News Corp. Plans Cost-Cutting as Newspapers Are Divested From Entertainment

Nearly half of revenue comes from sources other than advertising

News Corp. chief executive Robert Thomson said cost cuts will be "relentless" as the company's newspaper arm divests from Rupert Murdoch's entertainment assets, Reuters reported.

The new News Corp. will debut on June 28, retaining such properties as The Wall Street Journal, Dow Jones Newswires, The Times of London, HarperCollins, education unit Amplify and Australian pay-TV services.

The Fox Network, including Murdoch's movie studio and cable channels, will spin off as 21st Century Fox.

Thomson told Wall Street investors on Tuesday that News Corp. will retain a "permanent start-up sensibility."

In addition to cutting costs, the company plans to increase subscriber revenues in order to offset advertising losses, while investing in digital. 

Newspapers face declining profits and tumbling shares as readers prefer to get their news digitally and advertising revenues plunge. Budget cuts have already slashed staff at The New York Post as well as other New York newspapers like The Village Voice and the Daily News.

"Let me be clear, print is still a particularly powerful platform," Thomson said to investors.

Nonetheless, he emphasized that nearly half of News Corp.'s revenue comes from sources other than advertising, such as Dow Jones, which sells news and information to financial institutions.

Investors were impressed by the value of both Dow Jones and fledgling educational unit Amplify. Lazard Capital Markets analyst Barton Crockett raised his target price for News Corp. from $4 to $40, saying he was impressed with ebook growth at Harper Collins and the growth of TV and real estate business in Australia.

Crockett told The Hollywood Reporter that his main concern is "[News Corp's] ability to navigate Internet threats to traditional newspapers in Australia and the U.K."