network.
The New York Post is sold.
Sky Television launches in the UK, and HarperCollins is formed by a merger of book publishers.
News Corp debts reach $7 billion, prompting bankruptcy worries and putting Murdoch’s control of the company in jeopardy.
News Corp buys back the New York Post and expands into Asia with a stake in Star TV.
Fox Television expands after Murdoch buys a 20% stake in New World’s 12 major market stations. These networks switch their affiliations to Fox. The initial public offering of Sky in the UK nets News Corp $1.3 billion.
Fox News launches.
News Corp and Fox acquire the remaining 80% of New World.
Fox Entertainment Group’s IPO raises $2.8 billion.
Sky Global Networks emerges to create a global network, with a reach from the UK to Latin America. Fox Television Stations acquires 10 more networks for $5.35 billion, giving the group the largest footprint in the U.S. market.
NewsCorp enters the satellite TV market, acquiring one-third of DirecTV owner Hughes Electronics for $6.6 billion in cash and stock.
Murdoch shocks many in the industry when he purchases MySpace, the largest social media site in the world, surpassing even Google in terms of visitors.
Murdoch buys the Wall Street Journal’s parent, Dow Jones, for $5 billion. The Fox Business news channel launches.
Wall Street analysts and investors begin to voice concern that the newspaper industry woes were dragging down News Corp’s stock price.
In June, News Corp formally splits into two entities, with 21st Century Fox housing the television, film, and supporting digital enterprises. This separation, Murdoch predicts, will “unlock the true value” of both companies and allow investors “to benefit from the strategic opportunities” of each company. The stock of the “new” News Corp debuts at around $15 a share, rose as high as $18 before settling in around the $12 to $14 range.
The two-year-old “publishing company” is composed of five divisions:
1) News and Information Services: newspapers in the U.S., Europe and Asia—including such prestigious brands as the Wall Street Journal and the Times of London, popular tabloids such as the New York Post and the Sun, and 120 newspapers in Australia—as well as a North American direct-mail and coupon-marketing service
2) Book Publishing: HarperCollins — the venerable New York Harper & Row, purchased by News Corp in 1987 and merged with British publisher William Collins & Son in 1990
3) Digital Real Estate Services: A partial interest in REA—which operates websites in Australia, China and Europe, advertising commercial and residential listings—and Move, which operates similar websites in the United States
4) Cable Network Programming: FOX SPORTS, the leading sports programming producer in Australia
5) Digital Education: Amplify, a tablet-based instructional program for K-12 that incorporated the Common Core Standards into a multi-media presentation.
In October, News Corp takes an impairment charge of $370 million against its digital education division and the company sells Amplify, which it purchased for $390 million in 2011, for an undisclosed sum. By year’s end, the company reports revenues of $8.63 billion, a 1% increase compared to the prior year. Growth comes from the Book Publishing and Digital Real Estate Services segments, as a result of acquiring of Harlequin Enterprises Limited (“Harlequin”) and Move, Inc. (“Move”).
NewsCorp reports fiscal 2016 4Q total revenues of $2.2 billion, a 5% climb from the previous year. Growth in the Digital Real Estate Services and Book Publishing segments continue to be partially offset by lower advertising revenues in the News and Information Services segment. While digital ad revenue is sluggish, audiences across several news properties rise. The WSJ reached 948,000 digital-only subscribers. News UK, The Times and The Sunday Times hit 182,500 digital-only subscribers. Digital subscriptions account for nearly half of the subscriber base, while print sales rise tangibly. The Sun’s website relaunches, with over 42 million global unique users and a lifted paywall.
Digital Real Estate Services continue to power News Corp’s fiscal-year growth. It accounts for nearly 40% of the company’s profits. HarperCollins posts higher EBITDA and margins through books with broad appeal including The Magnolia Story and Hillbilly Elegy. Digital audio is cited as a source of long-term growth. In November, Murdoch reportedly offers to buy CNN but was turned down.
News Corp reports 3% growth in revenue for Q4 in 2017. While its digital real-estate unit continues to prosper, the news and information services division remains plagued by dwindling ad revenues.
In May, NewsCorp reports a 6% gain in revenue, driven by digital real estate and book publishing. Key titles include The Woman in the Window by A.J. Finn and The Rock, the Road, and the Rabbi Kathie Lee Gifford. News & information services revenue jumps 2% compared to the previous year.
In August, News Corp closes out FY18 with a $1.4 billion net loss but sees a 12% rise among its Australian digital subscriptions. News Corp also launches Kayo Sports, dubbed the “Netflix of Sports,” which offers a massive lineup of sports streaming service to Australian consumers, ranging from rugby to college basketball to European soccer.
In January. News Corp announces Sean Giancola will become publisher and CEO of the New York Post and Michelle Gotthelf will become Digital editor-in-chief of the Post. Giancola previously served as the chief revenue officer at the Post and vice president of national sales at AOL Advertising prior to the Post. Gotthelf was a reporter at ABPnews.com, North Jersey Herald and News, and Newsday before holding reporting and managing editor positions at the Post.
In February, News Corp releases Q2 results, which show promising growth for various divisions in the media enterprise. News Corp continues to experience growth from its digital real estate division, which contributes to 44% of total company EBITDA. Revenues in this division increase 8% and EBITDA increases by 11%. The HarperCollins division achieves record revenue and segment EBITDA in Q2.
As of late, digital real estate is driving News Corp’s bottom line.
Interested in learning more about how a single division can affect the future of a large media company? Read more about News Corp’s book publishing division in The Strategic Digital Media Entrepreneur, pgs. 43-45.
News Corp Timeline Sources:
Australian Press timeline:
Financial Times timeline:
2015 — https://newscorp.com/2015/08/12/news-corp-reports-fourth-quarter-and-full-year-results-for-fiscal-2015/
2016 — https://newscorp.com/2016/08/08/news-corp-reports-fourth-quarter-and-full-year-results-for-fiscal-2016/
2017 — https://newscorp.com/2017/08/10/news-corp-reports-fourth-quarter-and-full-year-for-fiscal-2017/
2018 — https://newscorp.com/2018/08/09/news-corp-reports-fourth-quarter-and-full-year-results-for-fiscal-2018/
CMO Today: Murdoch’s CNN Calls
News Corp Revenue Boosted by Digital Real Estate Unit
News Corp earnings boosted by real estate, books
News Corp finishes fiscal year with a net loss but paid subscriptions rise
News Corp continues to benefit from digital real estate growth
News Corp launches Kayo Sports in Australia