News Corp, the media giant owned by Rupert Murdoch, has reported a significant drop in profits of 75% for the year ended 30 June. Despite this decline, the company remains optimistic about the future, citing the remarkable opportunity of artificial intelligence (AI) as a potential driver of a remarkable turnaround.
News Corp achieved a net income of $187 million (£147 million) during the period, a significant decrease from the previous year’s $760 million (£598 million). However, chief executive Robert Thomson expressed positivity about the upcoming months, highlighting the potential of generative AI to boost the company’s fortunes. Generative AI has the ability to create text, images, audio, and other media.
Thomson also revealed that digital products accounted for over 50% of News Corp’s annual revenues for the first time, indicating the company’s growing focus on digital platforms. He believes that generative AI presents an opportunity to not only generate new streams of revenue but also reduce costs across the business.
The company is actively engaged in negotiations to determine the value of its unique content sets and intellectual property (IP), which it believes will play a crucial role in the future of AI.
News Corp’s full-year results attributed the decline in profits internationally to higher newsprint and sports programming costs, as well as lower book sales and negative foreign currency fluctuations.
The company’s UK division, News UK, which owns newspapers such as The Sun and The Times, experienced a decline in print advertising revenues. However, this decline was partially offset by growth in digital advertising, according to the results report.
Aside from newspapers, News Corp also owns other prominent brands including publisher HarperCollins, the Wall Street Journal in the US, and TV channels in Australia.
In terms of financial performance, the company reported a decrease in earnings before interest, tax, depreciation, and amortization (EBITDA) from $1.67 billion (£1.32 billion) to $1.42 billion (£1.12 billion) compared to the previous year.
Thomson emphasized the durability and depth of News Corp’s revenue streams, as well as the impact of stringent cost controls, as they navigated challenging macro conditions, supply chain pressures, and currency headwinds. He expressed optimism about the coming quarters, highlighting factors such as easing inflation, plateauing interest rates, and early signs of stability in the housing market.
News Corp’s focus on AI and digital platforms reflects the ever-changing landscape of the media industry. As the company seeks to adapt and evolve, the utilization of generative AI presents an exciting avenue for growth and innovation. With negotiations underway to determine the value of its valuable content sets and IP, News Corp is positioning itself at the forefront of the AI revolution. Despite the decline in profits in the past year, the company remains hopeful about its future prospects while acknowledging the challenges they face in a rapidly evolving media landscape.
