News Corp has posted a 23 per cent increase in total revenue for the first quarter to $US2.52 billion, up from $US2.06 billion in the corresponding period last year, with strong paid digital subscriber growth at The Wall Street Journal, The Times and Sunday Times and The Australian a highlight.
Digital subscribers now account for more than half of the group’s total subscriber base.
News Corp chief executive Robert Thomson said growth in revenue and earnings reaffirmed the company’s strategy to focus on digital development, and to put particular emphasis on subscriptions, as the advertising market continues to evolve.
The first-quarter growth reflects the impact from the consolidation of Foxtel’s results following the combination of Foxtel and Fox Sports Australia into a new company and continued strong performances at the Digital Real Estate Services and Book Publishing segments.
This growth was partially offset by lower print advertising revenues at the News and Information Services segment. The results also include the $US48 million benefit related to News UK’s exit of the gaming partnership with Tabcorp for Sun Bets, a $US49 million negative impact from foreign currency fluctuations and $17 million of lower revenues as a result of the adoption of the new revenue recognition standard.
Total profit was up 44 per cent to $US358 million.
Mr Thomson said the News and Information Services segment showed good progress, with digital paid subscriptions rising at many of the group’s mastheads.
“Dow Jones is well advanced in its digital transformation, with nearly 65 per cent of The Wall Street Journal subscribers digital-only. That growth is complemented by the Professional Information Business, which allows us to sell higher value-added products across the WSJ subscriber base,” he said.
“HarperCollins again demonstrated that unique, compelling content can be monetised successfully across different platforms and markets, posting another quarter of robust profit growth. We are enhancing the new Foxtel, having already launched a dedicated Fox Cricket channel, begun the rollout of 4K, and done advanced work on a sports-only IP offering. The Foxtel leadership team has also been transformed in recent months.”
Total News and Information Services revenues in the quarter increased $US7 million, or 1 per cent, as compared to the prior year. Within the segment, News UK and Dow Jones revenues grew 12 per cent and 3 per cent, respectively, while revenues at News Corp Australia and News America Marketing declined 7 per cent and 6 per cent, respectively.
Adjusted revenues for the segment increased 3 per cent compared to the prior year. Advertising revenues declined 7 per cent compared to the prior year, of which $US15 million, or 2 per cent, was related to the negative impact from foreign currency fluctuations.
The decline was driven by weakness in the print advertising market, mainly in Australia and the UK and lower revenues at News America Marketing, partially offset by a modest increase in digital advertising revenues.
Advertising revenues at Dow Jones, excluding the impact from the cessation of The Wall Street Journal international print editions, were relatively flat in the quarter.
In the Digital Real Estate Services, revenues increased $US22 million, or 8 per cent, compared to the prior year, of which foreign currency fluctuations had a negative impact on growth of $US14 million, or 5 per cent. The growth was primarily due to the continued growth at REA Group in Australia and Move.
REA Group revenues increased 9 per cent to $US173 million from $US158 million in the prior year, primarily due to an increase in Australian residential depth revenue, driven by favourable product mix and pricing increases, as well as the acquisitions of Smartline and Hometrack Australia. The growth was partially offset by foreign currency fluctuations.
Revenues in Book Publishing increased $US17 million, or 4 per cent, compared to the prior year, primarily due to higher sales in General, Children’s and Christian publishing, including the success of front-list titles such as Girl Wash Your Face by Rachel Hollis, The Other Woman by Daniel Silva and The Russia Hoax by Gregg Jarrett, and the continued strength of backlist titles.
Revenues in Subscription Video Services increased $US420 million, with profit up by $US86 million, compared to the prior year, primarily due to the inclusion of Foxtel.
News’ sister company, 21st Century Fox, had an increase in profits but the company’s cable-network business reported weaker-than-expected sales.
Overall, 21st Century Fox earned $US1.29 billion, or 69 cents a share, in the quarter, compared with $US855 million, or 46 cents a share, a year earlier. Revenue increased almost 3 per cent to $US7.17 billion.
The company’s cable business, which includes Fox News and Fox Sports 1, booked $US4.35 billion in revenue in the quarter, up about 4 per cent from a year ago.