News Corp Swings to Loss Amid Revenue Drop, Book-Publishing Struggles

News Corp said it swung to a loss in the latest quarter, due in part to a revenue decline and a sharp drop in profitability at its book-publishing unit.

The New York-based media company, which owns The Wall Street Journal, HarperCollins Publishers and news organizations in the U.K. and Australia, said revenue fell 9% to $2.43 billion for the quarter ended June 30, hurt by foreign-currency fluctuations and the fact that the year-earlier quarter comprised one extra week.

The company lost $8 million, or one cent a share, which it said was also partly caused by higher restructuring charges. That compared with a profit of $110 million, or 19 cents a share, in the year-earlier quarter, boosted by a $149 million tax benefit. 

News Corp shares were flat in after-hours trading. 

Chief Executive Robert Thomson said the company’s Dow Jones unit, which beyond the Journal also publishes Barron’s and MarketWatch, reported its highest profitability since it became part of News Corp.  Segment earnings at Dow Jones increased 25% to $133 million, while revenue fell 3.4%.

News Corp calculates segment earnings as revenue less operating and administrative expenses. Segment earnings exclude expenses such as interest, taxes, depreciation, amortization, impairment and restructuring charges, and other items.

The Journal averaged 3.406 million digital subscriptions in the period, an increase of 107,000 from the previous quarter. Including the print edition, the Journal averaged 3.966 million subscriptions. Total average subscriptions to all Dow Jones consumer products reached 5.242 million, an increase of 125,000 from the previous quarter. 

During a call with investors to discuss the company’s results, Thomson said the company was in active negotiations with relevant companies in the artificial-intelligence field to address the impact of generative AI, a type of artificial intelligence that can create various types of content including text, images and audio.

“We have been characteristically candid about the AI challenge to publishers and to intellectual property,” Thomson said. “Our content is being harvested and scraped and otherwise ingested to train AI engines. Ingestion should not lead to indigestion.”

News Corp’s news-media segment, which includes the Sun, the New York Post and the Times in the U.K., posted a 9.2% revenue decline and a 36% increase in segment earnings, driven by cost-saving initiatives.

Advertising revenue across all units fell 11% to $424 million.  

The company said revenue was down 13% at its book-publishing unit, HarperCollins Publishers, where segment earnings fell 66%. News Corp said the decline reflected “lower book sales due to lower consumer demand industry-wide.”

Key titles in the quarter included Barbara Kingsolver’s novel “Demon Copperhead” and Shelby Van Pelt’s

The company’s digital real-estate services division reported a 17% decrease in revenue, with segment earnings declining 11%. 

News Corp’s subscription-video-services unit, which includes Foxtel, an Australian pay-television provider, posted a 4.4% drop in revenue and a 3.7% decline in segment earnings.

During the call, Thomson also mentioned the continued detention by Russia of Wall Street Journal reporter Evan Gershkovich, stating that Gershkovich is “unjustly incarcerated by Russia for being a journalist seeking facts, seeking the truth.”

Gershkovich, a U.S. citizen who was accredited by Russia’s Foreign Ministry to work as a journalist, is being held on a charge of espionage that he, the Journal and the U.S. government vehemently deny. The Biden administration has designated him as wrongfully detained.

“Evan has now spent almost five months in prison, and we thank the many thoughtful people, from all around the globe, who have rallied to his cause and sought his release,” Thomson said.

Write to Jeffrey A. Trachtenberg at [email protected]