News Corp Reports Unexpected Net Income of $23 Million for Q3 FY2019

Digital-only subscribers for The Wall Street Journal grew 19% to 1.8 million.

Source: News Corp

Last week, News Corp reported unexpected results for the third quarter of its fiscal year 2019 for the period ended March 31, 2019. The Rupert Murdoch-controlled company reported net income of $23 million, compared to a net loss of $1.1 billion for the same period last year. Earnings per share were $0.02, compared to ($1.94) year-over-year. The company also reported total revenue of $2.46 billion, a 17% increase over the prior year. New Corp attributed the strong results to the consolidation of Foxtel and strength of its book publishing business segment.

News Corp reaped rewards from our digital strategy this quarter, underscored by a robust rise in digital subscriptions across our media properties, a sharp increase in digital audio book sales and continued expansion at our digital real estate businesses despite volatile conditions in property markets, said Robert Thomson, CEO, in a May 9 news release.

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The Journal is the most trusted masthead in America and that value can be seen its results in this quarter, with paid digital-only subscribers of the Journal growing to nearly $1.8 million, reflecting 19% growth. In total, 68% of subscribers are now digital-only, Thomson said on the earnings call. Equally as significant, in the last quarter, about 55% of circulation revenues of Dow Jones were digital, and we believe there is undoubted potential for future growth. In addition to the Journal, other noteworthy Dow Jones properties include Barrons and MarketWatch.

MarketWatch expanded its audience by 13% in the first nine months of the fiscal year, and Barrons subscribers grew more than 20% during the quarter. News UK also reported some gains in digital subscriber growth. The Times and The Sunday Times, for example, had digital subscriber growth of 24%.

Other highlights for the quarter include:

  • Total segment EBITDA was $247 million, compared to $181 million in the same period last year.
  • The Wall Street Journal had a 19% increase in digital paid subscriptions, bringing the total number of subscribers to 1.8 million.
  • In April, Realtor.com had a record audience of 69.4 million unique monthly visitors and 209 million visits.
  • Book publishing revenue increased $23 million, or 6%, primarily due to higher sales in Christian publishing and new titles including Girl, Stop Apologizing (Rachel Hollis) and We are the Gardeners (Joanna Gaines).
  • HarperCollins had a 29% increase in profitability, driven by 30% revenue growth in digital audio books and additional revenue from the publishers backlist of titles and new releases.
  • The book publishing segment exceeded Wall Street analyst predictions of $414 million by $7 million, reported Reuters.
  • New Foxtel expanded its over-the-top streaming services with 714,000 total paying subscribers, including Kayo Sports and Foxtel now, representing 80% growth since the beginning of 2019.

Total revenue for the period breaks down as follows:

Revenue Segment

(in millions)

News and Information Services

$1,224

Subscription Video Services

539

Book Publishing

421

Digital Real Estate Services

272

Other

1

Total

$2,457

Despite better than expected profitability, News Corp investors were not overly impressed. On May 9, when earnings were released, News Corp Class B stock (NASDAQ: NWS) was valued at $11.66 per share. As of 4:55 p.m. EDT yesterday, stock was valued at $11.58 per share.

Source: Google

Insider Take:

News Corp is mixing things up a bit, diversifying its lines of business to include more subscription products, over-the-top subscription services, exclusive events, book publishing, news and financial products, real estate services and more. By diversifying, News Corp can rely less on previous forms of revenue, including advertising, which have proven unreliable in a digital world and more on those with higher margins.