More cost-cutting (and possible job losses) could be ahead for News Corp, according to its recent 10-K filing. Both the News and Information Services and the Cable Network Programming segments say they are at risk of goodwill impairment — that is, that is, the value of the non-financial factors that add to the business are falling. As of June 30, 2016, nearly $1 billion of goodwill at these reporting units was at risk for future impairment.
The company also flagged that another restructure could be on the cards — and that usually means more people to head out the door.
Weirdly, that was’t reported in the News Corp outlets yesterday, even in The Australian‘s Media section. Now we can play guess the asset. The Australian? The Daily Telegraph or The Courier-Mail? Or perhaps it’s The Sun in the UK that is struggling. It wouldn’t be The Times or Sunday Times in the UK, which have reported higher sales (a small operating profit in 2014-15) and a rise in digital paywall subs, nor would it be The Wall Street Journal after its strong rise in paywall subscriptions and the milestone of digital revenues now exceeding those from analog sources.
The other thing to consider is that the Australian newspaper operations are the single largest groups of assets in the News and Information business of News. But there’s a left-field contender, The New York Post, which must be losing a lot of money because it didn’t feature in any of the reports on how the various parts of News performed in the year to June. In fact, the Post was conspicuous by its absence. But could it account for US$1 billion in impairments on its own? Hardly. News Corp had US$3.714 billion of goodwill in its balance sheet at June 30, up from US$3.06 billion a year earlier, so any reduction in the next year would take the goodwill figure well under US$3 billion (which also includes more than US$1 billion for Fox Sports Australia).
And if News is forced to lop US$1 billion or so off its asset values, it would be following the hated Fairfax Media, which chopped around $980 million off the value of its Australian and NZ newspapers.
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.