News Corp and the New York Times have both reported strong subscriptions growth and are bucking the trend of news businesses reporting revenue decline.
Rupert Murdoch’s News Corp marked a milestone as digital reached 52% of all revenues, with chief executive Robert Thomson describing this as “more than an e-evolution, it is an e-revolution”.
Thomson told investors: “For the second quarter in succession, News Corp has achieved growth in both revenue and profitability, and we believe there are strong prospects for further growth as difficult, inauspicious macro conditions ease in some of our markets.”
Thousands of journalist jobs were cut in the UK and US in the past year. News Corp said in February 2023 it would seek to cut 5% of its global workforce, or around 1,250 positions, over the subsequent year.
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Thomson also revealed News Corp is in “advanced” negotiations with generative AI companies and that The Times will “imminently” launch a digital version in the US.
News Corp reported second quarter revenue of $2.59bn, up 3% from $2.52bn in the same period last year. It said this was driven by growth at Dow Jones as well as its digital real estate services and book publishing segments.
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The EBITDA profit figure was up 16% from £409m to £473m, the third consecutive quarter of profit growth despite what Thomson described as “testing economic times”. Net income was up 95% from $183m last year to $94m.
The “strong” results in the first two quarters of the 2024 fiscal year put News Corp off to a “sterling start”, Thomson said, following “the three most profitable years for the new News Corp”.
Thomson noted the seismic shift away from advertising to subscriptions over the past ten years. He said: “We are seeing the collective benefit of our conscious strategic shift away from potentially volatile advertising revenues to growth in circulation and subscription revenues.
“In FY 2014, nearly half of News Corp revenues were from advertising, with 31% from circulation and subscriptions. There has been a fundamental metamorphosis – in the first half of this fiscal year advertising had receded to 16%, with circulation and subscriptions surging to 44%.”
News Corp has more consumer subscribers than New York Times
News Corp now boasts 11.3 million paying consumer subscribers (more than the New York Times total of 10.4 million).
News Corp now has more than seven million subscriptions to its newsbrands, including The Wall Street Journal, Barron’s, The Times and Sunday Times, The Australian, and others. More than 4.9 million of these are within the Dow Jones portfolio, which includes The Wall Street Journal, Barron’s, MarketWatch and Investor’s Business Daily, more than double the pre-Covid average level of 2.4 million four years ago.
At Dow Jones in particular, Thomson said: “The acceleration of digital subscription growth has been driven, in part, by the team’s bundling of products, which is designed to increase reader engagement and reduce long-term churn.”
News Corp has an additional 4.3 million paid subscribers at Australia-based streaming TV service Foxtel and an undisclosed additional number to its professional information business within Dow Jones.
The professional information business “remains on track to be the largest contributor to profitability at Dow Jones this fiscal year”, according to Thomson. That business includes the Oil Price Information Service (OPIS) and Chemical Market Analytics (CMA) formerly known as Base Chemicals, which were acquired in 2022.
Subscribers there are loyal, he said, with an average retention rate “comfortably above” 90%.
Overall Dow Jones “yet again achieved its highest level of quarterly revenues and profitability since News Corp’s acquisition”. Murdoch‘s business acquired Dow Jones in 2007. It said last year Dow Jones had doubled its profitability over the previous four years.
“While we have purposefully shifted emphasis to recurring revenues at Dow Jones, we are happy to report that although we faced some challenges in print advertising, digital advertising grew year-over-year, for the first time since the first quarter of fiscal 2023,” Thomson said. “This positive result has been driven primarily by growth in the tech and automotive sectors, and most notably at WSJ.com.”
Elsewhere in News Corp’s news media division, traffic was said to be recovering “in recent weeks” after “convulsions” brought on by the “algorithmic aberrations” from Google and other platforms that affected many outlets in the final months of 2023. “Gratifyingly, we experienced digital subscription growth during the quarter,” Thomson said.
The Times to launch in US
The Times and Sunday Times set a new record for the quarter with digital subscriptions reaching 575,000 (up from 572,000 in the previous quarter) as well as “significant digital ad growth, up 21% on a reported basis and over 15% in local currency”.
Revealing the upcoming launch of The Times in the US, Thomson said: “We expect the success of The Times to continue beyond Britain’s borders with the imminent digital launch of The Times in the US. We are confident that it will resonate with discerning readers hungry for objective news coverage in a market saturated with narrative non-journalism.” Katie Davies was appointed as the first US editor of The Times in October.
It is unclear how The Times will be billed in a country where The New York Times is known as The Times and News Corp’s title is as a result referred to as The Times of London.
News Corp’s US tabloid the New York Post was said to be “again on course to be profitable and has expanded its positive political influence in these vexed and vexing times”.
News Corp hopeful of deal with AI companies: ‘Wooing not suing’
On the earnings call with investors, Thomson also addressed News Corp’s position on generative AI companies using its content to train their models following the New York Times lawsuit filed against OpenAI and Microsoft at the end of December. Thomson hinted that News Corp was getting closer to a financial settlement with the owners of Large Language Models.
Thomson said he was “hopeful… News Corp will be able to set meaningful global precedents with digital companies that will assist journalists and journalism, and ensure that gen AI is not fuelled by digital dross”.
“The corny, callow cliche is that AI companies are selling the ‘picks and shovels’ during this seeming gold rush – well, we are selectively reselling gold nuggets and those crucial negotiations are at an advanced stage.
“It is reassuring that certain digital companies appreciate the value of integrity, quality and creativity, and while certain other media companies prefer litigation, we prefer consultation, as the former is merely creating a gold rush for lawyers. Courtship is preferable to courtrooms – we are wooing not suing. But let’s be clear, in my view those who are repurposing our content without approval are stealing…”
New York Times trumpets $1bn annual subs revenue
Also on Wednesday The New York Times announced it had crossed $1bn in annual digital subscription revenue for the first time in 2023. Digital subscription revenue was up 7.2% in the fourth quarter of 2023 compared to the year before.
This was attributed to a growth in subscribers – with 300,000 net digital-only subscribers added in the quarter – as well as 3.5% year-on-year growth in average revenue per user to $9.24, largely down to subscribers upgrading from promotional to higher prices as well as other price increases for non-bundled subscribers.
The New York Times now has around 10.36 million subscribers across its print and digital products, including 9.7 million digital-only.
As at Dow Jones, the bundle is proving a successful technique for The New York Times where 41% of its subscriber base now have bundles or multi-product packages. Chief executive Meredith Kopit Levien said those subscribers “continue to be more engaged, better retaining, and willing to pay more over time than single-product subscribers”.
Although digital advertising revenues were down 3.7% year-on-year in the fourth quarter, this was largely put down to the fact there were five fewer days in the quarter due to a shift in the fiscal year to match the calendar year.
Revenue also declined in the podcast and creative services (book, film and TV) divisions, but other revenue was up 10%, put down to licensing and Wirecutter affiliate revenues.
Operating profit was up 8.5% year-on-year to $154m in the quarter “primarily as a result of higher digital subscription and other revenues as well as lower adjusted operating costs, partially offset by lower advertising revenues”. Revenue was 1.3% up year on year to $676.2m in the quarter, the company said.
Kopit Levien said: “2023 was a strong year for The Times that showcased the power of our strategy to be the essential subscription for every curious person seeking to understand and engage with the world. Our market leading news and lifestyle products commanded large and deeply engaged audiences, and our multi-revenue stream model contributed to improving profitability.”
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