News Corp, the global media and information services conglomerate, has continued its strategic transformation, delivering strong profitability in the face of macroeconomic headwinds. The company's fiscal third quarter results for 2024 demonstrate its ability to adapt and thrive in the rapidly evolving digital landscape.
Financials
For the full fiscal year 2023, News Corp reported annual net income of $149 million, annual revenue of $9.879 billion, annual operating cash flow of $1.092 billion, and annual free cash flow of $593 million. These robust financial metrics underscore the company's resilience and its successful execution of strategic initiatives.
In the third quarter of fiscal 2024, News Corp's total revenues reached $2.423 billion, a slight decrease of 1% compared to the prior-year period. This was primarily due to declines in the News Media and Subscription Video Services segments, partially offset by growth in the Digital Real Estate Services and Dow Jones segments. Net income for the quarter was $42 million, compared to $59 million in the same period last year.
Segment Performance
Digital Real Estate Services:
The Digital Real Estate Services segment, which includes the company's 61.4% stake in REA Group and 80% interest in Move, delivered strong performance. Revenues in this segment increased 7% to $388 million, driven by a 15% surge in revenues at REA Group, which benefited from higher Australian residential revenues and increased depth penetration. However, Move's revenues declined 6% due to the continued impact of the macroeconomic environment on the U.S. housing market.Subscription Video Services:
The Subscription Video Services segment, which encompasses the Foxtel Group and Australian News Channel, saw revenues decrease 5% to $455 million, primarily due to the negative impact of foreign currency fluctuations and lower residential subscription revenues, partially offset by higher streaming revenues.Dow Jones:
Dow Jones, the company's news and information services segment, reported a 3% increase in revenues to $544 million, driven by strong growth in the professional information business, including a 15% rise in revenues at Dow Jones Risk & Compliance and Dow Jones Energy. Digital revenues at Dow Jones accounted for 81% of total revenues in the quarter, up from 79% in the prior-year period.Book Publishing:
The Book Publishing segment, led by HarperCollins, saw revenues decline 2% to $506 million, as lower physical book sales were partially offset by improved returns in the U.S. and higher digital book sales. Segment EBITDA, however, increased 2% to $62 million, reflecting improved margins.News Media:
The News Media segment, which includes News Corp Australia, News UK, and the New York Post, experienced a 6% decrease in revenues to $530 million, primarily due to lower advertising revenues, particularly in Australia. The segment's Segment EBITDA declined 24% to $26 million, as the lower revenues were only partially offset by cost savings.Outlook
Looking ahead, the company provided the following guidance for the fourth quarter and full fiscal year 2024:
- Digital Real Estate Services: Expects continued moderation in revenue declines at Move, with ongoing reinvestment in marketing and product development. - Subscription Video Services: Anticipates modestly higher expenses for the full year and some softness in streaming revenues. - Dow Jones: Expects strong revenue and profitability performance for the full year, driven by the professional information business, but with modestly higher overall expenses. - Book Publishing: Expects overall industry revenue trends to remain relatively stable, with strong performance expected in the fourth quarter. - News Media: Expects advertising revenue trends to remain challenging, particularly in Australia, with a continued focus on cost efficiencies.
Conclusion
News Corp's transformation into a more digitally-focused, diversified media and information services company is evident in its financial results. The company's strategic initiatives, such as the expansion of its professional information businesses, the growth of its digital real estate platforms, and the ongoing optimization of its media assets, have positioned it well to navigate the evolving media landscape.
Liquidity
The company's strong liquidity position, with $1.943 billion in cash and cash equivalents as of March 31, 2024, provides it with the financial flexibility to continue investing in growth opportunities and pursuing strategic initiatives. News Corp's commitment to cost management and operational efficiency has also been a key driver of its improved profitability.
Overall, News Corp's third-quarter results demonstrate its ability to adapt and thrive in the digital age. The company's diversified business model, focus on high-growth segments, and disciplined approach to capital allocation have positioned it for continued success in the years ahead.