News Corp’s ‘robust’ start to financial year, with sale of Foxtel still on the table

News Corp shares have raced to a new record as the media giant posted its highest first quarter revenue result in over a decade.

News Corp CFO Susan Panuccio will step down from the role on January 1. Picture: Chris Pavlich

News Corp’s shares hit a record high on Friday as chief executive Robert Thomson reported the potential sale of sports and entertainment streaming giant Foxtel is progressing.

“It is true to say we are in active discussions over the future of Foxtel,” he said during a first-quarter earnings call.

Mr Thomson’s remarks follow his revelation in August that there was “third-party interest” in Foxtel, which is 65 per cent owned by News Corp (publisher of The Australian).

News Corp shares surged 2.14 per cent to a record close of $48.22 after hitting an all-time high of $49.30 in intra-day trading.

News Corp’s first quarter results, released on Friday, show Foxtel’s streaming businesses Kayo and BINGE now account for nearly 70 per cent of the company’s paid subscribers, while ARPU (average revenue per user) has continued to rise.

In announcing the results, Mr Thomson said the market undervalued News Corp.

“As for the structure of our company, we continue to examine changes to maximise our overall value for shareholders,” he said.

“We believe all who have studied the worth of our individual assets and our current share price can easily see that that price does not reflect the collective value of our businesses.

“In our view, a clear gap remains, despite the approximately 38 per cent increase in our share price over the past year.”

News Corp’s net income in the first quarter was $US144m, well up on the $US58m posted in the same period last year.

News Corp chief executive Robert Thomson. Picture: Jim Watson / AFP

Revenues of $US2.58bn – up three per cent year-on-year – were the highest first quarter result for News Corp for more than a decade, driven by growth in the company’s the digital real estate services, book publishing and Dow Jones segments.

Total segment earnings before interest tax, depreciation and amortisation (EBITDA) of $US415m compared favourably to the $US364m in the first quarter of 2023/24.

News Corp’s REA Group posted record revenues for the quarter of $US318m, a 22 per cent increase from the prior year, underpinned by the strength of the Australian residential market.

Digital revenue growth at HarperCollins lifted by 15 per cent in the quarter, largely due to the continued boom in audiobook sales, which rose 26 per cent from the same period last year.

Mr Thomson said: “There is no doubt we have begun fiscal 2025 robustly. Our profit margin rose from 14.6 per cent a year ago to 16.1 per cent, and recurring circulation and subscription revenues continued to expand, as our reliance on a sometimes volatile advertising market has declined markedly.

“That we have achieved these record first quarter results in macro-conditions which were far from auspicious tells much about the successful transformation of News Corp over the past decade.”

Mr Thomson also referenced News Corp’s delicate relationship with artificial intelligence companies, in an era of great change for the news media industry.

“The just-completed election has highlighted the importance of trusted journalism in a media maelstrom in which some journalists routinely mistake virtue signalling for virtue,” he said.

“Artificial intelligence harvests and recycles informational infelicities and so it is critical that journalistic inputs have integrity – which is why our partnership with OpenAI is so crucial and why we will certainly seek to challenge AI companies misusing and abusing our trusted journalism.

“We have indicated in the past that we would prefer to woo rather than sue artificial intelligence companies, hence the alliance with OpenAI, but we have reached the point where litigation is also essential.

“Dow Jones and the New York Post have started proceedings against the perplexing (AI search engine) Perplexity, which is selling products based on our journalism, and we are diligently preparing for further action against other companies that have ingested our archives and are synthesising our intellectual property.

“We hope that litigation will not be necessary, but we intend to defend vigorously our rights and our journalism.

“This matter is an imperative for our society and for our shareholders.”

Mr Thomson called out the conduct of advertising agencies and activist organisations who were targeting media companies to the detriment of shareholders.

“We are also oppugning the blatant biases of ad agencies and ad associations, which we believe are boycotting certain media properties solely on the basis of personal political prejudices,” he said.

“That is detrimental to companies which advertise and, obviously enough, to the shareholders of those companies, which are being denied the opportunity to optimise audience reach. The ad heavens are certainly not in equilibrium.”

Earlier on Friday, it was announced that Susan Panuccio will step down from her role as News Corp’s chief financial officer on January 1, and will be succeeded by Lavanya Chandrashekar.

Ms Panuccio has held the position since March 2017.