Earnings: News Group Losses Grow, Web Is Principal Risk

imageUPDATE News Corp.’s (NYSE: NWS) Q3 earnings release revealed Wednesday night that the UK newspapers division suffered a 21 percent drop in advertising revenues for the three months to March 31. The drop in advertising, higher marketing and production costs contributed to a “significant” drop in profits at News International compared with the same period last year, though an exact figure isn’t given. Overall, News Corp’s newspapers across the world returned profits of just $7 million (£4.6 million), compared to $216 million (£146.7 million) a year ago. Release (pdf).

Original: Sun and Times publisher News Group Newspapers’ losses for the year ending June 29, 2008, widened to £18.5 million from £10.7 million the year before, after costs increased thanks to rises in newsprint costs and “higher technology development costs in relation to digital activities“. The outfit said it’s aiming “significant resources” at internet development “in order to capitalise on the opportunities that this impending market shift will present”.

Within the group, Times Newspapers losses grew to £51.3 million from £43.9 million – if you like, that’s the equivalent of losing a million quid a week. Don’t expect things to get any better – directors, in their Companies House filing, say this picture will “continue for the foreseeable future”. Under “principal risks and uncertainties”, they list “addressing the challenges of the internet as an advertising medium”, and say internet advertising is “increasingly important”. Times Online saw 21.6 million unique users this March, up 34 percent from a year ago.

Ad sales were, of course, down – but only “marginally below” the previous year, while circulation revenue was slightly up – but the company’s accounting year ended before the recession really took hold. Turnover was virtually flat at £444 million. The outfit slashed 23 percent of its marketing budget to £39 million, but admin costs rose 12 percent to £87 million and staff costs rose rose three percent to £53.1 million despite dropping four percent of workers. The company took a £4.7 hit on redundancy payouts – but that was less than the year before.