These are pivotal times for News Corporation, Rupert Murdoch’s global media empire. He’s about to put the Times and the Sunday Times behind a pay wall, as part of his crusade to make us start shelling out for content we’ve spent years getting free. But, judging by its latest results, the rest of the company looks in rude financial health: on top of the remarkable success of Avatar, Murdoch also said today that advertising revenue had bounced back strongly. In which case, is this a good time to be shedding a large chunk of your audience?
News Corp’s bottom-line profits were actually 69% down on last year’s third-quarter figure of $2.7bn, but that was because the partial sale of technology group NDS provided a one-off boost last time around. On an underlying basis, earnings were actually up 55% – which is perhaps not surprising, given that science-fiction film Avatar has now raked in $2.7bn of box office receipts all by itself. All told, profits were up a very healthy 76% to almost $500m at Twentieth Century Fox, Murdoch’s film studio – although this was also due to the continued success of nutjob magnet Fox News, and some of Fox’s more admirable outputs like Modern Family.
More significantly for Murdoch, the advertisers seem to be coming back: his British newspapers (that’s the Sun and the News of the Screws, as well as the Times) saw a 10% hike in ad revenue, which more than made up for a 4% fall in circulation income. In fact, his newspapers increased profit more than fourfold, while cable TV earnings jumped 38%. Murdoch said even he was surprised by how quickly things had perked up again.
So, all things considered, maybe it’s a good time for him to launch his great online gamble. The Times is expected to disappear behind its online pay wall next month, and some reckon its number of users could fall by something like 95%. This will mean News Corp has fewer clicks to sell to all these advertisers – but it will presumably hope that the remaining audience is a more engaged and generous bunch or that it can make up the difference in subscription revenue.
Time will tell. But these results do tend to support Murdoch's central claim that News Corp has content that people want – and that advertisers want to be associated with.
In today's bulletin:
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