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March 24, 2022updated 30 Sep 2022 11:11am

The Sun cuts losses to £51.8m while Times Newspapers triples pre-tax profits

By Charlotte Tobitt

The Sun cut its pre-tax losses by three-quarters but still lost £51.8m in the year to 27 June 2021 – although £49m of this was made up of costs related to phone-hacking and other legal claims.

Meanwhile, its News UK stablemates The Times and Sunday Times more than tripled pre-tax profits to £34m, according to accounts filed with Companies House.

News Group Newspapers, which operates The Sun, has reported revenue of £318.6m in its latest accounts, down 2% from £324m in the year to June 2020.

It said this small decline was primarily due to “adverse print market conditions exacerbated by the pandemic, particularly in Monday-Friday sales, though performance has continued to improve since the first lockdown and throughout the financial year.

“There were declines in both newspaper circulation and print advertising revenues owing to an industry-wide acceleration in the shift in spends towards online. Growth in our digital advertising revenues and other customer revenues including betting and gaming were able to partly offset the losses in print.”

News Corp revealed in its quarterly earnings report last month that The Sun’s digital advertising revenue had surpassed print for the first time in the last three months of 2021 due to page view growth and higher yields.

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Earnings before interest, taxation, depreciation and amortisation charges (EBITDA) amounted to a loss of £41.6m, compared to a loss of £80m in 2020. Excluding the impact of restructuring costs and one-off operating charges, EBITDA for NGN was £12.9m, up from £2.3m the year before.

Last year, NGN wrote down the carrying value of The Sun titles to zero.

Legal fees and damages paid out against claims of phone hacking at the now-defunct News of the World cost NGN £14.5m in 2021, compared to £52.3m in 2020. Total costs related to these matters came to £49m, down from £164m in 2020. Most of the claims have now been settled and Rupert Murdoch's Fox Corporation indemnified the legal costs in 2013.

A restructuring of the editorial workforce “to match the requirements of the business” meant restructuring costs were up from £2.2m in 2020 to £5.5m. However the average number of editorial employees declined only by three, to 543.

The publisher said: "The Sun will continue to invest and focus on investigative journalism and delivering the big stories which showcase its quality."

NGN noted that it is now preparing for a world without third-party cookies by redeveloping its apps and websites to increase on-platform engagement and increase its known audiences. In part, this involves converting The Sun’s print and non-UK audiences into app users.

In July News UK launched its own first-party data platform called Nucleus to help brands target their advertising using “rich data and contextual insight” across its brands.

Meanwhile Times Newspapers Ltd, the arm of News UK that runs The Times and The Sunday Times, reported 5% revenue growth up from £310.1m to £327.1m.

It said this boost was “underpinned by strong growth in digital subscription revenue and digital advertising revenue which, supported by the impact of cover price increases across both titles during the period, were more than able to mitigate industry-wide declines in both newspaper circulation and print advertising".

The Times, unlike The Sun, follows a subscription strategy and is in particular focused on growing digital subscriptions. In December, the most recent data available, The Times brand including Times Literary Supplement had 399,000 digital subscribers.

The company said in its accounts that attracting more "premium" subscribers and driving "deeper loyalty and engagement" will "underpin further growth in digital advertising and customer revenue".

Times Newspapers' operating profit grew by 187% to to £36.3m while EBITDA was up by 132% to £44.2m. Excluding restructuring expenses and one-off operating costs, EBITDA doubled to £52.5m.

This growth was put down to “a combination of higher revenues and a lower operational costs due to targeted cost savings across editorial, marketing, commercial and corporate functions, as well as lower print production costs”.

Average Times editorial staff numbers grew by ten to 534.

Both News Corp subsidiaries made reference to revenue from deals made with Google, Facebook and Apple: "We will also see a future benefit from landmark news payment agreements reached between News Corporation and major tech platforms. These deals, while confidential, will provide new sources of annual revenue and are a profoundly positive sign of the ongoing transformation of the news landscape."

News Corp chief executive Robert Thomson said last month that in the three months to 31 December 2021 News UK "had its highest second quarter profit contribution since fiscal 2011" helped by digital subscriber growth at The Times and traffic surging at The Sun.

During the quarter, News UK's revenues grew by 14% with advertising revenues up 21%.

Picture: Robert Alexander/Getty Images

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