After 2020’s jobs purge in Australia, are more cost cuts coming at News Corp globally as the company’s revamp of its back offices and other shared services accelerates?
It seems to with Deloittes, the authors of 2020’s massive job cuts at News Corp Australia, now hired to run the same ruler over the worldwide businesses of News, according to the New York Times.
News of Deloittes new role at News Corp was contained in a lengthy New York Times report on an internal argument inside the Wall Street Journal newsroom (the Journal is now the most profitable and powerful print title controlled by the Murdoch family) about how it is covering current news events and plans to cover them in future (in terms of the issues raised by Black Lives Matter and MeToo)
“News Corp looks like most aging media businesses: It’s shrinking. It recorded a $1.1 billion loss last year, and news revenues, with the exception of Dow Jones, continue to fall. Dow Jones operates The Journal and several other titles such as Barron’s and MarketWatch, but not News Corp’s Australian and British newspapers, which haven’t performed as well. (The company also owns a real estate listings business, TV stations in Australia and the book publisher HarperCollins.)
“News Corp recently hired the consulting firm Deloitte to work on a project to consolidate its many divisions, according to three people with direct knowledge of the matter. That would mean cost cuts and could lead to the loss of a significant number of jobs, the people said.” The Times missed the role of Deloittes in News Corp Australia’s 2020 jobs bloodbath.
Deloittes was used in Australia in 2020 to prepare cost cuts at the various newspapers and Foxtel that saw more than 1,000 permanent, part time and contractor employees (journalists, producers, copy editors, reporters, camera people, video editors, sound recordists etc) sacked.
As well more than 100 urban and regional newspapers – daily, bi-weekly and weekly – were closed completely or turned into website only operations. As well News had earlier quit Australian Associated Press, almost causing the country’s only independent news agency to its knees.
In appointing Deloittes in April 2020 in the midst of the first major Covid lockdowns, News asked its consultants to look at centralising some editorial and commercial functions, cutting print production of some smaller newspapers and reviewing its regional newspapers business.
News Corp had been working on consolidating its advertising groups over the 12 months prior to April, 2020 by bringing together staff from The Australian and the metropolitan tabloids, plus regional and local titles. Many of those jobs were lost in the restructure last year.
The new cost cut plans follow the appointment last year by News Corp of Damien Eales (the chief operating officer of News Corp Australia) to head up its so-called shared services reforms.
Eales was due to start the revamp of all News’s services in every part of the business from September last year after moving there from Sydney. He has not been able to move because of the border closures but the revamp has started, with Deloittes employed.
The report of Deloittes’ latest role at News Corp comes as the company said strong demand forced it to up its debt offering announced last Thursday from $US750 million to $US1 billion (more than $A1.3 billion). The ostensible reason for the raising has been the renewed spending spree At News.
It bought Investor’s Business Daily (IBD) from O’Neil Capital Management last month for $US275 million and then added the consumer books & media segment of Houghton Mifflin Harcourt for $US349 million, combining it with its HarperCollins business. Its 61% subsidiary, REA also made a $US186 million takeover offer for Mortgage Choice.
All up that’s $US810 million in deal costs. REA will be paying for Mortgage Choice out of its own bank accounts and borrowings, so the two direct News deals – IBD and the new books business have a total cost of $US624 million.
News had around $US1.56 billion in cash at the end of last December and has a $US750 million revolving credit as well, so the new borrowings were not really needed. That revolving credit was set up in 2019 and can be boosted to $US1 billion at the company’s request. Assuming nothing else changes, this means News could have up to $US3.5 billion (around $A4.6 billion) available for a one-off megadeal.
News also had $US1.3 billion in debt and this raising will take that to more than $US2.3 billion, or $US3.3 billion if the line of credit is maxed out to the limit of $US1 billion.
