News Corporation Reports 75% Drop in Profits, but Sees Promise in AI
News Corporation, the media giant, has announced a significant decline in profits, citing higher newsprint costs and foreign currency fluctuations as contributing factors. However, the company remains optimistic about the future, particularly due to the “remarkable opportunity” presented by artificial intelligence (AI).
In the year ending on June 30, News Corporation reported a net income of $187 million (£147 million), a sharp decrease from the previous year’s $760 million (£598 million). Despite this decline, CEO Robert Thomson expressed positivity about the months ahead, highlighting the potential of generative AI to boost the company’s fortunes.
Generative AI refers to technology that can create text, images, audio, and other media. Thomson believes that leveraging this technology can not only create new revenue streams but also reduce costs across the business. He stated, “That momentum is surely gathering pace in the age of generative AI, which we believe presents a remarkable opportunity to create a new stream of revenues while allowing us to reduce costs across the business.”
Thomson also revealed that digital products accounted for more than 50% of News Corp’s annual revenues for the first time. This shift towards digital is in line with the company’s strategy to adapt to changing consumer preferences and market dynamics.
Looking ahead, News Corp is actively engaged in negotiations to establish the value of its unique content sets and intellectual property (IP) in relation to AI. Thomson emphasized the crucial role that content and IP will play in shaping the future of AI.
News Corp’s full-year results also highlighted higher newsprint and sports programming costs, lower book sales, and negative foreign currency fluctuations as contributing factors to the decline in profits internationally. The company’s News UK division, which owns newspapers such as The Sun and The Times, experienced a decline in print advertising revenues. However, this was partially offset by growth in digital advertising.
News Corp, led by executive chair Rupert Murdoch, owns a diverse portfolio of brands, including publisher Harper Collins, the Wall Street Journal in the US, and TV channels in Australia. The company reported earnings before interest, tax, depreciation, and amortization (EBITDA) of $1.42 billion (£1.12 billion), a 15% decrease compared to the previous year’s $1.67 billion (£1.32 billion).
Despite the challenges faced, Thomson emphasized the durability and depth of News Corp’s revenue streams, as well as the impact of stringent cost controls. He expressed optimism about the coming quarters, citing factors such as abating inflation, plateauing interest rates, and signs of stability in the housing market.
As News Corporation navigates challenging macro conditions, supply chain pressures, and currency headwinds, the company remains focused on leveraging AI and digital opportunities to drive growth and adapt to the evolving media landscape.
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