Why talking about print being ‘undervalued’ isn’t enough for News Corp

The media world is often split between those who think print is alive and kicking and those who think it should be put out of its misery. It’s clear which camp News Corp CEO Robert Thomson is in.

Speaking at the company’s first full year earnings call since being split off from 21st Century Fox, Thomson insisted that News Corp remains not only committed to its newspapers including The Times, The Sun, The Wall Street Journal, and the New York Post, but also sees print – and specifically print advertising – as the focus and potentially the future for the company.

That bravado came despite a revenue drop at News Corp of four percent year-on-year from $8.89 billion to $8.57 billion, – reflecting of the decline of ad revenues in the company’s News and Information Services segment, foreign currency fluctuations and the sale of the Dow Jones Local Media Group.

The rest of the figures weren’t especially promising either: 

— Reported total EBITDA was $770 million compared to $688 million in 2013. Net income dropped 47 percent, from $550 million to $290 million.

— Advertising revenue fell 7.5 percent from $4.35 billion to $4.02 billion, while circulation and subscription revenue increased slightly, from $2.67 billion to $2.68 billion – a rise of 0.7 percent.

— Consumer revenue increased from $1.29 billion to $1.37 billion, while “other” revenue decreased from $590 million to $490 million.

News Corp’s News and Information Services segment – the company’s largest – generated $1.56 billion in revenue, a drop of six percent from 2013’s $1.66 billion, while the Book Publishing division pulled in 10 percent more revenue year-on-year – $361 million compared to $329 million.

Print may still be a winner when it comes to books, but the figures don’t quite back up the confidence in print newspapers.

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Thomson said:

“While we are operating in a challenging advertising environment, our results highlight the diversification of our portfolio and our cost discipline, leading to improved free cash flow and a firm foundation for sustained growth.”

Thomson also told investors on a Thursday evening conference call that “We remain firm believers in the power of print,” according to Capital New York, who also report that Thomson said print is “seriously undervalued” by advertisers, “who are increasingly interested in reaching consumers on web browsers and mobile devices where mass scale belies lower premiums.”

Split thinking

Thomson’s rhetoric doesn’t quite tally with the emphasis on ‘total paid sales’ at Times- and Sun-owning subsidiary News UK, which seeks to avoid differentiation between print and digital purchasers of News UK products and convince advertisers to pay the same for digital ads as they do for print ones.

News UK CEO Darcey previously said at an Enders Analysis event back in February that “the relentless focus on print sales alone is misleading, myopic and, I think, causes some to make strategic mis-steps”.

That attitudes contrasts quite heavily with Thomson’s comments last week, where he described print as a “concentrated, intense reading experience with unique affinity in our digitally distracted age”.

Is print really better than digital? Or are beautiful tablet ads just as good?

Of course, a big reason for that mismatch is that both messages are designed to serve the same – convince advertisers to keep paying top dollar rates for ads in News Corp newspapers. It’s just that Darcey is focused on two newspapers that have hard paywalls and are pushing migration to digital app subscriptions. Thomson has a bigger portfolio on his mind, and across the whole lot print newspaper ads are still a very big deal.

Unfortunately for News Corp, insisting that print is still the best format for delivering advertising is increasingly difficult in the face of evidence about where people actually spend their time. As was again highlighted by analyst Mary Meeker in her most recent annual slide deck on Amercan meda consumpton, the American ad market is playing catch-up to where the American audience’s attention is – and that attention is on the internet and mobile.

By this measure, print is seriously overvalued.

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Advertisers are basically competing for the same thing publishers are competing for, and that’s attention. That attention is drifting away from print.

And if News Corp’s latest results are anything to go by, merely telling the ad market that print ads are better will not be enough to convince advertisers that’s where they should be spending their money.

By |2014-08-11T10:40:00+00:00August 11th, 2014|Analysis|Comments Off on Why talking about print being ‘undervalued’ isn’t enough for News Corp

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