Earlier this month News Corp (NASDAQ: NWS, NWSA) reported financials for the second quarter of its fiscal year 2018, for the period ended December 31, 2017. The company reported total revenue of $2.18 billion, a 3 percent increase over the same period last year. News Corp also reported an improvement in net loss, going from a net loss of $219 million the first quarter down to $66 million in the second quarter. Adjusted earnings per share for the quarter were $0.24, compared to $0.19 for the same period last year.

CEO Robert Thomson offered the following comments in a news release about the company’s quarterly financials:

‘The robust first half results highlight the virtue of our strategy to become increasingly digital and global, the discipline of our financial management, and our commitment to premium content and high-quality, high-integrity news,’ Thomson said.

‘Clearly there are profound changes taking place in the creation and distribution of digital content. The big tech disruptors are in the midst of a particularly disruptive period, commercially, socially and politically,’ added Thomson. ‘We appreciate that Google has ended the prejudicial First Click Free and that Facebook is prioritizing provenance, but these are modest steps toward changing a digital environment that is dysfunctional at its core. The bot-infested badlands are hardly a safe space for advertisers, whose brands are being tainted by association with the extreme, the violent and the repulsive.’

Thomson also said that is critical that news organizations focus on quality and integrity, so that readers are willing to pay for professional journalism. While The Wall Street Journal and The Sun are both experiencing growth in terms of readership and subscriptions, Thomson said returns for their work would be much greater in a less volatile, more consistent digital environment.

Other highlights from the second quarter include:

• News Corp recorded a charge of $174 million related to the U.S. Tax Cuts and Jobs Act.
• Total Segment EBITDA was $329 million, a 1 percent increase.
• Digital real estate services revenue grew 21 percent.
• Book publishing revenue increased $3 million, or 1 percent, compared to the prior year.
• Cable network programming increased $16 million, or 35 percent, compared to the prior year.
• Digital revenue represented 29 percent of News and Information Services revenue, compared to 26 percent in the same period last year.
• The Wall Street Journal had a 29 percent increase in digital-only subscribers, bringing the total to approximately 1.4 million subscribers.

In the News and Information segment, revenue for News UK grew 7 percent, News Corp Australia grew 4 percent, and Dow Jones grew 1 percent. News America Marketing revenue declined 16 percent. Advertising revenue declined 6 percent compared to the prior year, due to a weak print advertising market and the cessation of international print editions. As News Corp’s largest revenue segment, advertising revenue totaled $702 million, representing 32.2 percent of total revenue.

On a positive note, circulation and subscription revenue increased 6 percent which included a 10 percent increase in circulation revenue from Dow Jones, digital subscriber growth from The Wall Street Journal and growth in the company’s professional information business. Increases in cover price and subscription fee increases also contributed to improved revenue in this category. This revenue segment is the second largest at $637 million, or 29.2 percent of total revenue.

News Corp offered some impressive subscriber highlights for the quarter, including:

• The Wall Street Journal had average daily digital subscribers of 1,389,000 as of December 31, 2017 compared to 1,080,000 as of December 31, 2016.
• Closing digital subscribers at News Corp Australia were 389,600 as of December 31, 2017, compared to 309,200 as of December 31, 2016.
• The Times and Sunday Times (UK) closing digital subscribers as of December 31, 2017 were 220,000, compared to 184,000 as of December 31, 2016.
• The Sun’s digital product reached approximately 86 million global monthly unique users in December, compared to 61 million in the prior year.

On February 8, the day News Corp’s Q2 financials were released, News Corp’s Class A stock hit a low point for the last month at $15.65 per share. As of 4:45 PM EST on February 16, Class A stock was valued at $16.26.

Insider Take:

Thomson’s comments are consistent with what other news organizations are saying. Print advertising is down, and digital readership is up, but digital ad revenue and subscriptions are often not enough to offset the loss of print ad dollars. Thomson recognizes that a complex solution is needed to right the News Corp ship – brands need solutions they can bank on, readers need news organizations they can trust, and everyone needs to expect quality journalism.

The fact that News Corp’s net loss has dropped significantly is a step in the right direction, but the company needs much more than digital subscriber increases to get back in the black. Unfortunately, recognizing the problem and fixing it are easier said than done.