News Corporation (NYSE: NWS, NWSA)

News Corporation's third quarter results for fiscal 2025 demonstrated continued progress in the company's strategic transformation. Total revenue increased 1% year-over-year to $2.01 billion, primarily driven by higher circulation and subscription revenues at the Dow Jones segment, higher Australian residential revenues at REA Group, and higher book sales at the Book Publishing segment. The growth was partly offset by lower revenues at the News Media segment and a $32 million negative impact from foreign currency fluctuations. When excluding foreign currency impacts, acquisitions and divestitures, Adjusted Revenues increased 2%.

Net income from continuing operations for the quarter was $107 million, a significant 67% increase compared to $64 million in the prior year. This improvement was primarily driven by higher Total Segment EBITDA and lower impairment and restructuring charges, partially offset by higher income tax expense. Net income attributable to News Corporation stockholders reached $103 million, compared to $30 million in the prior year.

The company reported third quarter Total Segment EBITDA of $290 million, representing a 12% increase compared to $259 million in the prior year. This growth was primarily due to strong contributions from the Digital Real Estate Services and Dow Jones segments. On an adjusted basis excluding the impact of foreign currency fluctuations and other items, Total Segment EBITDA increased by 15%.

Earnings per share (EPS) showed significant improvement, with reported EPS from continuing operations doubling to $0.14 compared to $0.07 in the prior year. Adjusted EPS, which excludes certain non-operational items, increased to $0.17 from $0.13 in the prior year, representing a 31% improvement.

For the nine months ended March 31, 2025, free cash flow was $539 million, compared to $475 million in the prior year, an improvement of 13%. This increase was primarily due to higher cash provided by operating activities from continuing operations, which reached $789 million for the nine-month period.

Dow Jones was a highlight of the quarter, with revenues increasing 6% to $575 million, driven by higher circulation and subscription revenues from digital circulation and continued growth in the professional information business. Digital revenues at Dow Jones represented 82% of total revenues, up from 81% in the prior year. Segment EBITDA increased 12% to $132 million, primarily due to revenue growth, partially offset by higher employee, technology, and marketing costs.

Circulation and subscription revenues for Dow Jones increased 7%, reflecting a 6% increase in professional information business revenues, led by 11% growth in Risk & Compliance revenues to $84 million and 10% growth in Dow Jones Energy revenues to $69 million. During the third quarter, total average subscriptions to Dow Jones' consumer products were 6.1 million, a 7% increase compared to the prior year, with digital-only subscriptions growing 9% to over 5.5 million.

Digital Real Estate Services saw revenues increase 5% to $406 million, driven by higher revenues at REA Group, while Move revenues increased for the second consecutive quarter. Segment EBITDA increased 19% to $124 million, due to higher contribution from REA Group and improved results at Move. REA Group revenues increased 6% to $271 million, driven by higher Australian residential revenues due to price increases and increased depth penetration. Move's revenues increased 2% to $135 million, primarily from revenue growth in seller, new homes, and rentals segments.

Book Publishing reported revenues of $514 million, a 2% increase compared to the prior year, driven by higher book sales and the impact from a recently closed German book publisher acquisition. Digital sales increased 3% compared to the prior year, driven by growth from audiobook sales, including the contribution from Spotify. Digital sales represented 25% of Consumer revenues for the quarter, while backlist sales represented approximately 65% of Consumer revenues. Segment EBITDA increased 3% to $64 million.

News Media segment saw revenues decrease 8% to $514 million, primarily driven by lower advertising revenues and lower revenues from the transfer of third-party printing revenue contracts to News UK's joint venture with DMG Media. Despite the revenue decline, Segment EBITDA increased 22% to $33 million, driven by cost savings initiatives, including lower Talk costs, and the combination of News UK's printing operations with those of DMG Media. Digital revenues represented 39% of News Media segment revenues in the quarter, compared to 37% in the prior year.

Dow Jones demonstrated strong performance in the third quarter, continuing its position as a key growth driver for News Corporation:

Digital Transformation

• Digital Revenue Share: Digital revenues represented 82% of total Dow Jones revenues in the quarter, up from 81% in the prior year
• Digital Circulation: Digital circulation revenues accounted for 75% of circulation revenues for the quarter, compared to 70% in the prior year
• Digital Advertising: Digital advertising accounted for 63% of total advertising revenues in the quarter

Subscription Growth

• Total Consumer Subscriptions: 6.1 million total average subscriptions, a 7% increase compared to the prior year
• Digital-Only Subscriptions: Over 5.5 million digital-only subscriptions, a 9% increase compared to the prior year
• The Wall Street Journal: Over 4.3 million total subscriptions, with digital-only subscriptions growing 5% to over 3.9 million, representing 90% of total WSJ subscriptions
• Barron's Group: Digital-only subscriptions grew 12% to 1.4 million

Professional Information Business

• Risk & Compliance: Revenues grew 11% to $84 million, reflecting continued demand for risk and compliance solutions
• Dow Jones Energy: Revenues increased 10% to $69 million, demonstrating strong market position in energy information services
• Strategic Acquisitions: Completed the acquisition of Oxford Analytica and Dragonfly Intelligence to enhance professional information offerings

The strong performance of Dow Jones underscores the company's successful subscription-led strategy and growing professional information business. The business continues to benefit from high subscription renewal rates, pricing power, and increasing adoption of its professional information services.

