News Corp continues pivot away from digital advertising towards subscriptions and AI deals

News Corp has been strategically pivoting away from its dependence on digital advertising, which CEO Robert Thomson described as “volatile”, amid continuing reductions in ad revenue. This transition was detailed during the company’s Q1 2025 earnings call, which highlighted a significant shift in business strategy towards data licensing and subscription models, particularly in the area of artificial intelligence (AI).

For the quarter reported, the Dow Jones division, which encompasses major titles such as The Wall Street Journal and Barron’s, documented a $6 million reduction in advertising revenue, marking a 7% drop compared to the previous year. Even more specifically, digital ad revenue experienced a 5% year-on-year decline, culminating in total ad revenue of $85 million for the Dow Jones segment.

Similarly, the News Media division, including publications like the New York Post, News Corp Australia, and News UK, registered a $10 million dip in advertising revenue, a 5% decrease from the previous year, resulting in ad earnings of $193 million.

The decline in ad revenues was ascribed to a range of factors. Notably, there was a general caution among advertisers to spend during election periods, particularly impacting the financial and technology sectors. Additionally, there were reduced sales from programmatic advertising in the reported quarter. An important factor cited by Thomson was the purported biases exhibited by ad agencies and associations, which, he claimed, were boycotting certain media properties due to political prejudices.

A specific challenge faced by News Corp was seen with The Sun US, where unexpected algorithm alterations, particularly by platforms such as Google and Meta, led to a drastic fall in traffic, prompting workforce reductions.

Nevertheless, the decreased reliance on advertising revenue has been a decade-long process. Noteworthy is the fact that advertising constituted 38% of Dow Jones’s revenue in 2014 but shrank to only 15% in the latest quarter. Similar trends were seen with News Media, where advertising’s share of revenue decreased from 35% to a mere 7%.

On a more positive note, News Corp’s Australian pay TV and streaming division, Foxtel, reported an uptick in ad revenue. Streaming advertisements, especially from the Kayo sports service, saw a 45% rise, underpinning Foxtel’s continued relevance in the shifting media landscape.

Central to News Corp’s evolving business model is its foray into licensing data to AI platforms. A significant revenue driver was its partnership with OpenAI, reported to be potentially worth $250 million over five years. Although detailed revenue figures from AI initiatives were not disclosed due to confidentiality agreements, this area represents a significant growth vector for the company.

Thomson also revealed ongoing legal action against Perplexity AI, accused of using News Corp content without proper licensing.

Subscription revenues, especially for the Dow Jones segment, presented a more encouraging picture. Total subscription income rose by $23 million, a 5% year-on-year increase to $459 million, driven largely by digital subscriptions. Dow Jones’s digital subscriptions grew by 15%, with The Wall Street Journal alone seeing a 10% rise to 3.8 million digital subscribers.

However, on the News Media side, subscription revenues showed a slight decline of 1%, highlighting the uneven nature of subscription growth across different branches of News Corp.

Forecasts by CFO Susan Panuccio suggested optimism around subscription bundles, which drove a significant portion of digital subscription growth. As introductory promotional subscriptions convert to standard pricing, the company anticipates continued revenue growth through 2024.

Source: Noah Wire Services