News subscriptions surge, but coronavirus will have material impact
News Corp has recorded a surge in digital news subscriptions, but warned COVID-19 could have a material impact on operations.
News Corp has recorded a surge in digital news subscriptions, but warned the coronavirus crisis could have a material impact on its global operations.
In a trading update, the publisher and broadcaster said it would push ahead with cost cutting, as advertising drops off and the cancellation of sports hurt its pay-television and streaming businesses, Foxtel and Kayo Sports.
News Corp, which also has a majority stake in online real estate listing group REA Group, said the real estate markets in Australia and the US had been negatively affected as a result of social distancing measures, business closures and economic uncertainty resulting from COVID-19. News Corp is the publisher of The Australian and metropolitan titles including The Daily Telegraph, Herald Sun and The Courier-Mail.
It is the latest media company to warn of a hit to advertising as the COVID-19 pandemic has triggered lockdowns to stop its spread which has caused the economy to stall.
News Corp said the coronavirus crisis was expected to adversely affect the company’s business and results of operations, and could have a "material adverse impact" on its business, particularly over the near to medium term.
"The ultimate impact of the COVID-19 pandemic, including the extent of adverse impacts on the Company’s businesses, results of operations and financial condition, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental actions and consumer behaviour in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak and global economic conditions, all of which are highly uncertain and cannot be predicted," News Corp said in a statement.
However, News Corp said it had ample liquidity with a cash pile of $US1.27bn ($1.98bn). In addition, the group has access to a committed $US750m revolving credit facility, which remains undrawn, and no upcoming corporate debt maturities in the next 12 months.
Advertising and single-copy sales revenues across News Corp's news and information services business is forecast to be "adversely affected as a result of widespread business closures, social distancing measures and economic uncertainty resulting from COVID-19".
However, the group has seen increases in digital paid subscriber numbers, at titles including at The Wall Street Journal and London's The Times.
News Corp expects the cancellation or postponement of sports events such as the AFL and NRL for which it has broadcast rights to adversely affect subscription revenue from broadcast and Kayo subscribers and, together with adverse economic conditions, to negatively affect advertising revenue.
The closure of pubs and clubs and lower occupancy at hotels throughout Australia are expected to hurt commercial subscription revenue.
News Corp said it was "working proactively to offset a portion of anticipated revenue losses by reducing variable costs and implementing cost-savings initiatives across its businesses''.
The media company told investors not to rely on existing analyst earnings forecasts, as they may not include any or all of the impacts that COVID-19 may have on the company’s businesses.
News Corp plans to provide a further update in its fiscal third-quarter earnings results next month.
The group’s shares rose more than 2 per cent to $15.16 on Tuesday.
Lattouf sobs as she recalls ABC sacking, and her ‘heavy drinking’
The fill-in radio host refused an ABC management request to stop posting on social media during her week-long stint after she was informed of complaints from listeners about her stance on the Israel-Palestine conflict.
New set, new host … but not much has changed at the ABC’s Media Watch
Paul Barry’s successor Linton Besser signalled that, as it has in the past, MediaWatch will continue to attempt to keep journalists contained within Green Left ideological guard rails.