Rupert Murdoch’s News Corporation insists it can make money out of its newspapers online despite steep falls in advertising revenue weighing on the business.
The new News Corp’s first quarterly financial report since being spun off as a publishing group produced a $US38 million ($A40.70 million) net profit.
However that was inflated by $US132 million in revenue from the Fox Sports Australia TV station it acquired in the last year.
Revenue for the all-important news and information services segment, which includes the newspapers and represents three-quarters of all revenue, sank $US171 million, or 10 per cent, to $US1.5 billion.
Australians continue to buy fewer hard copy newspapers, with domestic mastheads such as The Australian, Herald Sun and others responsible for 70 per cent of that fall and newspaper circulation and subscription revenues down 6.0 per cent.
Many of the newspaper websites are now behind paywalls as it tries to monetise increasing online readerships, which have not been matched by online ad revenue.
It did not provide a breakdown of digital revenue out of its newspapers.
Chief executive Robert Thompson told analysts in a teleconference in the US that while ad revenues had to rise the company wanted to become less ad-dependent and more subscription focused.
He said the current exponential increases seen in the use of smartphones and tablets to access New Corp’s news content could translate into strong growth in digital advertising.
It is investing internally in online advertising, such as a new “ad exchange” that enables advertisers to place ads across multiple News Corp newspapers in one deal.
“We will be candid with you about the challenges as we have been about the headwinds buffeting the Australian newspaper business,” he said.
“(But) we are confident our emerging strategy will well serve our investors, employees and our customers.”
Evidence of expansion plans would be unveiled in coming months, he said, citing the importance of “mobile” as a platform and Asia, where it recently struck a deal to provide European football content.
However Morningstar analyst Michael Corty said the operating results for the business were not good and there were doubts the newspapers could be better monetised.
Those who invested in News Corp did so for the non-newspaper assets such as Australian pay TV and online real estate and its $US2.6 billion cash balance, he said.
The company’s shares slumped, with voting stock down 62 cents, or 3.3 per cent, to $18.40 and non-voting shares shed 93 cents, or five per cent, to $17.70.
Mr Murdoch’s other spin-off, the film and cable TV arm 21st Century Fox reported a $US1.3 billion profit for the September quarter last week.
News Corp’s overall revenues missed analysts expectations and declined by $US60 million to $US2.07 billion.
