News Corp reports US$2.59b quarterly revenue on the back of booming digital business

Rupert Murdoch’s mass media and publishing company News Corporation (ASX: NWS) has unveiled revenue totalling US$2.59 billion for the three months to end December 2023.

The figure represents a 3% increase on the US$2.52b in revenue recorded for the previous corresponding period and has been attributed to booming growth within the group’s core Digital Real Estate Services, Dow Jones and Book Publishing businesses.

Digital Real Estate Services (which houses Real Estate Australia Group) posted a 22% increase in revenues for the quarter to $292 million, primarily due to higher Australian residential revenues as a result of price increases, better depth penetration, favorable geographic mix and an increase in national listings, as well as an increase from financial services.

The increase was slightly offset by a $3m (or 1%) negative impact from foreign currency fluctuations.

National residential buy listing volumes in the quarter increased 8% compared to the prior year, with listings in Sydney and Melbourne up 22% and 24% respectively.

Dow Jones achieved its highest quarterly revenues and segment earnings before interest, taxes, depreciation and amortisation (EBITDA) since it was acquired by News Corp in 2007.

This is reported to have been driven by strength in professional information business revenues, which rose 13% on the previous corresponding period.

Book Publishing revenues grew 4% while segment EBITDA increased 67% on the back of higher digital sales, strong audiobooks performance and improved return rates.

Net income

News Corp’s net income for the December quarter was US$183m, representing a 95% increase on the previous period and driven by higher total segment EBITDA and improved equity losses of affiliate companies.

These impacts were partially offset by higher income tax expenses.

The group’s EBITDA rose by 16% to US$473m due to higher revenues, lower costs in its book publishing business and a 5% reduction in the group’s headcount.

The increase was partly offset by higher costs for sports programming rights within the subscription video services segment.

Adjusted total segment EBITDA increased 14%.

Net cash from operating activities during the period was $305m, an increase of $144m on the previous year and due mainly to higher total segment EBITDA, lower working capital and lower tax payments, partially offset by higher restructuring payments.

Foxtel revenues

News Corp subsidiary Foxtel Group reported revenues of $470m for the quarter, representing an increase of 2% (or $8m) on the previous corresponding period and driven by higher revenues from streaming services Kayo and Binge.

Foxtel’s streaming revenues represented approximately 29% of total circulation and subscription revenues, compared to 26% in the previous period.

At quarter-end, Foxtel’s paid subscriber volumes had fallen by 6% to 4.3m, while over 250,000 Kayo Sports customers cancelled or paused their subscriptions, which the group put down to a “more difficult summer sports season” alongside inflationary pressures.

Adjusted segment EBITDA of $77m was 14% (or $13m) down on the previous period due in part to the upcoming launch of streaming app Hubbl.

The app is designed to house paid and free entertainment channels within a unified user interface, eliminating the need for customers to switch between multiple streaming services to find content.

New options

News Corp chief executive Robert Thomson said the group had benefited from a shift to new options in place of “volatile” advertising revenues.

“We have seen a growth in 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,” he said.

“We had particularly robust results across the three core pillars of our business and we believe there are strong prospects for further growth as difficult macro conditions ease in some of our markets.”

AI provider

Mr Thomson said News Corp aimed to be paid for its premium content when it is used to train artificial intelligence (AI) companies.

“We expect to be a core content provider for generative AI companies who need the highest quality and timely content to ensure the relevance and accuracy of their products,” he said.

“We patently prefer negotiation to litigation, courtship to courtrooms… in my view, those who repurpose without approval are stealing and are undermining the very act of creativity – counterfeiting is not creating and the AI world is replete with content counterfeiters.”