PRs know that spinning a positive story first and fast can obscure a deeper truth. Rupert Murdoch’s News UK, now boasting a very professional PR outfit, has just proved the point.
Let me take you back to 2 December. On that day, Times Newspapers (TNL) announced it had achieved a £1.7m operating profit for the year ending 30 June 2014 (which I duly reported, as did the Financial Times here).
In boasting that this was its first profitable year since 2001, those of us who attended its press conference were treated to graphs and charts showing the success of the Times and Sunday Times.
It was all very uplifting, of course. The aim was to underline that News UK’s paid-for strategy was working well and thereby helping to secure a sustainable future for the two papers.
But we were not given access the full set of accounts that had been sent to Companies House. So we were unable to see the full picture, which was altogether less positive.
We did not discover for another two weeks that TNL’s operating profit excluded various operating costs that were later reported for other News UK divisions.
We were unable to see that TNL made a pre-tax loss despite its operating profit. We could not tell how much of the company’s huge spend on sports rights was allocated to TNL.
Only later, when the accounts for News Corp UK & Ireland (News UK is its equivalent shortform) appeared on the Companies House website did we discover that TNL’s total revenue had reduced by £1m year-on-year with print and digital subscriptions growth offset by advertising and sold copy decline.
The improvement in quoted operating profit, from a £5.9m loss to a £1.7m profit, was driven by a £9m reduction in costs within TNL. So revenue was broadly flat.
We were also able to see at last that the cost of sales was £9m lower during the year, as a result of decreased costs for newsprint, ink and plates due to lower print circulation volumes. Editorial costs were also lower than in previous years.
Moreover, significant operating costs were omitted from the TNL company accounts and were instead accounted for in other entities within the News UK group.
Therefore, taking into account other staff costs and depreciation, it is fair to say that the operating loss for TNL was about £33.9m.
Even so, the allocation of sports rights costs - one of the supposed lures to encourage people to pay for access to the websites of the Times/Sunday Times and the Sun - remains opaque.
The figures for subscribers to those sites are meaningless unless one is able to see how much it costs News UK to attract them. The sum that counts is the one that equates the payments by individual subscribers as against the amount paid for the content.
In other words, is News UK absorbing huge losses in order to “buy” digital subscribers? It is impossible to work that out from its accounts.
Then, of course, came the figures for the Sun.* As I reported on 17 December, the stand-out feature in News UK’s overall loss in the 2013-14 period was the plunge in the profitability of the Sun, where operating profits were down to £35.6m from £62.1m. (Again, the FT noted that too).
Most important of all was the salient fact that News UK suffered an operating loss of £3.5m in the year up to June 2014 compared to a £51m profit the year before.
The TNL spinning worked for a while. But I note that the Observer’s Peter Preston also realised the true state of affairs at the Times in his latest column.
First and fast is all very well, but Murdoch’s spinners should know that facts is the f-word that really counts.
*The original posting stated that there was no UK News press conference about the Sun’s figures. This was incorrect. Apologies for the error.