The Digital Real Estate Services segment delivered solid performance in the third quarter, contributing significantly to the company's overall growth:

REA Group Performance

• Revenue Growth: Revenues increased 6% to $271 million, driven by higher Australian residential revenues
• Australian Residential: Higher revenues due to price increases and increased depth penetration
• Market Conditions: Australian national residential buy listing volumes were flat compared to the prior year, with listings in Sydney up 4% and Melbourne down 3%
• REA India: Continued growth in the Indian market, contributing to overall revenue growth

Move Performance

• Revenue Growth: Revenues increased 2% to $135 million for the second consecutive quarter of growth
• Growth Drivers: Revenue growth in seller, new homes, and rentals segments, including the partnership with Zillow
• User Metrics: Average monthly unique users of Realtor.com® decreased 8% to 66 million
• Lead Generation: Lead volume was down 17% year-over-year due to continued impact of high mortgage rates and affordability issues, partly offset by higher revenue per lead

Despite challenging market conditions in some areas, particularly related to high mortgage rates and housing affordability issues, the Digital Real Estate Services segment continues to demonstrate resilience through pricing power, product innovation, and strategic partnerships. The segment's focus on premium offerings and value-added services has helped offset volume challenges in certain markets.

News Corporation continued to execute on its strategic priorities during the third quarter, with a significant milestone being the completion of the Foxtel sale:

Foxtel Transaction

• Completion: Completed the sale of Foxtel Group to DAZN on April 2, 2025
• Financial Impact: Received repayment of outstanding shareholder loans with News Corp (A$592 million) in full in cash at closing
• Equity Stake: Received a minority equity interest in DAZN of approximately 6% and holds one seat on its Board of Directors
• Strategic Benefits: Transaction significantly strengthened the balance sheet, is expected to increase return on invested capital, and be accretive to earnings per share

Digital Transformation

• Digital Revenue Focus: Continued emphasis on driving digital revenue growth across all business segments
• Subscription Growth: Strong growth in digital subscriptions, particularly at Dow Jones and News Corp Australia
• Professional Information Services: Strategic investments in Dow Jones' professional information business, including recent acquisitions

Cost Discipline & Operational Efficiency

• Margin Expansion: Margins expanded in every segment, reflecting continued focus on cost management
• News UK Joint Venture: Benefits from the combination of News UK's printing operations with those of DMG Media
• Operational Streamlining: Ongoing initiatives to enhance operational efficiency and reduce costs

The completion of the Foxtel sale marks a significant milestone in News Corp's strategic transformation, allowing the company to focus on its core pillars and driving growth. The transaction not only strengthens the company's financial position but also demonstrates its commitment to maximizing shareholder value through strategic portfolio optimization.

News Corporation maintained a strong financial position in the third quarter, with solid cash flow generation and a strengthened balance sheet:

Cash Flow

• Operating Cash Flow: Net cash provided by operating activities from continuing operations reached $789 million for the nine months ended March 31, 2025, a $68 million increase from the prior year
• Free Cash Flow: $539 million for the nine months ended March 31, 2025, a 13% increase from $475 million in the prior year
• Capital Expenditures: $250 million for the nine months ended March 31, 2025, compared to $246 million in the prior year

Balance Sheet

• Cash and Cash Equivalents: $2.1 billion as of March 31, 2025, compared to $1.9 billion as of March 31, 2024
• Borrowings: Total borrowings of $1.97 billion, including current borrowings of $22 million
• Total Assets: $16.6 billion as of March 31, 2025
• Total Equity: $9.1 billion as of March 31, 2025

Foxtel Sale Impact

• Shareholder Loan Repayment: Received repayment of A$592 million in outstanding shareholder loans from Foxtel
• Balance Sheet Strengthening: The transaction significantly strengthened the company's balance sheet post-quarter close
• Discontinued Operations: Foxtel's assets and liabilities have been classified as held for sale, and its results have been classified as discontinued operations

The improvement in free cash flow was primarily due to higher cash provided by operating activities from continuing operations, reflecting the company's strong underlying performance and focus on operational efficiency. The completion of the Foxtel sale in April 2025 further strengthened the company's financial position, providing additional capital for strategic investments and potential shareholder returns.