News Corp, overseeing media behemoths like the Wall Street Journal and Dow Jones, has announced a significant workforce reduction. The decision, part of a broader strategy to slash headcount by 5%, translates to approximately 1,250 job cuts. CEO Robert Thomson linked these layoffs to “obvious global challenges,” notably citing the impact of escalating interest rates and inflation on the company’s operations.
Fiscal Challenges in the Fourth Quarter
Financial troubles were evident in News Corp’s recent earnings report for the quarter concluding on December 31. A 7% revenue decline year over year was unveiled, amounting to $2.52 billion. Net income nosedived by 64% to $94 million, with adjusted earnings per share falling short of analyst predictions at 14 cents. Thomson stressed the imperative for cost-saving measures, including the 5% staff reduction, to fortify the company’s prospects for future growth.
Factors contributing to the revenue downturn included an 11% drop in consolidated ad revenue to $464 million and a 30% decrease in EBITDA to $409 million, attributed chiefly to higher costs in the Dow Jones segment and escalated operating expenses in the News Media segment. Inflationary pressures and adverse foreign currency fluctuations compounded these challenges.
Positive Growth in Circulation and Subscription Revenue
Despite the challenges, Dow Jones saw positive circulation and subscription revenue growth, which increased by $61 million or 17%. This growth included contributions from recent acquisitions such as Oil Price Information Service (OPIS) and Chemical Market Analytics (CMA). Digital-only subscriptions to the Wall Street Journal rose by 9% to 3.17 million, reflecting continued expansion in digital readership.
Additionally, News Corp disclosed one-time costs of $6 million related to professional fees incurred while evaluating a proposal to merge News Corp and Fox Corp. The Murdoch family ultimately withdrew this proposition last month.
In response to the financial performance and ongoing challenges, News Corp has been discussing with CoStar Group the potential sale of its real-estate listing company, Move. The outcome of these discussions remains to be seen as News Corp navigates the evolving media landscape and seeks to adapt to changing market dynamics.
Withdrawal of the Merger Proposal
Several years after splitting News Corp and Fox Corp in 2013, Rupert Murdoch and his son, Lachlan Murdoch, proposed merging the two media conglomerates. However, facing tepid responses from investors, the Murdochs ultimately withdrew their proposal to recombine the companies. The potential merger surfaced in 2021 and aimed to consolidate assets like the Fox Broadcast Network, Fox News Channel, and Fox Sports with entities like the Harper Collins publishing company and Dow Jones & Co. financial-publishing business.
Despite the increasing pressure on traditional media companies to gain scale amidst digital disruption, the Murdochs decided to keep News Corp and Fox Corp separate entities, with Rupert and Lachlan Murdoch citing that a merger was not optimal for shareholders then. This decision came amid competitors like Amazon, Apple, and Netflix dominating digital content distribution, prompting other media companies to pursue recombination strategies, such as Shari Redstone’s decision to recombine CBS Corp and Viacom Inc. in 2019.
Future Potentials With CoStar Group
In response to the financial performance and ongoing challenges, News Corp has been discussing with CoStar Group the potential sale of its real-estate listing company, Move. The outcome of these discussions remains to be seen as News Corp navigates the evolving media landscape and seeks to adapt to changing market dynamics.
