News Corp profit, revenue hit fresh record

Powerful performances in news media and real estate, and Foxtel’s ongoing renaissance drove annual revenue to a new high.

News Corp chief executive Robert Thomson.

News Corp registered record revenue and profitability in the past financial year, underpinned by powerful performances in the company’s news media segment, its real estate arm, and Foxtel’s ongoing renaissance.

The media giant’s revenues of $US10.39bn ($14.9bn) in the 2022 financial year represents year-on-year growth of 11 per cent, while the full-year EBITDA of $US1.67bn is a 31 per cent jump on the figure posted in 2020-21.

Dow Jones achieved its highest full-year revenues and segment EBITDA since its acquisition by News Corp, driven by key acquisitions such as OPIS and Chemical Market Analytics, a surge in digital-only subscriptions, rebounding advertising revenues and strong growth in risk and compliance products.

Revenues for the company’s digital real estate services also grew 25 per cent in the year.

Reporting the financial results for both the fourth quarter and the overall financial year on Tuesday morning (AEST), News Corp chief executive Robert Thomson said: “Our provenance and principles endure at News Corporation but the business has been fundamentally transformed – we are vastly more profitable and have created a potent platform for even greater growth, to the benefit of all our investors and other stakeholders.”

“The successful journey of our media properties is unlike any in the world, as has been the principled pursuit of changed terms of trade with the big digital players – we believe the profoundly positive commercial and social impact of those changes will be felt for many years to come,” he said.

The 2022 financial year saw outstanding returns by the company’s news media segment, which includes its newspaper and digital news assets.

“The news media segment was the single largest contributor to the enhanced profit picture this fiscal year with profitability expanding to $US217m from $US52m, bolstered by growth in digital advertising revenues and record digital subscriber numbers,” Mr Thomson said.

“Let’s be candid, this spectacular result came as many other newspaper companies around the world struggled, and is a true tribute to the efforts of our executives and teams in Australia, the UK and the US.

“News Corp Australia, under Michael Miller and his team, increased its profit contribution by $109m, its highest since separation, as digital subscribers to News Corp Australia properties rose by 12 per cent to 964,000 and advertising revenues remain robust.”

News Corp is the publisher of The Australian.

Mr Thomson praised the performance of Australian streaming-led sports and entertainment service Foxtel, which continues its impressive trajectory with the success of leading platforms Kayo (sports) and BINGE (entertainment).

“Foxtel’s renaissance continued, as streaming revenues from Kayo and BINGE offset broadcast declines during the year. While down slightly for the year due to currency fluctuations, both revenue and profitability were markedly higher on an adjusted basis,” Mr Thomson said.

“The Foxtel Group is a company transformed, and one generating record metrics.

Total streaming subscribers at end of fiscal year soared 31 per cent from a year ago to 2.8 million, while broadcast churn fell to 13.8 per cent in the fourth quarter, sharply lower than the prior year.

“Our sports streaming service, Kayo, is particularly successful, with ARPU (average revenue per user) rising, partially attributable to the recent price increase, and given the quality of our team’s productions and the quantity of quality sports.”

During Tuesday morning’s News Corp investor briefing, the company’s chief financial officer Susan Panuccio noted that streaming revenues accounted for 23 per cent of circulation and subscription revenues, versus 16 per cent in the prior year.

“We believe this is a key inflection point for the business and has helped underpin the recent stability in Foxtel Group’s revenue,” she said.

Total Foxtel Group subscribers increased to 4.529 million (4.413 million paid), a record high, up 13 per cent on the previous year.

Ms Panuccio also highlighted the returns driven by the news media segment.

“We again saw a very strong performance in advertising as well as continued growth in circulation and subscription revenues, which was driven by the contribution from our recent content licensing deals, higher fourth-quarter digital subscriptions and cover price rises,” Ms Panuccio said.

“Digital revenues continue to expand, increasing to 35 per cent of segment revenues from 32 per cent, primarily driven by the strength of digital advertising which we expect will soon be the largest source of the segment’s advertising revenues.

“Within the segment, revenues at News Corp Australia increased 6 per cent and revenues at News UK were flat, as both were materially impacted by currency headwinds. The New York Post also continued to show strong top-line growth, up 23 per cent.”

But Ms Panuccio also sounded a warning about the economic obstacles facing the company in the upcoming quarter.

“We expect cost impacts from continued supply chain and inflationary pressures, together with wage inflation challenges to continue,” she said.

“We will take necessary action to address those pressures, including pricing adjustments, together with our ongoing focus on cost management.

“Visibility on advertising remains limited across the businesses and we continue to expect foreign exchange headwinds, given the current spot rates for the Australian dollar and pound sterling compared to the prior year.”