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News Corp. CEO: Company’s Digital Growth Strategy Paid Off in Q2

As the growing shift from print to digital publications continued, News Corp.’s digital growth strategy paid off for the company in the first half of its fiscal year (ended Dec. 31), according to its CEO, Robert Thomson.

“The robust results for the first half of this fiscal year highlight the virtue of our strategy to become increasingly digital and global,” he said Feb. 8 on an earnings call for the second quarter. The results underscored the company’s 
“commitment to premium content and to high-quality, high-integrity news,” he said.

News Corp.’s Q2 revenue grew 3% from a year ago, to $2.2 billion, while the company’s loss narrowed to $66 million (-14 cents a share) from $219 million (-50 cents a share).
“Clearly, there are profound changes taking place in the creation and the distribution of digital content,” Thomson said on the call. “The big tech disruptors are in the midst of a particularly disruptive period commercially, socially and politically,” he told analysts.

“We appreciate that Google has ended the prejudicial” First Click Free policy and that Facebook is “prioritizing prominence, but these are modest steps towards changing a digital environment that is dysfunctional and sometimes dystopian,” he said. The Google policy allowed subscription web sites to be included in searches despite their content being mostly unavailable to non-paying users.

“It is certainly in the interest of our shareholders that there be a digital reorientation towards quality and integrity, and that more people are encouraged to pay for professional journalism,” Thomson said, adding: “There is a social and commercial value to journalism, but that value needs to be valued by the digital publishing platforms. The bot-infested badlands are hardly a safe space for advertisers, whose brands are being tarnished by association with the extreme, the violent and the repulsive.”

Digital Real Estate Services had an especially strong quarter for News Corp., “solidifying its role as a significant engine of expansion” for the company, he said.

Revenue in that division grew 21% in Q2 to $292 million, driven by continued traffic growth at both REA Group and realtor.com, News Corp. said in its earnings news release. Revenue from its Cable Network Programming division grew 15% to $120 million and book publishing revenue inched up 1% to $469 million, but revenue from News and Information Services was flat, at $1.3 billion.

Digital revenue represented 29% of News and Information Services segment revenue, up from 26% a year ago. There was strong paid digital subscriber growth at the company’s “key news mastheads, led by” The Wall Street Journal, with a 29% increase in its digital-only subscribers to about 1.4 million, the company said.

Digital ad growth at the company’s New York Post newspaper was a “robust 35 percent and represented 60 percent of total ad revenues for the quarter,” Thomson told analysts.
In the second quarter, the company launched News IQ, its “premium digital advertising platform, which has authenticated audiences,” he pointed out on the call.

While announcing the new ad platform with an audience of more than 140 million in the U.S., News Corp. said in December that it was the first time the company “integrated all of its collective first-party data, premium media properties and data science tools into one unified advertising solution.”

News IQ 
“will give brands a new way of reaching News Corp’s sophisticated audiences in a safe, trusted environment to achieve precise and measurable results,” it said at the time.

“There is keen interest in leveraging our first-party data and brand-enhancing environments, which are in stark contrast to the tainted placements on so many digital platforms,” Thomson said on the Feb. 8 call. What’s helping is “concentrated collaboration across many” of the company’s business divisions, which “will intensify as we drive our drive our advertising business in the U.S. and pursue longer-term plans for global expansion,” he told analysts.

During the Q&A with analysts, he told them: “We’re still in the midst of obviously a transition from print,” but print “remains a strong platform and we’re seeing that with a new real estate magazine that we’re launching in the coming months, which is oversubscribed by advertisers, so don’t discount print. But the digital market itself really is in the midst of upheaval.”

There’s a lot of concern about the online environments in which “famous, prestigious advertisers find themselves” today, he said, adding: “What we are gradually going to see – and I think we have little doubt about this – is there will be a migration to premium and that’s where we have a comparative advantage” over rivals.