How much is The Australian losing?

How much money has Rupert Murdoch’s The Australian been losing? Thankfully we’ll soon have a way of knowing for sure.

What the past month has established is that The Australian has lost large amounts of money, and continues to lose money. This post attempts to keep score of the last 11 published loss figures. Some of these reports are puzzling. Perhaps there have been some misunderstandings.

The good news is that the recent complaint that News Corporation Australia has made to the Australian Communications and Media Authority about Media Watch is quite specific about focusing on the reference to The Australian’s losses. What’s encouraging about this is that in order to respond to the complaint, the first thing that ACMA will need to establish for the record is exactly how much money The Australian has been losing and is currently losing.

Various totals for The Australian’s losses have been reported:

1. Reported loss: $33 million a year F2011 -F2013

June 30 2012:  I wrote in the AFR: “It’s estimated that The Times, the New York Post and The Australian lose more than $200 million a year . . . The Australian alone would lose more than $100 million over three years.”

This is based on The Australian losing $33 million a year, whereas I had been told by a very senior former News source that the loss was $35 million a year. Elsewhere I was told the losses for The Australian, the New York Post and The Times totalled close to a quarter of a billion dollars a year.

2. Reported loss: $33 million a year x 3 “absurd”

July 2 2012: The Australian reported that Chris Mitchell “highlighted The Australian‘s contribution to the overall profit of News Limited and refuted claims by journalist Neil Chenoweth in The Weekend Australian Financial Review about the paper’s losses. “Mitchell said Chenoweth’s claim was absurd. ‘We would not have lost that in the 30 years since I joined the paper,’ he said.

3. Reported profit: $10 million in 2007 before GFC, losses since then.

July 3 2012: In an email to me, Mitchell wrote: “Your other comments about the paper are way off the mark. Stutch would be aware of the numbers from the time he was editor. Before the GFC we were make [sic] a bit over $10 million a year, and we are not well treated by the state satellites on recharges. As [Brett] Clegg knows many of them charge us at full commercial rate plus 15 per cent.” [Elsewhere there is one suggestion that this was the ONLY year The Australian has ever made money.]

4. Reported loss: $36 million in F2012 or 2013

August 5 2013: James Chessell & Anne Hyland wrote in the AFR: “But several informed sources tell the Financial Review that newspaper revenues have tanked. Losses at The Australian last financial year are understood to have hit $36 million. Yet following redundancies among reporting and sales staff, and a flatter management structure, News sources claim it started the new financial year hitting its EBITDA and revenue targets.”
[As of that date News did not have published figures for the year to July 2013. So “last financial year” in this case appears to have been F2012. No suggestions were put forward by News Corporation or by The Australian that the $36 million loss figure was incorrect. This is the only unchallenged report of losses at The Australian and appears the definitive account of the loss. Since that time anecdotal reports suggest some increased spending, including payments to Google for higher search rankings. While other newspapers were cutting back, The Australian announced it had begun printing copies in Darwin]

5. Reported loss: $40-$50 million a year

Feb 17 2014:  Paul Barry on Media Watch said: “Insiders tell Media Watch that The Australian is losing $40 million to $50 million a year.”

6. Reported loss: Less than $20 million a year for F2014

Feb 21 2014: Lawyers for The Australian wrote to Media Watch to request a correction to state: “Last week we said The Australian is losing tens of millions a year. That statement was incorrect. Media Watch acknowledges that it did not contact The Australian for comment.”  [The correction denying tens of millions of dollars assumes the loss is less than $20 million a year]. Media Watch declines.

7. Reported loss: A fraction of $40-$50 million for F2014

Feb 24 2014: The Australian published a video interview of Chris Mitchell by Sharri Markson:

Markson: “Yeah it’s still a profitable business, for sure.

Mitchell: Well, you know, it’s probably not profitable for The Australian, as people have noticed, we’ve had a hard time since the GFC, but the idea that we are losing $50 million is ridiculous and, um–

Markson: Those figures are incorrect?

