News Corp posts first quarter earnings boost
The digital publisher has seen a rush in demand for its news sources at a time of political and economic upheaval during the COVID-19 pandemic.
News Corporation chief executive Robert Thomson is eyeing a surge in digital subscriptions for the media giant’s portfolio of businesses, from its premier US and Australian newspapers to its new Binge pay-TV service, helping to propel News’s value well beyond the sum of its parts.
Underlining the thirst for news in the current geopolitical environment shaped by COVID-19 and the subsequent economic upheaval, consumers were reaching for News Corp’s media outlets and increasingly opting for a digital subscription.
The upbeat quarterly performance and bullish outlook helped drive a rally in News Corp shares, which ended on Friday up $2.60, or 13.66 per cent, at $21.63.
The company’s Dow Jones business unveiled a record first quarter in profits and revenues, with further potential for an expansion of its audiences in the US and the rest of the world. It was matched by strong digital subscriber growth for its newspapers in the US, led by The Wall Street Journal, The Times in Britain and The Australian in Australia.
News Corp on Friday posted a 10 per cent decline in revenue in the September quarter, primarily driven by the sale of its News America Marketing division, although revenue for many other of its operational segments were higher as customers turned to its trusted news sources.
News Corp booked revenue of $US2.12bn ($2.9bn) for the first quarter to September 30, down from $US2.34bn a year earlier.
Net income of $US47m compared to a writedown-hit loss of $US211m a year earlier, which included non-cash impairment charges of $US273m. It was also up from a June quarter loss of $US401m.
Mr Thomson said the new financial year had begun strongly for the global media company, “with higher revenue in many of our segments during the first quarter, and a 21 per cent increase year-on-year in profitability”.
Mr Thomson told investors the digital landscape was changing dramatically, and that News Corp was at the forefront of that change.
“Now more than ever, we believe it is evident that News Corp has value above and beyond the sum of our parts,” Mr Thomson said. “That value should be more visible now that we have broken out the Dow Jones results, which also increases the scrutiny of our other news businesses, which are themselves in the midst of a successful transition.”
Figures for Dow Jones, which houses The Wall Street Journal, were broken out for the first time in August. In the September quarter Dow Jones EBITDA rose 47 per cent, driven by record average consumer product subscriptions of 3.88 million, led by 29 per cent growth in digital-only subscriptions.
Revenues in the quarter increased $US4m, or 1 per cent, compared to the prior year, primarily due to growth in circulation and subscription revenues, partially offset by lower print advertising revenues. Digital revenues at Dow Jones represented 73 per cent of total revenues compared to 65 per cent in the prior year.
Subscriptions to The Wall Street Journal rose 19 per cent to 3.1 million in the quarter. Digital-only subscriptions to the Journal rose 27 per cent to more than 2.35 million and represented 76 per cent of its total subscriptions.
Circulation and subscription revenues increased $US22m, or 8 per cent. Circulation revenue rose 7 per cent.
Mr Thomson said three of the company’s segments, Dow Jones, Digital Real Estate Services and Book Publishing, reported year-over-year EBITDA increases of at least 45 per cent.
New Corp reported strong digital subscriber growth at its newspapers. It said digital subscribers at News Corp Australia’s mastheads as of September 30 totalled 685,200, from 542,400 in the prior year, a 26 per cent gain. Across its news media division, circulation and subscription revenues increased $1m, primarily due to digital subscriber growth, a $10m, or 4 per cent, positive impact from foreign currency fluctuations, and price increases.
The real estate operations made up of REA Group and Move booked revenue of $US290m for the quarter, up 7 per cent.
News Corp’s total segment EBITDA was $US268m compared to $US221m in the prior year largely due to solid growth across most of its divisions.
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