News Corporation has announced that the costs of the phone hacking and other scandals at its UK newspapers have risen to $224m as it announces lower operating profits and a $2.8bn write-down its global newspaper business that plunged the company into a $1.55bn quarterly loss.
Which makes you rather wonder why the company bothers with newspapers at all but it has already announced that they are to be spun off into a separate business that will include the New York Post, the Wall Street Journal, about 70 per cent of the Australian newspaper market and its remaining UK titles the Sun, The Times and the Sunday Times.
The new newspaper company is provisionally valued at between $4.3bn and $5.3bn by analysts, pretty eye-wateringly low given that CEO Rupert Murdoch paid $5.7bn for Dow Jones, publisher of the WSJ, in 2007. But that has since been written down by half.
And the punishment from phone hacking isn’t over yet with Rebekah Brooks, Andy Coulson and others due to appear in court soon to anwer charges of phone hacking and, in Brooks’ case, conspiracy to pervert the course of justice.
The big question for News Corporation (aside from any court revelations which may well land it in even more serious trouble with UK and US regulators) is whether or not the new company can revive its newspapers.
The UK Times and Sunday Times are now locked behind a paywall but there has been no clear evidence as to whether or not this has succeeded in stemming their humungous losses, at least £60m a year according to some accounts. The odd are that, even with a claimed 300,000 digital subscribers, the daily Times is still losing money hand over first.
The Sunday Times is just as a big a problem. This used to make buckets of money a decade or so ago, landing on the nation’s doorsteps with a resounding thud thanks to all the display and classified ads in it. These are no longer there, alas, and the paper looks tired in the extreme; morphing into a kind of old columnists’ home.
It looks likely that the the newspaper company will be given a handsome dowry from News Corp, $2bn or so has been suggested, and then left to its own devices. These are bound to lead to swingeing changes at its UK titles and, maybe, the search for a ‘trophy asset’ buyer. Most likely from a part of the world rich in oil and minerals.