Media giant News Corp has posted a second quarter loss as writedowns at its Australian newspaper and pay TV businesses added to declines in advertising and subscription revenues.
The Rupert Murdoch-led company posted a group-wide loss from continuing operations of $US219 million ($A287 million) for the three months to December 31, compared to a $106 million profit for the same period a year earlier.
Overall revenue slipped two per cent to $US2.12 billion but second quarter revenue for its core news and information services business - which includes its Australian news mastheads - was down seven per cent at $US1.3 billion, as print advertising revenue continued to slide.
The group loss was driven by a $US310 million impairment on fixed assets at News Corp's Australian print newspaper business, and another $227 million non-cash writedown on the value of its Foxtel cable TV business.
In addition, it wrote down $US17 million in equity affiliate losses on Foxtel's investment in Ten Group and another $US5 million due to losses associated with the closure of the Presto streaming joint venture between Foxtel and Seven West Media.
Foxtel's earnings were 10 per cent lower in the quarter due to a fall in revenue and increased spending on local production and sports programming.
Despite the writedowns, News Corp's second quarter earnings rose 16 per cent to $US325 million on the back of gains in its digital real estate and book publishing divisions.
News Corp chief executive Robert Thomson said revenues had remained stable despite "blustery headwinds in print advertising".
"Results were driven by strong performance at our digital real estate segment and meaningful revenues at HarperCollins, along with appropriate and ongoing management of the cost base," he said.
Book publishing earnings rose 32 per cent to $US75 million.
Digital real estate services, which includes News's 62-per cent owned Australian listings giant REA Group, reported a 16 per cent jump in quarterly revenue to $337.3 million.
The digital real estate segment now contributes nearly 30 per cent of News Corp's earnings but about 11 per cent of its revenue.
The group also boosted digital revenues in its core news and information business.
For the December quarter, digital accounted for 27 per cent of revenues in news and information, up from 22 per cent a year earlier.
Chief financial officer Bedi Singh told an analyst call that the company aimed to reduce costs by $US40 million in the second half of the fiscal year, through ongoing cost-cutting at its news mastheads.
"This quarter demonstrates the importance of digital to our growth trajectory and our commitment to improving our cost structure," he said.
At 1414 AEDT, News Corp shares on the ASX were up 70 cents, or 4.3 per cent, at $A17.10.
NEWS CORP SLIPS TO Q217 LOSS
* Net loss $US219m vs profit $US106m in 2Q16
* Total revenue down 1.8pct to $US2.12b
* EBITDA up 16pct to $US325m
