The Sun halved its losses last year with lower phone-hacking costs and News UK stablemate The Times grew revenue but saw a 17% drop in profits due to higher costs.
New figures filed with Companies House also revealed TalkTV made losses of £53.7m in its first full year on air (adding to a £34.1m loss in its first two months on air).
The Sun, which files accounts under News Group Newspapers with Companies House, reported pre-tax and operating losses of £65.9m in the year to 2 July 2023, compared to £127.2m the year before.
Revenue at The Sun was down 5% to £305.2m – partly blamed on the absence of an additional week of trading that was included in 2022. Excluding week 53 in 2022, the year-on-year drop was of 3%.
Related
“In addition, the structural declines in the print market and volatility of social platforms’ approach toward news content negatively impacted both print and digital advertising revenues,” the publisher said.
It said The Sun’s UK online digital audience had fallen 14% from 27.8 million in the 2022 financial year to 23.8 million in 2023 as a result of changes to social media platforms.
Content from our partners
However The Sun’s US website, which went live in January 2020, saw revenues grow “as a result of a surge in page views and higher yields year on year”.
The publisher said circulation revenues had also increased due to cover price rises which offset the structural decline in print readership.
Other areas of growth include the betting and gaming division with "product enhancements and targeted marketing" for the Bingo and Vegas brands driving increases in monthly active users. The Sun signed a new commercial partnership with Gaming Innovation Group in the UK, with US initiatives launched in the second half of 2023.
On e-commerce, the publisher said: "The ongoing expansion of the company’s affiliate network is generating synergies across the News UK Group by creating sporting content across The Sun and Talksport that drives audiences to their affiliate partners."
Phone-hacking provisions at Sun publisher News Group Newspapers
News Group Newspapers is continuing to field phone-hacking claims, with several ongoing. The publisher has always denied allegations of unlawful activity at The Sun, saying such behaviour was confined to the News of the World.
The latest high-profile case sees Prince Harry suing the publisher, alleging unlawful acts were carried out by both newspapers resulting in "overwhelming intrusion" into his private life from the age of nine. A trial is scheduled for January next year.
In the year to 2 July 2023, News Group Newspapers made a £5.3m charge in respect of legal fees and damages plus one-off costs of £45.3m relating to "UK newspaper matters", a phrase used to describe cases related to the closure of the News of the World in 2011.
The change in hacking provisions accounts for a large part of the publisher's lower losses. In 2022, a £99.8m provision was made up of costs during the year of £46.8m (up from £14.5m the year before) plus a provision of £53m made for additional claims made prior to a 30 September deadline imposed by the court. The company also spent £27.5m on "UK newspaper matters”.
As of 4 July 2022, provisions for hacking-related legal proceedings stood at £94.8m. By 2 July 2023, £22.7m of this had been used and £5.4m was added, putting the company on £77.5m set aside for this purpose.
“The final cost may or may not be significantly higher than the amounts recognised depending on the course of the litigation, which in turn may also mean costs end up to be significantly lower than those provided for," the publisher said.
Rupert Murdoch’s Fox Corporation has indemnified the legal costs around these cases since 2013, meaning they are reimbursed to the UK business.
Cost increases but improved losses at The Sun
Earnings before interest, taxation, depreciation and amortisation improved at News Group Newspapers by about 50% from a loss of £117.6m, or £125.6m excluding the extra week in 2022, to a loss of £58.9m.
The company said the EBITDA improvement was due to “lower restructuring and one-off costs that were partially offset by lower revenues and increased cost base as a result of inflationary pressures”.
“Operating costs increased year on year due to increased energy prices as a consequence of the war in Ukraine. Cost saving initiatives were implemented to offset some of these pressures,” it added.
Costs of restructuring the editorial workforce were £3.3m, down from £4.4m in 2022. The average number of editorial staff was down slightly from 552 to 549.
Profits down at The Times but revenue up
At The Times, filed at Companies House under Times Media, revenue was up 3% - or 5% when excluding the extra week in 2022 - to £385.8m.
This was put down to growth in digital subscriptions and digital advertising, print circulation revenues benefiting from cover price increases, and higher brand extension revenues particularly in travel which rebounded after the easing of Covid-19 restrictions.
However profit before tax and operating profit were both down 17% to £60.9m.
EBITDA was also down 17% to £66.7m. The decline was 12% when excluding the extra week in 2022.
Excluding restructuring expenses and one-off operating charges, EBITDA was £74.6m – a 10% drop or 5% when the extra week in 2022 is excluded.
The company said its cost base was “adversely impacted by inflationary pressures, primarily relating to higher newsprint prices, resulting in higher production and distribution costs than the previous year. These were only partially offset by revenue growth and cost saving initiatives.”
A workforce restructuring “to match the requirements of the business” cost £7.9m, compared to restructuring costs of £3m in 2022. Average editorial staff numbers nonetheless increased, from 554 in 2022 to 594.
Times digital subscriptions growth
Paying digital-only subscribers to The Times and The Sunday Times totalled 558,000 at the end of June 2023, representing 83% of the overall total of 673,000 subscribers. In 2022 78% of subscribers were digital-only.
Digital-only paid subscriptions grew by 58,000 in 2023 amid a focus on “increasing subscriber engagement, introducing new acquisition offers and enhancements to the retention strategy”.
“Strong subscription growth has been achieved outside of the UK, and international growth is expected to continue to be an important area of focus.”
The publisher said continued growth in digital subscriptions "remains key". It added: "Through enhanced product value, new content verticals as well as targeted investments in product innovation, the business will aim to attract additional premium subscribers, in the UK and internationally, and drive deeper loyalty and engagement."
Both The Times and The Sun implemented further cover prices in June last year to "mitigate the impact of inflationary headwinds, particularly newsprint price rises and a difficult UK advertising market".
Since the end of the financial year, the publishers said, there "have been signs that inflationary forces are beginning to moderate, most notably in newsprint prices".
Both also said they are continuing to work with the major tech platforms with their relationships remaining "strong" and agreements providing sources of revenue.
"Looking ahead, further opportunities with the technology platforms will be explored that could benefit all parties within publishing, advertising and AI," they said. "These additions will in turn underpin further growth in digital advertising and customer revenue."
Robert Thomson, chief executive of Sun and Times parent company News Corp, said in February this year the company is in "advanced" negotiations with AI companies.
TalkTV losses in first full year on air
TalkTV made revenue of £5.6m in its first full year of broadcasting and reported losses before tax and operating losses of £53.7m.
In 2022’s financial figures TalkTV was only on air for two months. In that time, it made £1.1m in revenue and losses of £34.1m, according to the News UK Broadcasting accounts.
It was announced last month that TalkTV will close as a linear television channel but continue to go out with a schedule on radio, via streaming services and on Youtube.
Fellow News UK broadcaster Talksport Ltd, which includes Talkradio (but not TalkTV), Talksport, Times Radio and Virgin Radio, grew revenues by 3%.
However the higher revenues were offset by higher operating costs, including investment in sports rights and talent, leading to EBITDA down from £13m to £11.5m.
Email pged@pressgazette.co.uk to point out mistakes, provide story tips or send in a letter for publication on our "Letters Page" blog
