• by Karlene Lukovitz  @KLmarketdaily, August 14, 2023

News Corp’s fiscal 2023 marked the first year that more than half of its revenue came from digital platforms — marking a “profound transformation” over the last decade, CEO Robert Thomson said in the company’s fiscal Q4 earnings call on Friday.

Thomson attributed its current digital momentum to initiatives based in generative AI, which represents “a remarkable opportunity to create a new stream of revenues, while allowing us to reduce costs across the business” through “exponential” efficiencies, he said.

A News Corp Australia executive recently revealed that the division has been using generative AI to produce about 3,000 local news items per week, covering topics including weather, traffic and fuel prices.

“From the philosophical to the functional, there is no doubt that AI articulations will affect most sections of most companies, whether it be customer service, subscription management, chatbots, chitchatbots, text to audio and audio to video,” Thomson said.

News Corp, which has led the way among media companies in pressuring and succeeding at forcing Meta, Google and other big-tech players to pay for use of its content, is “already in active negotiations” with AI and tech companies “to establish a value for our unique content sets and (intellectual property) that will play a crucial role in the future of AI,” Thomson reported.

He said that News Corp’s content is already “being harvest and scraped and otherwise ingested to train AI engines,” that individual stories “are being surfaced in specific searches,” and that original content can be “synthesized and presented as distinct when it is actually an extracting of our editorial essence.” Such “super snippets” are “designed so the reader will never visit a news site, thus fatally undermining journalism and damaging our societies,” he added.

Generative AI poses the potential for “almost endless” forgeries and counterfeit content as well as “endless, perfidious permutations” — all of which make it crucial to refresh content “daily, weekly, with incremental improvements,” he said.  AI’s potential is “enormous,” but “garbage in, garbage out, and garbage all about.”

News Corp’s profit for the full year ending June 30 dove by 75%, to $187 million, from $760 million in its fiscal 2022, and its revenue was down 5% year-over-year, to $9.9 billion.

The company blamed lower print and digital advertising in Australia and lower print advertising in the U.K. for much of the drop.

Q4 revenue also fell, by 9% to $2.43 billion, reflecting sales declines in all segments.

But cost-cutting initiatives helped drive Q4 earnings before interest, taxes, depreciation and amortization (EBITDA) up 36% in the news division and 25% in the Dow Jones business, and earnings per share of $0.14 were nearly double analysts’ expectations.

That sent the company’s share price up by nearly 5%, to $21.68—its highest level since February — before close on Friday.