News Corp records operating loss of £3.5m - down from £51m profit - as company spends £100m on legal fees and hacking fallout - Press Gazette

News Corp records operating loss of £3.5m - down from £51m profit - as company spends £100m on legal fees and hacking fallout

News Corp made an operating loss of £3.5m, down from a £51m profit, in the year to June as it spent more than £100m on legal costs and financing the Management and Standards Committee.

According to its Companies House results, News Corp UK and Ireland – which publishes The Sun, Times and Sunday Times – recorded a turnover of £1,205.2m, down from £1,244.9m in the year to June 2013.

While The Times and Sunday Times reported their first operating profit – £1.7m – since 2001, The Sun’s revenues were down 5.5 per cent to £489m. The Sun recorded an operating profit of £35.6m, down year on year from £62.1m.

News Corp, which also owns publisher Harper Collins, said: “Turnover for The Sun was lower than the previous year due to continuing market decline for newspaper circulation, particularly the popular segment, but this was partly offset by digital revenue with the launch of Sun+ digital subscriptions, as well as a cover price increase on The Sun on Sunday edition.”

The tabloid went behind its Sun+ paywall in August 2013, and recently claimed to have more than 255,000 digital subscribers. But, the statement noted, its print circulation from Monday to Saturday is down around 10 per cent year on year.

The results noted that The Times’s cover price rise from £1 to £1.20 had benefited the title, and added: “Revenue for The Times and The Sunday Times was consistent with the previous year with increased digital and print subscription revenue more than offsetting the decline in print circulation, while advertising revenue decreased slightly compared to the prior year.”

Turnover on the newspaper side of News Corp UK and Ireland for the year to June 2014 was £932.4m, down from £957.3m, according to the results.

The company said that in the financial year it had paid £7.3m in legal fees and damages to claimants in the aftermath of the phone-hacking scandal.

It said: ”Following the allegations of voicemail interception and inappropriate payments to public officials there have been a number of civil cases brought against the group, most of which have been settled, or are in the process of being settled.

“A provision has been made at the balance sheet date in respect of all claims that have been filed up until the date of finalisation of the financial statements.

“In 2011, the company established a compensation scheme which was closed to new entrants in April 2013. A provision has been made at the balance sheet date for all applicants accepted to participate in this scheme.

“No provision has been made letters of claim which have been received but where no formal court proceedings have been issued, or for individuals who have not contacted the company.

“It is not possible to estimate the liability for such additional claims given the information is currently available to the Company.

“If more claims are filed and additional information becomes available in the civil cases, the Company will update the liability provision for such matters.”

On the £7.3m figure, the statement noted: “The final cost may or may not be significantly higher than the amounts recognised.”

The £7.3m was recorded under “operating one-off charges” alongside the costs “in relation to UK newspaper matters”, largely made up of legal fees, and costs “in relation to the Management and Standards Committee”, which was set up to investigate legal matters relating to the company in the aftermath of the phone-hacking scandal.

The company has spent £78m on “legal fees”, not including claimants’ legal fees, up from £50.1m in the year to 2013, and £16.1m on MSC matters, down from £40.3m.

The MSC costs, it said, “are primarily legal and professional fees”. The statement said: “The MSC is not a statutory entity; therefore whilst it has independence from the group, costs relating to the MSC must be recognised in the financial statements of a statutory entity.

“As the costs relate exclusively to investigations within the UK, these costs have been borne be News Group Newspapers Limited.”

Earlier in the statement, MSC costs are recorded as £17.1m, noting that 21st Century Fox has agreed to indemnify News Corp of £8.8m relating to them.



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