Four US news giants shrugged off industry angst around the impact of generative AI as they posted robust financial results this week.
Thomson Reuters, News Corp, People Inc (formerly Dotdash Meredith) and The New York Times collectively reported some $5bn in revenue and nearly $1.2bn in profit in the quarter to the end of June.
The biggest current threat to publishers from AI technology appears to be falling referral traffic from Google as it offers readers AI-written answers more prominently than article excerpts and links.
Here are Press Gazette’s highlights from four publishers that illustrate the resilience of the news industry amid technological disruption and macroeconomic uncertainty prompted by unpredictable US trade policy.
Thomson Reuters: AI-enabled products are helping growth
Reuters News (the famous agency business) is one of Thomson Reuters’ smallest commercial segments but reported revenue up 7% year on year to $218m in the quarter.
Overall, Thomson Reuters saw revenue grow 3% to £1.8bn and reported profit (EBITDA) for the period up 5% to $678m.
The company makes most of its money selling information services to legal and tax professionals as well as corporations.
CEO Steve Hasker said: “We saw good momentum continue in the second quarter, with revenue in line and margins modestly ahead of our expectations.”
So far AI appears to be a net benefit for Thomson Reuters, which won a legal victory in February over a competitor which was using its Westlaw legal intelligence service to train a AI tool.
Thomson Reuters has launched new AI features for its tax and accounting and legal businesses which automate tasks.
Reuters offers its legal and tax professional customers CoCounsel, a service that “seamlessly integrates with Microsoft 365 applications such as Microsoft Teams, Outlook, Word and
SharePoint, allowing our customers to draft, compare documents and conduct research leveraging the power of AI and our proprietary Thomson Reuters content”.
Hesker said: “With these advanced agentic AI offerings, we continue to leverage our authoritative content and deep expertise to bring transformative professional-grade AI solutions to our markets.”
Reuters said that generative AI technology contributes 22% to the value of contracts (up from 15% late last year).
Chief financial officer Michael Eastwood said: “That’s a pretty strong signal that generative AI enabled products are continuing to be a strong growth tailwind for us.”
News Corp warns of AI vandalism
News Corp revenue grew by a sluggish 1% in the quarter to $2.1bn with profit (EBITDA) up 5% to $322m. Overall it grew 2% to $8.5bn for the full year.
Growth in the US subscription-focused financial news division Dow Jones (which grew EBITDA by 10% to $100m in the period) is being held back by falling profit in the UK and Australia-based news media division (which saw EBITDA fall 13% to $28m).
CEO Robert Thomson used the results statement to sound the alarm over AI copyright theft.
He said: “The AI age must cherish the value of intellectual property if we are collectively to realise our potential. Much is made of the competition with China, but America’s advantage is ingenuity and creativity, not bits and bytes, not watts but wit. To undermine that comparative advantage by stripping away IP rights is to vandalise our virtuosity.”
But so far the AI answer engines do not appear to have dented News Corp’s strong subscriptions business.
Digital subscriptions grew 9% year on year to 5.7 million across the consumer products in the Dow Jones division, with the Wall Street Journal totalling 4.1 million and Barron’s Group 1.4 million. Digital advertising at Dow Jones grew at a more sluggish 1% in the quarter.
Falling website traffic to The Sun was cited at one of the reasons behind advertising revenue declining $39m for the full year in the news media division.
News Corp leaders believe investors are undervaluing the company. The current market cap is $17.5bn (or between and eight and times EBITDA). Thomson Reuters, by contrast, has a market cap of $81bn or around 30 times its annual adjusted EBITDA profit figure for 2024.
People Inc: More profitable digital revenue replacing lost print dollars
People Inc, which has just changed its name from Dotdash Meredith, reported overall revenue up just 1% to $427m in the quarter with digital revenue growth of 9% cancelling out print revenue decline of 9%.
But it can console itself with the fact the new digital revenue is delivering a significantly better profit margin than the lost print dollars.
People Inc publishes six of the biggest magazine brands in the US including Better Homes and Gardens, Southern Living, People and Real Simple. Online-only brands include Allrecipes, Investopedia and Verywell.
People Inc reported a 5% increase in profit (EBITDA) to $70m.
E-commerce revenue was said to be up 23% year on year.
Advertising revenue grew by 5% year on year, following 1% growth in Q1. This was attributed to “higher premium advertising revenue due primarily to the Health and Pharmaceuticals, Technology and Travel categories”.
Similarly to News Corp, People Inc parent company IAC feels its media holdings are seriously undervalued.
In a presentation to investors it said the value of the company (which currently has a market cap of $2.8bn) could be entirely accounted for by its stake in MGM Resorts (the gambling and casinos business) and cash of $800m. It said this effectively rates the value of People and other media assets, including the Daily Beast, at zero.
People Inc still carries $1.47bn of debt from the 2021 acquisition by IAC’s Meredith of Dotdash.
New York Times: Subscriptions fuel bumper growth
The New York Times put in the strongest relative performance of the four big US news media giants reporting this week, with revenue up 7% year on year to $686m and operating profit up 21% to $106m.
The headlines are all around subscriber growth.
Total subscribers saw net growth of 250,000 (230,000 digital-only) in the quarter to a new record of 11.88 million across the portfolio (which includes The New York Times, The Athletic and the puzzles portfolio).
Digital-only subscription revenue grew 15.1% to $350m in the quarter. Digital advertising revenue was also up, by 18.7% to $94m.
The Athletic, which was acquired by the New York Times for $550m in 2022, continues to return a profit – delivering adjusted operating profit of $6m in the quarter.
Some $3.5m was spent in the quarter on suing OpenAI over unlawful copying and commercial exploitation of New York Times journalism.
Chief executive Meredith Kopit Levien said: “Our world-class news coverage and diverse portfolio of lifestyle products in big spaces are continuing to attract large audiences who engage deeply. We grew all of our major revenue lines — subscription, advertising, affiliate, and licensing — with real running room ahead.
“And, we’re generating significant free cash flow, which, combined with a strong balance sheet, means we can keep investing in the unparalleled journalism and best-in-class product experiences that enable our leadership and underpin our enduring advantages.”
She singled out video as a strong growth area, saying: “We’re rapidly scaling video across three categories aimed at different user needs and moments. First, we’re producing substantially more news videos that bring people into the major stories of the day, often by putting our reporters in front of the camera to explain and humanize their work.
“Second, we’re producing more full-length shows, including video versions of podcasts like The Ezra Klein Show and Ross Douthat’s Interesting Times, and also Wesley Morris’ weekly take on culture. Third, we’re using video much more extensively to enhance the experience across our lifestyle products, including sports highlights from major leagues on The Athletic, and new video franchises on Cooking.”
She said that advertising growth was largely being driven by the (brand-safe) areas of sport and games.
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