HomeMarket NewsNews Corporation (NWSA) Q3 Earnings Beat, Revenues Fall Y/Y

News Corporation (NWSA) Q3 Earnings Beat, Revenues Fall Y/Y

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News Corporation NWSA reported third-quarter fiscal 2024 earnings of 11 cents per share, which beat the Zacks Consensus Estimate by 10% and increased 22.2% year over year.

Revenues of $2.42 billion decreased 1% year over year and missed the consensus mark by 2.3%. The top line suffered due to lower advertising revenues in the News Media segment, a decline in physical book sales in the Book Publishing segment and weakness in Move because of ongoing challenging housing market conditions in the United States.

News Corporation Price, Consensus and EPS Surprise

News Corporation Price, Consensus and EPS Surprise

News Corporation price-consensus-eps-surprise-chart | News Corporation Quote

Quarterly Details

Adjusted revenues (which exclude the impact of foreign currency, acquisitions and divestitures) were flat year over year.

Total EBITDA increased 1% to $322 million, primarily due to strong contributions from REA Group and the Dow Jones segment combined with lower costs in the Book Publishing segment and gross cost savings related to the announced 5% headcount reduction initiative. The increase was largely offset by the lower revenue drivers and higher marketing costs in the Move segment.

Segment Details

Digital Real Estate Services ย 

Revenues in the Digital Real Estate Services segment increased 7% to $25 million, driven by strong performance at REA Group, partially offset by lower revenues in Move. Adjusted revenues and adjusted Segment EBITDA increased 9% and 7%, respectively.

Revenues in Move fell 6% to $132 million, mainly due to lower real estate revenues. Representing 80% of total Move revenues, real estate revenues decreased 5% year over year, owing to the continued impact of the macroeconomic environment on the housing market, including higher mortgage rates, which has led to lower lead and transaction volumes.

Based on Moveโ€™s internal data, average monthly unique users of Realtor.comโ€™s web and mobile sites remained flat year over year at 72 million. Lead volume increased 4%.

Revenues at REA Group rose 15% to $256 million, driven by higher Australian residential revenues due to price increases, improved depth penetration, a surge in national listings, strength in financial services and a favorable geographic mix. The increase was partly offset by a 5% negative impact from foreign currency fluctuations.

Australian national residential buy listing volumes in the reported quarter increased 6%, with listings in Sydney and Melbourne up 20% and 18%, respectively.

Subscription Video Services

The Subscription Video Services segmentโ€™s revenues were $455 million, down 5% year over year, primarily attributed to foreign currency fluctuations. The impact of fewer residential broadcast subscribers was offset by higher revenues from Kayo due to improvements in both volume and pricing and higher BINGE revenues attributable to an increase in pricing. Adjusted revenues were down 1% year over year.

Foxtel Group streaming subscription revenues represented approximately 29% of total circulation and subscription revenues in the fiscal third quarter compared with 26% in the prior-year quarter.

Broadcast subscriber churn in the quarter was 13.3% compared with 12.3% in the prior-year quarter, driven by a recent price increase. Broadcast ARPU increased 2% year over year to A$85 (US$56).

Dow Jones

Revenues at the Dow Jones segment increased 3% year over year to $544 million, driven by growth in circulation and subscription revenues underpinned by the professional information business. Digital revenues at Dow Jones in the quarter represented 81% of total revenues compared with 79% in the year-ago quarter. Adjusted revenues increased 3%.

Circulation and subscription revenues rose 4%, primarily driven by a 10% increase in professional information business revenues, led by 15% growth in Risk & Compliance revenues to $76 million and a jump of 15% in Dow Jones Energy revenues to $63 million.

Circulation revenues were flat year over year, as the continued growth in digital-only subscriptions, which partially benefited from an increase in bundle offers, was offset by lower print volume. Digital circulation revenues accounted for 70% of circulation revenues for the quarter compared with 69% in the year-ago quarter.

Advertising revenues decreased 2%, primarily due to an 11% decline in print advertising revenues, partly offset by 4% growth in digital advertising revenues. Digital advertising accounted for 63% of total advertising revenues compared to 59% in the prior-year quarter.

During the fiscal third quarter, total average subscriptions to Dow Jonesโ€™ consumer products were above 5.7 million, representing a 12% increase compared with the year-ago quarter. Digital-only subscriptions to Dow Jonesโ€™ consumer products grew 17%.

Total subscriptions to The Wall Street Journal grew 7% year over year to more than 4 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 8% to more than 4.2 million average subscriptions and represented 88% of its total subscriptions.

Book Publishing

The Book Publishing segment reported revenues of $506 million, which decreased 2% year over year from the prior-year quarterโ€™s level, primarily due to lower sales of physical books, partly offset by improved returns and an increase in digital book sales.

Key titles in the quarter included Blood Money by Peter Schweizer, Mostly What God Does by Savannah Guthrie and Fangirl Down by Tessa Bailey.

Digital sales rose 5% year over year, driven by strong market growth for downloadable audiobook sales, which benefited from the continued contribution from the new Spotify partnership. Digital sales represented 25% of Consumer revenues compared with 23% in the prior year. Backlist sales represented approximately 63% of Consumer revenues in the quarter compared with 60% in the prior-year quarter.

News Media

Revenues in the News Media segment fell 6% to $530 million, primarily due to lower advertising revenues. Adjusted revenues for the segment decreased 6% compared with the year-ago quarter.

Within the segment, revenues at News Corp Australia decreased 10% due to lower advertising revenues. News UK remained flat year over year as lower advertising revenues were offset by a positive impact from foreign currency fluctuations and higher circulation and subscription revenues.

Circulation and subscription revenues increased $1 million to $1.122 billion in the reported quarter, primarily due to a 1% positive impact from foreign currency fluctuations, price increases and digital subscriber growth, partially offset by lower print volumes.

Advertising revenues decreased 13% compared with the prior year, primarily due to lower print advertising at News Corp Australia and a decline in digital advertising due to a fall in traffic at some mastheads due to platform-related changes.

Digital revenues represented 38% of News Media segment revenues in the quarter compared with 36% in the prior-year quarter and represented 36% of the combined revenues of the newspaper mastheads.

As of Mar 31, 2024, The Times and Sunday Times closing digital subscribers, including the Times Literary Supplement, were 582K compared with 554K in the year-ago quarter. New York Postโ€™s digital network reached 125 million unique users in March 2024 compared with 147 million in the prior year. The Sunโ€™s digital offering reached 126 million global monthly unique users in March 2024 compared with 199 million in the prior year.

Other Financial Aspects

News Corporation ended the fiscal third quarter with cash and cash equivalents of $1.943 billion, borrowings of $2.89 billion and stockholder equity of $8.051 billion, excluding non-controlling interest of $857 million.

Zacks Rank & Stocks to Consider

NWSA currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Consumer Discretionary sector are Roblox RBLX, SharkNinja, Inc. SN and Take-Two Interactive Software TTWO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of todayโ€™s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Roblox have lost 14.6% year to date. The Zacks Consensus Estimate for RBLXโ€™s first-quarter loss per share has widened by a penny to 53 cents over the past 30 days.

Shares of SharkNinja have jumped 31% year to date. The Zacks Consensus Estimate for SNโ€™s earnings is pegged at 95 cents per share, up 4.4% over the past 30 days.

Shares of TTWO have lost 9.3% year to date. The Zacks Consensus Estimate for TTWOโ€™s earnings is pegged at 22 cents per share, which has remained unchanged over the past 30 days.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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