News Corp third-quarter revenue resilient in face of economic pressures

Despite rising interest rates and persistent inflation pressures, the global media company’s subscription revenue has grown.

News Corp chief executive officer Robert Thomson. Picture: Jonathan Ng

News Corp has reported steady third-quarter revenue in the face of headwinds from rising interest rates, persistent inflation and ongoing supply chain disruption, while progressing its digital transformation.

Accounting for foreign exchangevolatility, News Corp’s total third-quarter revenue edged down 2 per cent to $US2.45bn, compared to $US2.49bn in the prior year.

On a constant currency basis, revenue rose 2 per cent to $US2.55bn in the quarter.

The media company’s chief executive Robert Thomson said the results “demonstrated the fundamental differences in the character of News Corp compared with other media companies”.

“In a period in which advertising was clearly insipid in certain parts of the world, our core non-advertising revenue has been particularly robust, highlighted by a 38 per cent increase in revenues at the Dow Jones professional information business,” he said.

“Overall, our fiscal third-quarter results demonstrated meaningful progress compared to the first half, with various macro and sectoral trends decidedly more positive.”

Net income in the quarter was $US59m, down from $US104m in the prior year, while EBITDA in the quarter was $US320m, down from $US358m in the prior year.

Total circulation and subscription revenue reached $US3.32bn, up from $US3.25bn.

Foxtel Group recorded 4.6 million subscribers – up 3 per cent on the prior corresponding period and streaming subscribers at Kayo Sports, BINGE and Foxtel Now exceeded 3 million. Mr Thomson said broadcast churn was at a record-low level in March of under 10 per cent.

“That success is also a tribute to our marketing and customer service teams at Foxtel and to the leadership of Patrick Delany and Siobhan McKenna,” he said.

“At the end of March, BINGE, our entertainment streaming product launched advertising on its basic service, adding a new, lucrative revenue stream.”

Mr Thomson said HarperCollins had also experienced improved trends and adjusted revenues were up 2 per cent.

“After a couple of tough quarters fortunes have certainly improved at HarperCollins, with a bevy of bestsellers and some moderation of supply chain snafus,” he said.

“Amazon’s orders improved in a quarter and our titles prospered.”

He said the company’s digital real estate arm including realestate.com.au had experienced positive movements despite pressures on the Australian housing market.

“We are seeing encouraging signs with realestate.com.au reaching almost 132 million visits in March, the highest total in 16 months and the fifth highest on record,” Mr Thomson said.

“With indications that prices and demand are again strengthening in Australia, we believe we are poised to prosper.”

The company’s chief financial officer, Susan Panuccio, said the News Media’s revenues were $US560m, down 3 per cent and were impacted by foreign currency fluctuations.

“Growth on a constant currency basis was driven by cover price increases in the UK and Australia and double-digit digital subscriber across News Australia and (UK) The Times and The Sunday Times,” she said.

“Advertising trends improved this quarter as advertising revenues were down 5 per cent but gained 2 per cent in constant currency.

“Notably both Australia and the New York Post benefited from an improvement in print advertising this quarter.

“Newsprint costs remain a challenge.”

Ms Panuccio said the fiscal challenges ahead included “supply chain and inflationary pressures and advertising conditions remain uncertain”.

Mr Thomson also noted the impacts of generative artificial intelligence and said, “there’s no doubt it will profoundly affect the media business”.

Mr Thomson also highlighted that it was the 44th day in captivity for Wall Street Journal journalist Evan Gershkovich who he said, “has been wrongfully, wilfully detained in Russia”. “We trust that justice and common sense will prevail and that Evan will soon be released.”

News Corp is publisher of The Australian.