The Sun more than doubled its pre-tax losses to £127.2m last year – but News UK stablemates The Times and Sunday Times boosted profits by 115% to £73.2m.
Both newspapers grew their revenues, put down to digital investment paying off, but ongoing legal claims loom over The Sun’s accounts making up the bulk of its losses.
The new accounts from News UK’s subsidiaries also revealed TalkTV made £1.1m in revenue between its launch on 25 April and the end of the financial year on 3 July.
The losses at Sun publisher News Group Newspapers (NGN) were in large part due to it putting aside £99.8m for damages and legal fees for ongoing phone-hacking cases. The company also spent £27.5m “in relation to UK newspaper matters”, in other words further legal fees for cases in relation to the closure of the News of the World in 2011.
After more than 1,000 claims have gone through the courts, the High Court heard in March last year there were at that time 52 claims registered against NGN, with a further 436 claims at the pre-action letter stage and 82 more claims “in the pipeline”.
Rupert Murdoch’s Fox Corporation has indemnified the legal costs around these cases from 2013, meaning they are reimbursed to the UK business.
NGN has never admitted liability for any unlawful activity at The Sun, saying such behaviour was confined to the News of the World. The new £99.8m provision is made up of costs during the year of £46.8m (up from £14.5m the year before) plus a provision of £53m made for additional claims made prior to a 30 September deadline imposed by the court – making these technically outside the full-year period being reported.
The publisher said in its financial accounts for the year to 3 July 2022 published on Thursday: “The final cost may or may not be significantly higher than the amounts recognised depending on the course of the litigation, which in turn may also mean costs end up to be significantly lower than those provided for.
“This has been reported as a one off charge due to its size and incidence. This provision has not been discounted due to the uncertainty over the timing of the resolution of these cases.”
An NGN spokesperson said separately: “In 2012, an unreserved apology was made to all of those who had brought cases against the News of the World for voicemail interception. Since then, NGN has been paying financial damages to claimants.
“There are a number of disputed claims still going through the civil courts including some which seek to involve The Sun. The Sun does not accept liability or make any admissions to the allegations. It is of course common litigation practice for parties to reach a settlement before trial to bring a resolution to the matter for commercial reasons.
“As we reach the tail end of litigation, provision has had to be made in the NGN accounts for the ongoing litigation. The figure in the NGN accounts relating to the civil claims is higher this year than the previous financial year as a result of the September cut off date for the bringing of claims which was imposed in the proceedings. This resulted in claims being brought before that date to avoid being stayed causing a spike in cases. Provision has therefore been made in the accounts for possible costs for the next financial year on top of the actual costs for the 2022-2023 financial year.”
The Sun’s revenues, however, grew marginally from £318.6m to £320.5m as digital growth outpaces the decline of print. The company put this growth primarily down to “higher digital advertising where targeted digital investment helped drive strong growth in audience and advertising yields”.
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Revenues also benefited from higher content licensing revenues and a slightly longer year of trading with 53 weeks in the financial year.
The publisher also said its expansion into the US, launched in 2020, saw audience up 193% year-on-year and advertising yields grow “significantly”, “incrementally” benefiting revenues. But the NGN accounts do not include the full revenues of the US Sun, which Press Gazette understands is on course to contribute revenues of seven figures per week.
Earnings before interest, taxation, depreciation and amortisation charges (EBITDA) went from a loss of £41.6m in 2021 to a loss of £117.6m. However, once restructuring expenses and one-off operating charges were taken out, this became earnings of £15m, up from £12.9m the year before.
Some £4.4m was spent on restructuring the editorial workforce, down from £5.5m in 2021 to do the same, although The Sun had 552 editorial employees on average each month in 2022 up from 543 the year before.
The increase in EBITDA was put down to higher revenues combined with a reduction in costs, achieved through “targeted cost savings” made in the marketing, technology and corporate departments and a decrease in production costs due to lower print volumes. “These factors were partly offset by investments made in commercial to help drive revenue growth,” the company said.
Meanwhile Times Media (formerly Times Newspapers), publisher of The Times and Sunday Times, reported revenues of £373.4m in the year to 3 July 2022, up 14% on the year before. It said in its own accounts that this was down to a growth in both digital subscriptions and digital advertising, as well as a “rebound” in print advertising, higher content licensing revenues and a 53rd week in the year.
It reported a pre-tax profit for the financial year of £73.2m, more than double the £34m reported in the year before.
At the end of the period, The Times and Sunday Times had 438,000 digital-only subscribers out of a total 641,000. By the end of 2022, according to News Corp’s global accounts, digital-only subscribers across the newspapers, and the Times Literary Supplement, totalled 489,000. Digital-only paid subscriptions saw the fastest growth yet since The Times launched its online paywall in 2010.
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Times Media’s EBITDA, excluding restructuring costs, totalled £82.9m in the year to July, up 58% from £52.5m the year before. Including restructuring expenses, EBITDA was £79.9m, up from £44.2m.
According to the accounts, Times Media employed an average of 554 editorial staff in 2022, up from 532 the year before.
Sister company News UK Broadcasting made a loss of £34m after it launched TalkTV on 25 April last year. It made £1.1m in revenues from advertising and syndication before the end of the financial year on 3 July.
And Talksport Ltd, which also includes Virgin Radio and Times Radio, saw turnover up 56% to £78.3m and reported a swing from a pre-tax loss of £2.2m to profit of £10.7m. Its advertising revenues had been particularly hit by the Covid-19 pandemic in the year before.
Earnings from all the News UK subsidiaries are consolidated into parent company News Corp’s news media segment. In News Corp’s full-year earnings call to the end of June 2022 chief executive Robert Thomson said News UK had contributed an increased profit contribution of $54m (£43m).
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