News Corp. holds firm on value of print

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News Corp. building. (via Edgar Zuniga Jr.)
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News Corp., the global publishing conglomerate chaired by Rupert Murdoch, reaffirmed its commitment to print in the face of ongoing financial pressures that have upended the industry as more readers migrate from paper to digital platforms.

"We remain firm believers in the power of print," chief executive Robert Thomson told investors on a Thursday evening conference call following the company's fourth-quarter and full fiscal-year earnings results.

Thomson said print is "seriously unvervalued" by advertisers, who are increasingly interested in reaching consumers on Web browsers and mobile devices where mass scale belies lower premiums.

"Print is a concentrated, intense reading experience with unique affinity in our digitally distracted age," said Thomson.

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By doubling down on enthusiasm for print, such as newspapers like The Wall Street Journal, the New York Post and the Times of London, among other News Corp tabloids and broadsheets in the U.K. and Australia, Thomson underscored a belief that the company's legacy assets will survive headwinds that have sent many publishers' revenues on a downward spiral.

During the fourth quarter, lower advertising revenues within News Corp's news and information segment were the main driver of a 3-percent total revenue decline to $2.19 billion from $2.26 billion during the same three-month period a year earlier. Advertising revenues were down 9 percent during the quarter and 10 percent during the 2014 fiscal year, a drop the company attributed primarily to "weakness in the print advertising market."

At the Journal, News Corp's flagship American publication, fourth-quarter advertising revenues declined in the low double digits while circulation and subscription revenues were down 4 percent, said chief financial officer Bedi Singh on the call.

"Advertising remains weak," he said. "But our ad sales team remains cautiously optimistic and we hope for improvement."

Thomson meanwhile emphasized new digital initiatives and cost control during the 12 months since News Corp was spun off from a suite of high-performing entertainment and broadcast outfits that now trade as 21st Century Fox.

He noted that the company recently sold two local newspaper divisions as it concentrates on core growth assets. In addition to Murdoch's beloved newspaper stable, these include the financial information provider Dow Jones, an educational curriculum company called Amplify and cable network programming in Australia, where News Corp originated and continues to maintain a strong foothold. "Non-advertising sources" now account for 50 percent of company revenues, Thomson said.

Book publishing continues to be a bright spot for News Corp, which owns HarperCollins. Full-year segment revenues increased 5 percent, or $65 million, largely thanks to the success of Veronica Roth's "Divergent" series. Thomson said e-book revenues were up 23 percent in the fourth quarter. The company expects a boon next year from its recent acquisition of the global romance publisher Harlequin.

News Corp also remains bullish on its $25 million purchase last year of the social news service Storyful. And further acquisitions, which Murdoch hinted at in a recent interview with Capital, are expected.

There's been speculation, for instance, that Murdoch has his eye on the Tribune newspapers, which were spun-off from their parent company earlier this week. The mogul has presumably been preoccupied lately with an attempt by 21st Century Fox, of which he is C.E.O. and chairman, to purchase Time Warner for $80 billion.

As for News Corp, Thomson said Thursday that the company was in the "early phase of our expansion" with "the sensibility of a start-up."

Asked why News Corp was holding off either on a stock-buyback program or a dividend for shareholders, Singh said the company has been "very focused on making sure that we do smart strategic acquisitions, that we make sure the top line is getting stabilized and that we make internal investments. That's really the frontline focus to make sure we build shareholder value."