News Corp to slash one in 20 jobs amid earnings drop

News Corp will cut 1250 jobs in response to a big slump in second-quarter earnings as interest rates and inflation bite.

News Corp will cut 1250 jobs in response to a big slump in second-quarter earnings as interest rates and inflation bite. Photo: AAP

Rupert Murdoch’s News Corporation has vowed to slash one in 20 jobs globally after a sharp drop in second-quarter earnings.

The media conglomerate, including its slew of Australian newspaper, TV and digital assets, reported a 64 per cent decline in income for the quarter ending December 31 on Friday to $US94 million ($135 million) from $US262 million the year prior.

In response, it announced a 5 per cent reduction in staff, or 1250 jobs, in coming months.

CEO Robert Thompson said the job cuts would create a “robust platform for future growth”, saving $US130 million ($187 million) a year.

Revenue dropped 7 per cent to $US2.5 billion while profitability fell 30 per cent to $US409 million.

Mr Thomson blamed a surge in interest rates and inflation for the earnings slump but believed the challenges were “more ephemeral than eternal”.

News Corp’s announcement came as global media and tech company Yahoo revealed plans to lay off about 1600 workers, or more than 20 per cent of its staff. Most will come from Yahoo’s unprofitable business ad tech unit.

Online retailer eBay said on Thursday (US time), it would lay off 4 per cent of its workforce, or about 500 employees, as it struggles with declining sales.

This week’s jobs cuts are just the latest among tech companies. Google-parent Alphabet, Amazon, IBM, Lyft, Meta and Microsoft have all announced plans to shed workers in recently weeks as they look to save money as consumers cut back on spending.

News Corp said on Friday that book publishing, news media and digital real estate were its worst-hit segments, as foreign currency fluctuations caused revenue to decline $US171 million, or 6 per cent.

Slowing book sales following a COVID-induced boom hit publisher Harper Collins, with quarterly revenues declining 14 per cent.

Meanwhile, the flailing property market weighed on News Corp’s real estate arm.

Lower residential settlement rates in Australia contributed to a 15 per cent, or $US70 million drop in digital real estate revenue.

News media suffered from higher operating expenses due to high inflation and lower advertising revenues.

Revenue at News Corp Australia, which owns The Australian, The Daily Telegraph and the Herald Sun locally, decreased 13 per cent.

Despite increasing digital subscriptions by 100,000 to 1 million, it was weighed down by higher newsprint prices, higher employee costs and higher marketing expenses.

Dow Jones, the group’s financial arm, which publishes the Dow Jones Industrial Average, was one bright spot.

It experienced an 11 per cent increase in quarterly revenue due to growth in circulation and subscription as risk and compliance products gained in popularity.

Revenues in News Corp’s subscription video segment fell 7 per cent due to foreign currency fluctuations.

Growth in digital subscription services Kayo and Binge was offset by lower residential subscribers.

Mr Thomson said negotiations were ongoing with CoStar Group into the sale of digital real estate listings company MOVE.

“Any transaction would be designed to create shareholder value and strengthen’s competitive position,” he said.

News Corp will pay shareholders an interim dividend of 10c after earnings per share collapsed to 12c from 40c the year prior.

Mr Murdoch in January abandoned plans to reunite News Corp with Fox, the other arm of his media empire, after investor pushback.

– with AAP

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