News Corp Australia is making its biggest company restructure to offset the loss from this deal and look at ways to save $15 million per year.
👉 Background: Back in 2021, after tense negotiations, Meta and Google came to an agreement with the Australian government to contribute $250 million a year towards media publishers for access to their news.
👉 What happened: Meta's contribution to the biggest media companies in Australia was worth $70 million per year. So now, News Corp Australia is making its biggest company restructure to offset the loss from this deal and look at ways to save $15 million per year.
👉 What else: As part of the restructure, News Corp is likely to split the company into three divisions:
It just goes to show the risk of relying too heavily on one source of revenue.
💡 When companies over-depend on one external entity for significant portions of their revenue, they expose themselves to substantial key party risk.
💡In the case of News Corp, they’ve already suffered from a pretty major drop in ad revenue. In the first quarter of this year, News Corp already saw a 9% decline in ad revenue compared to the prior year.
💡With Meta now pulling out of these deals, it means that News Corp needs to make up an even bigger hole in revenue. Since it’s struggling to grow its ad revenue, it’s looking at ways to restructure its team to make up that shortfall (ie reduce its headcount).
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