After Crikey exclusively revealed the dire state of News Corp’s Australian newspaper assets for 2012-13, executives at Rupert Murdoch’s Australian media empire have insisted that things turned around in a big way for the company in 2013-14, and there was nothing to worry about. But is that actually true?

On Wednesday, News CEO Julian Clarke calmed the horses in Holt Street, telling his colleagues:

“These confidential figures, which are 14 months out of date … certainly do not reflect the company’s current performance.

“We have continually emphasised our confidence in the future of our print and digital assets …”

But there is evidence in the parent company’s 2013-14 accounts that suggests another round of impairments and losses could be looming because of the sliding performance in the news and information services business, including the Australian papers. Crikey is the only organisation to have reported the warning of further goodwill impairments of up to US$1.7 billion, plus unquantifiable restructuring costs and losses. The News Corp report, filed with the United States Securities and Exchange Commission a week ago, shows that all is not well:

“The News and Information Services and Digital Education segments have reporting units with goodwill that is at risk for future impairment. As of June 30, 2014, $1.7 billion of goodwill at these reporting units was at risk for future impairment because the fair values of the reporting units exceeded their carrying values by less than 10%. The Company may also incur additional restructuring charges in the future if it is required to further realign its resources in response to significant shortfalls in revenue or other adverse trends.”

The company’s Australian newspaper assets form the largest part of the News and Information Services business, which in turn accounts for 30% of the total business of News Corp.

Clarke and others at News have yet to explain why, if the company has turned its fortunes around, did News Corp Australia’s contribution (outside of currency changes) worsen in 2013-14? This is what the 2013-14 News Corp annual report said:

“Revenues at the Australian newspapers for the fiscal year ended June 30, 2014 decreased 18%, as compared to fiscal 2013, primarily as a result of the adverse impact of foreign currency fluctuations and weakness in the print advertising market in Australia. The strengthening of the U.S. dollar against the Australian dollar resulted in a revenue decrease of $199 million, or 10%, for the fiscal year ended 2014 as compared to fiscal 2013 … For the fiscal year ended June 30, 2014, Segment EBITDA at the News and Information Services segment decreased $130 million, or 16%, as compared to fiscal 2013. This decrease was primarily due to a decrease at the Australian newspapers of $67 million, principally as a result of lower advertising revenues as noted above, partially offset by lower production costs and the impact of cost savings initiatives.”

And this is what the 2012-13 News Corp report said:

“Revenues at the Australian newspapers for the fiscal year ended June 30, 2013 decreased 15%, as compared to fiscal 2012, primarily reflecting lower newspaper advertising revenues principally due to the continued challenging economic environment in Australia. The strengthening of the U.S. dollar against the Australian dollar resulted in a revenue decrease of $8 million for the fiscal year ended June 30, 2013 as compared to fiscal 2012 … For the fiscal year ended June 30, 2013, Segment EBITDA at the News and Information Services segment decreased $144 million, or 15%, as compared to fiscal 2012, primarily due to: a $192 million decrease at the Australian newspapers driven by lower advertising revenues.”

Judging by the warning in the 2013-14 annual report, News could be facing close to US$2 billion ($2.1 billion) in impairment and possible restructuring charges sometime in the coming year, most of which will be taken in the struggling Amplify education business, perhaps the professional information services part of Dow Jones and in the news and information business.

If a cut of that size were to happen, it would be the fifth round of impairments against businesses in the news and information business in the past six years.

If a cut of US$1.7 billion is made, most of it will be applied against the goodwill value of the company’s newspapers in Australia, the UK and US and could cut the value of the papers to a few hundred million dollars — which is virtually nothing given the amount of money invested in them over the years.

And why would most of the impairments in news and information be applied to the News Corp Australia papers? Well, according to the 2013-14 annual report, Australia recorded the largest falls in revenues (ad revenues fell US$314 million alone due to a mix of currency changes and falling revenues), the earnings contribution from Australia was 51% (or US$67 million) of the US$130 million fall in earnings for the division in the year to June, while Australian circulation losses cost US$45 million. And no paper in Australia (especially the loss-making Australian) is as valuable to News Corp as The Wall Street Journal with its 2.3 million combined print and digital sales each day; nor is there an Australian paper as valuable to News in the UK as The Sun, which still sells more than 1.8 million copies a day (including Sundays) and has a growing base of digital subscribers. The Times is in a similar situation, as is the Sunday Times.