News Corp. chairman Rupert Murdoch told analysts and reporters Tuesday that the company intends to start charging subscription fees for all news Web sites in its ailing newspaper division and for venues such as the Fox News Channel site.
Murdoch and company COO Chase Carey said the media behemoth must come up with new and more effective business models for its print and broadcast businesses, both of which took a beating in fiscal year 2009, which ended for the company on June 30.
Citing the Wall Street Journal as the model, Murdoch said that readers are willing to pay for quality journalism, noting that WSJ print and online subscriptions rose over the past year despite the recession. As for FNC, Murdoch said it has a “huge loyal and profitable audience,” with prime-time ratings that were up 45 percent year over year.
Carey said the traditional broadcast ad model “doesn’t work,” and that new models have to be devised. Those might include, for example, charging cable operators special fees to retransmit Fox’s coverage of the National Football League, for which it pays billions in rights to the league.
Coming off what Murdoch termed “one of the worst years” in the company’s history, News Corp. reported a $3.4 billion loss for the fiscal year, which included almost $9 billion in write-downs. That compared to a profit of $5.4 billion in fiscal 2008. Revenue for the year was down 8 percent to $30.4 billion.
In the fourth quarter, the company reported a loss of $203 million (vs. a prior-year profit for the same period of $1.1 billion), on an 11 percent revenue drop to $7.7 billion.
Company guidance for next year: expect about 4 percent revenue growth with an operating income increase in the high-single-digit range.
“The worst may be behind us but there are no clear signs of a fast economic recovery,” Murdoch said.
Murdoch confirmed that the Fox network would hold back more inventory from this year’s upfront market given advertiser demand for lower prices, betting that the company can sell the spots at higher rates during the broadcast season. Murdoch declined to say what price Fox was able to achieve in the upfront marketplace (which he said was ongoing), but buyers have said the network’s prime-time ads are priced below last year’s levels by an average percentage in the low-single-digit range.
Separately, ad sales chief Jon Nesvig issued a statement late Wednesday saying the network has wrapped up its upfront sales market.
“As the upfront selling season winds down, Fox Broadcasting has achieved its prime-time revenue goal,” Nesvig said. “We also plan to have slightly more inventory available for the scatter market. And while the overall economic climate was difficult during the first six months of 2009, the short-term market for national broadcast time remained strong. With a broader economic recovery seeming to take hold, we are very comfortable in our marketplace positioning for next year.”
Murdoch noted that print classified ads would “never” reach pre-Internet levels, and that free online extensions to print products were “cannibalizing” many publications.
“Quality journalism is not cheap,” he said, indicating that the company would start charging online subscription fees for news sites starting sometime in the company’s current fiscal year, which began last month.
For fiscal ’09, TV revenue at the company was down 21 percent to $4.6 billion, while newspaper revenue fell 7 percent to $5.8 billion.
News Corp. described cable as the company’s “standout” sector of the year where revenue climbed 14 percent to $5.6 billion.
Fox Interactive, where the social network MySpace is housed, took a $450 million write-down for the year.
Nielsen Business Media