Mitchell: Completely incorrect. We’ve never gone even close to that. You know we’ve had, like most newspapers, we’ve lost classified advertising. I think the aim of the game is to lift your display advertising and lift your cover prices and then the balance that you lose from classifieds you need to try to make up with digital, Now have we made that up? No we haven’t. But we’ve cut costs pretty effectively and I would think we’ll go close to halving our loss from last year this year so we’ll be a fraction of the number Paul Barry quoted.”

8. Reported Result: The Australian boosts News Corp Australia result by $30 million 

Feb 24 2014: Mumbrella published an update to its story about the Markson/Mitchell interview: “Speaking to Mumbrella this afternoon Mitchell clarified his previous remarks explaining that rebates and recharges were an important part of The Australian’s contribution to News Corp Australia’s bottom line.

“The company as a whole would have $30m worse off without The Australian, i.e. various cost centres that recharge to us, would have been lost and the business as a whole would have made a lot less money,” said Mitchell.

“I wasn’t fudging when I said that a few years ago. The last profit we made was in 2008 and I’ve said a couple of times part of what has happened in the last two of years is a very large investment in digital.”

“Saying that you haven’t made a profit — that means that after all the retail print costs etc. it takes you into the red.”

“But that is very different from saying if The Oz didn’t exist News Corp would be better off without that loss. In fact it would be $30m worse off because people (other elements of the News Corp Australia business) charge us commercial rates for printers.”

9. Reported Loss: $20-$25 million loss for F2013; $10-$12.5 million loss for F2014

February 25 2014: Video comment by Sharri Markson published by The Australian. Markson: “Mitchell said for the record: The Australian is on track to halve its loss for the financial year. He said it would be about a quarter of what Media Watch has alleged. And the paper is hopeful of breaking even next year.  . . And Media Watch’s socalled sources were disaffected employees removed for damaging the company.” [A quarter of $40 to $50 million means the forecast loss is $10-$12.5 million for F2014. If this is half the previous year then F2013 loss was $20-$25 million].

This appears slightly different from what Mitchell actually said in the video published to the web, where Mitchell said, “. . .  I would think we’ll go close to halving our loss from last year this year so we’ll be a fraction of the number Paul Barry quoted.”

It’s noticeable that halfway through this sentence, after the word “so”, there is a change of camera shot, from a close up to a medium-range shot of Mitchell. In video production this is generally the sign that two shots have been spliced together, linking two different statements. In this case artificially linking two parts of a sentence.

It’s possible that Mitchell did say the loss this year would be “a quarter of what Media Watch has alleged,” as Markson maintained the following day, but that Mitchell then substituted the phrase, “a fraction of the number Paul Barry quoted”. This would put F2014 at a quarter of $40 to $50 million, or $10 million to $12.5 million.

This doesn’t seem to be correct in light of subsequent disclosures, which suggests Mitchell was correct to describe current losses as “a faction” of the Media Watch totals, and Markson’s reference to this as “a quarter” of the Media Watch totals was incorrect.

10. Reported loss: Less than $20 million a year for F2014

Febraruy 26 2014: The Australian published its complaint to ACMA in which it bases on its repeated demand for a correction by Media Watch which states: ““Last week we said The Australian is losing tens of millions a year. That statement was incorrect.”

11. Reported loss: $30 million for F2013; budgeted loss for F2014 $15 million.

February 26 2014: Media Watch seeks confirmation of the $20-$25 million loss for F2013 based on Markson video.  runs a correction to its February 17 story citing email from Chris Mitchell of February 25: “My Budget for this year is minus $15 million in total across print and digital. We are well in the ballpark. My CEO Nicholas Gray is happy to agree.”

In subsequent emails Mitchell declines to confirm that the previous year’s figure was $30 million:

Trying to put out a paper here mate but this is a non sequitur. Our complaint was about your figure for this year. Can’t remember anything from your side about last year. We are with ACMA anyway.

4 thoughts on “How much is The Australian losing?

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