Financial results from news publishers and broadcasters over the past few weeks have confirmed that the advertising pullback which has hit the tech giants is affecting more traditional media outlets too. Last week the New York Times posted a decline in ad revenue, while publishing group Gannett said it will begin a round of layoffs following disappointing results in which ad revenues struggled. Meanwhile Warner Bros. Discovery cut its full year outlook, citing worse than expected ad sales.
But the continued positivity of the agency groups has suggested there is still ad money out there to be seized, and News Corp appears to be one of the publishers doing so.
News Corp reported 8.9 percent growth in its ad revenues in the most recent quarter, helping fuel a seven percent year-on-year growth in total revenues. This was a slowdown compared to the rest of the last 12 months – overall, News Corp’s ad revenues for the past year were up 17.6 percent compared to the previous year. But then this isn’t too surprising – Q3 and Q4 last year (which are Q1 and Q2 for News Corp, since its financial calendar starts in July) had a very favourable comparison to same quarters the previous year, which were in the height of the pandemic.
Dow Jones, a branch of News Corp’s business which publishes the Wall Street Journal, performed particularly well. Across the whole year, ad revenues were up 20 percent, the highest growth rate since News Corp acquired Dow Jones. In the recent quarter, digital ad revenues at Dow Jones were up by 16 percent year-on-year. CEO Robert Thomson was quick to point out in the earnings call the contrast with rival paper the New York Times’ recent slide in ad revenues.
However even with all that said, News Corp’s executives enthusiasm was tempered somewhat by the reality that things could change quickly. Thomson recounted at the beginning of the call how ad revenues, historically dependent on print, have fallen by $2.2 billion over the past eight years. And even with the company’s current strong performance, CFO Susan Panuccio said that there is limited visibility on how advertising will perform across the rest of the year, and touted as a virtue the fact that News Corp is less dependent on ad revenues now than it was at the beginning of the year.
A reset in social relations
Another significant takeaway from the results were comments made on the earnings call around News Corp’s relationship with the likes of Meta and Google.
News Corp has found itself at the forefront of the battle between publishers and platforms over payments for news content. In Australia, where new laws have forced tech companies to negotiate with publishers in order to be able to repost clippings of their content, News Corp is a dominant force in the news landscape. And while News Corp was long critical of tech companies over their reluctance to pay for news, it is now a major beneficiary of their publisher payments programmes.
“I think it’s fair to say we’ve entered a new Facebook phase,” said CEO Robert Thomson on the earnings call. “We have a three year agreement with Facebook in Australia. But beyond that, we have open discussions with Facebook on the role of professional content in areas from sport video to the Metaverse […] We have extended our significant Apple deal, thanks to Tim Manet, who both firmly believe in news. And our engagement with Google is creative and purposeful, thanks to Sundar and his team.”