News Corporation Q4 Earnings Beat, Revenues Rise Y/Y

News Corporation NWSA reported fourth-quarter fiscal 2024 earnings of 17 cents per share, which beat the Zacks Consensus Estimate by 13.33% and increased 21.4% year over year.

Revenues of $2.58 billion increased 6% year over year and beat the consensus mark by 2.06%. The improvement was driven by growth in the Digital Real Estate Services, Book Publishing and Dow Jones segments.

Quarterly Details

Adjusted revenues (which exclude the impact of foreign currency, acquisitions and divestitures) increased 6% year over year.

Total EBITDA increased 11% to $380 million, primarily due to strong contributions from the Book Publishing segment and REA Group. The increase was partly offset by Hubbl launch costs at Foxtel Group and lower contributions from the News Media segment and Move.

Segment Details

Digital Real Estate Services

Revenues in the Digital Real Estate Services segment increased 21% to $448 million, driven by strong performance at REA Group, partially offset by lower revenues in Move. Adjusted revenues and adjusted Segment EBITDA increased 21% and 28%, respectively.

Revenues in Move fell 2% to $143 million, mainly due to lower real estate revenues. Representing 80% of total Move revenues, real estate revenues decreased 2% year over year, owing to the continued impact of the macroeconomic environment on the housing market, including higher mortgage rates, which has led to lower lead and transaction volumes.

Based on Move's internal data, average monthly unique users of Realtor.com's web and mobile sites remained flat year over year at 74 million. Lead volume was flat year over year.

Revenues at REA Group rose 37% to $305 million, driven by higher Australian residential revenues due to price increases, improved depth penetration, a surge in national listings, strength in financial services and a favorable geographic mix. The increase was partly offset by a 2% negative impact from foreign currency fluctuations.

Australian national residential buy listing volumes in the reported quarter increased 16%, with listings in Sydney and Melbourne up 26% and 32%, respectively.
Subscription Video Services

The Subscription Video Services segment's revenues were $506 million, up 1% year over year, primarily attributed to higher revenues from Kayo and BINGE from increases in both volume and pricing, mostly offset by the impact of fewer residential broadcast subscribers. Adjusted revenues were up 2% year over year.

Foxtel Group streaming subscription revenues represented approximately 32% of total circulation and subscription revenues in the fiscal fourth quarter compared with 29% in the prior-year quarter.

Broadcast subscriber churn in the quarter was 11.7% compared with 11.1% in the prior-year quarter, driven by a recent price and packaging simplification. Broadcast ARPU increased 6% year over year to A$90 (US$59).
Dow Jones

Revenues at the Dow Jones segment increased 4% year over year to $566 million, driven by growth in circulation and subscription revenues underpinned by the professional information business. Digital revenues at Dow Jones in the fiscal fourth quarter represented 81% of total revenues compared with 79% in the year-ago quarter. Adjusted revenues rose 4%.

Circulation and subscription revenues rose 4%, primarily driven by an 8% increase in professional information business revenues, led by 12% growth in Risk & Compliance revenues to $76 million and a jump of 14% in Dow Jones Energy revenues to $65 million.

Circulation revenues inched up 1% year over year, as the continued growth in digital-only subscriptions, which partially benefited from an increase in bundle offers, was offset by lower print volume. Digital circulation revenues accounted for 71% of circulation revenues for the quarter compared with 70% in the year-ago quarter.

Advertising revenues increased 2%, primarily due to 12% growth in digital advertising revenues, partly offset by a 13% decline in print advertising revenues. Digital advertising accounted for 66% of total advertising revenues compared to 60% in the prior-year quarter.

During the fiscal fourth quarter, total average subscriptions to Dow Jones' consumer products were above 5.8 million, representing an 11% increase compared with the year-ago quarter. Digital-only subscriptions to Dow Jones' consumer products grew 16%.

Total subscriptions to The Wall Street Journal grew 7% year over year to nearly 4.3 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 11% to more than 3.8 million average subscriptions and represented 89% of its total subscriptions.

Book Publishing

The Book Publishing segment reported revenues of $512 million, which increased 15% year over year from the prior-year quarter's level, primarily due to higher physical and digital book sales and improved returns.

Key titles in the quarter included The Bridgerton Series by Julia Quinn, The Midnight Feast by Lucy Foley and When the Moon Hatched by Sarah A. Parker

Digital sales rose 12% year over year, driven by strong market growth for downloadable audiobook sales, which benefited from the continued contribution from the new Spotify partnership. Digital sales represented 24% of Consumer revenues compared with 25% in the prior year. Backlist sales represented approximately 62% of Consumer revenues in the quarter compared with 59% in the prior-year quarter.

News Media

Revenues in the News Media segment fell 5% to $545 million, primarily due to lower advertising revenues. Adjusted revenues for the segment decreased 4% compared with the year-ago quarter.

Within the segment, revenues at News Corp Australia decreased 5% due to lower circulation revenues. News UK decreased 5% year over year due to lower advertising revenues.

Circulation and subscription revenues decreased $9 million in the reported quarter, primarily due to lower print volumes and lower digital circulation and subscription revenues at News Corp Australia due to the expiration of the Meta content licensing deal, partially offset by price increases and digital subscriber growth at News UK.

Advertising revenues decreased 5% compared with the prior year, primarily due to lower print advertising at News Corp Australia and a decline in digital advertising due to a fall in traffic at some mastheads due to platform-related changes.

Digital revenues represented 37% of News Media segment revenues in the fiscal fourth quarter compared with 36% in the prior-year quarter and represented 35% of the combined revenues of the newspaper mastheads.

As of Jun 30, 2024, The Times and Sunday Times closing digital subscribers, including the Times Literary Supplement, were 594K compared with 565K in the year-ago quarter. New York Post's digital network reached 117 million unique users in June 2024 compared with 145 million in the prior year. The Sun's digital offering reached 112 million global monthly unique users in June 2024 compared with 159 million in the prior year.

Other Financial Aspects

News Corporation ended the fiscal fourth quarter with cash and cash equivalents of $1.96 billion, borrowings of $2.9 billion and stockholder equity of $8.12 billion, excluding non-controlling interest of $891 million.

Zacks Rank & Stocks to Consider

NWSA currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Consumer Discretionary sector are GameSquare Holdings, Inc. GAME, H&R Block HRB and Madison Square Garden Entertainment Corp. MSGE, each carrying a Zacks Rank #2 (Buy) at present.

GameSquare Holdings is scheduled to report second-quarter 2024 results on Aug 14. The Zacks Consensus Estimate for GAME's loss per share has narrowed by 2 cents to 9 cents over the past 30 days.

H&R Block is set to report second-quarter 2024 results on Aug 15. The Zacks Consensus Estimate for HRB's earnings is pegged at $1.71 per share, which has remained unchanged over the past 30 days.

Madison Square Garden Entertainment is slated to report second-quarter 2024 results on Aug 16. The Zacks Consensus Estimate for MSGE's loss per share is pegged at 57 cents, which has remained unchanged over the past 30 days.

To read this article on Zacks.com click here.