News Corp profit surges 95pc as revenues rises to $US2.59bn

Chief executive Robert Thomson outlined a ‘sterling start in fiscal year 2024’, while detailing the media company’s approach to artificial intelligence.

News Corp chief executive Robert Thomson.

News Corporation’s net income has near doubled in the second quarter, driven largely by the company’s focus on digital and subscription revenues.

The media company reported a 95 per cent increase to its net income for the quarter to $US183m ($280m), up from $US94m for the same quarter in the previous year.

Its second-quarter revenues lifted 3 per cent to $US2.59bn and EBITDA rose to $US473m, from $US409m in the prior year.

News Corp’s chief executive Robert Thomson said the company is “off to a sterling start in fiscal year 2024”, with digital revenue comprising 52 per cent of the total.

“News Corp again saw growth in both revenue and profitability this quarter as we continue to realise the collective benefit of our strategic shift to digital and subscription revenues, and away from sometimes volatile advertising revenues,” Mr Thomson said.

“We had particularly robust results across the three core pillars of our business – Dow Jones, book publishing and digital real estate services – and believe there are strong prospects for further growth as difficult macro conditions ease in some of our markets.”

The company’s shares jumped 10 per cent to a record high of $43.10 after its results beat market estimates. By lunchtime they were up 5.6 per cent to $41.56.

News Corp is publisher of The Australian.

Mr Thomson also spoke about the role of artificial intelligence and its impact on the media industry, saying “crucial negotiations are at an advanced stage.”

“It is reassuring that certain digital companies appreciate the value of integrity, quality and creativity, and while certain other media companies prefer litigation, we prefer consultation, as the former is merely creating a gold rush for lawyers,” he said.

“Courtship is preferable to courtrooms – we are wooing not suing.

“But let’s be clear, in my view those who are repurposing our content without approval are stealing, they are undermining creativity – counterfeiting is not creating, and the AI world is replete with content counterfeiters.”

He also commended OpenAI chief executive officer Sam Altman for having a “clear understanding of the social importance of journalism.”

“We are hopeful that, again, News Corp will be able to set meaningful global precedents with digital companies that will assist journalists and journalism, and ensure that Gen AI is not fuelled by digital dross,” Mr Thomson said.

During the Thursday (US time) investor briefing Mr Thomson thanked News Corp chairman emeritus Rupert Murdoch and chairman Lachlan Murdoch, company directors and the employees around the world.

The quarterly results also showed streaming service revenues increased by $US8m, or 8 per cent, to $US470m, from the previous year. Foxtel’s total paid subscribers were at 4.3 million and remained stable.

Kayo’s subscribers grew from 1.136 million to 1.183 million and BINGE subscribers increased from 1.439 million to 1.503 million.

For news media, advertising revenues edged back 3 per cent ($US16m), while circulation and subscription revenues rose by $12m or 5 per cent.

Subscriptions at News Corp Australia climbed to 1.05 million at December 31, compared to 1.01 million in the prior year.

Dow Jones recorded its highest quarterly revenues and segment EBITDA since it was acquired in 2007, a result of strength in professional business revenues which increased by 13 per cent compared to the prior year.

REA Group recorded double-digital growth to quarterly revenues, which rose 22 per cent to $292m.

Book publishing revenue climbed by 4 per cent.

Chief financial officer Susan Panuccio said it was a “strong second quarter resulting in first half year-over-year improvements in both profitability and revenues.”

“We continue to transform the company and move towards higher recurring and digital revenues, together with exercising strong capital allocation discipline and balancing reinvestment across the portfolio with ongoing fixed cost reductions,” she said.