News Corporation’s third quarter results have revealed the news and information services segment has grown 2 per cent on the back of strong digital growth, while group revenues have bumped up 6 per cent to $US2.10 billion. The news and information services grew to $US23 million compared to the prior year. The European market drove...
The news and information services grew to $US23 million compared to the prior year. The European market drove growth, with News UK increasing revenues by 10 per cent and Dow Jones adding 4 per cent.
The group’s total revenue gains was driven by the digital real estate services segment, with revenue growth of 27 per cent. Net losses amounted to $US1.1 billion, primarily due to non-cash write-downs of $US998 million.
News Corp Australia experienced a 3 per cent drop in revenues, despite digital subscribers to the mastheads lifting 75,600 to 409,000 as of March 31, 2018.
Digital accounted for 29 per cent of the segment’s total revenues, growing 5 per cent in the quarter, on the back of substantial subscriber growth. Circulation and subscription revenues also grew 7 per cent.
News Corp chief executive Robert Thomson was pleased with the growth.
“At our mastheads, digital audience expanded at a time when premium news has become more important to readers and advertisers. The Wall Street Journal, The Times and Sunday Times, and The Australian reported average growth in digital subscriptions of more than 20 per cent for the quarter, a testament to the success of their digital transformation.”
Modest digital advertising revenues at News Corp Australia and Dow Jones and a slight increase in advertising revenues at News UK were unable to offset a decline in total advertising revenues of 3 per cent. Weak print advertising returns in Australia and the US, lower revenues at News America Marketing and the last quarter decision to cease printing international print editions The Wall Street Journal attributed to the fall.
The news and information services segment’s adjusted revenues were down 2 per cent. Segment EBITDA declined $US38 million (31 per cent) compared to the prior year, primarily due to high costs at News UK.
REA Group, of which News is the major shareholder, booked a 19 per cent jump in third-quarter revenue to $186 million. For the nine months to March 31, REA posted revenue of $592 million, and earnings before interest, tax, depreciation and amortisation of $345 million. The group, the operator of realestate.com.au, said its financial services business, which commenced in the first half, remains on track to achieve full-year revenue and earnings guidance.
Book publishing also had a positive impact on the quarter’s revenues increasing by $US24 million (6 per cent) compared to the prior year.
The Australian market greatly impacted the cable network programming segment. Despite growth of 6 per cent ($US7 million) attributed to higher affiliate revenues at Fox Sports Australia and Australian News Channel and foreign currency fluctuations, segment EBITDA dropped 53 per cent ($US18 million) due to Fox Sports Australia programming timing and costs.
Foxtel received a $US957 million non-cash write-down, with the business’ EBITDA decreasing 24 per cent due to lower revenues.
News Corp’s sister company, 21st Century Fox, posted mixed fiscal third-quarter results, missing Wall Street’s income projections but exceeding its revenue target. Strong growth in the cable division was not enough to offset shrinking TV network advertising revenue, according to Fox, which is in the process of selling its film and TV assets to Disney for $US52.4 billion.
The company’s operating income before depreciation and amortisation fell by 2 per cent, in part because of a $US60 million charge stemming from higher employee compensation costs related to the Disney sale. Revenue in the television segment fell 32 per cent from the same quarter a year before, when Fox carried the Super Bowl. In all, Fox recorded a fiscal third-quarter profit of $US858 million, or 46 cents a share, compared with $US799 million, or 43 cents a share, a year earlier.