FISCAL 2024 FIRST QUARTER KEY FINANCIAL
HIGHLIGHTS
- First quarter revenues were $2.50 billion, a 1% increase
compared to $2.48 billion in the prior year, driven by growth at
the Book Publishing and Dow Jones segments
- Net income in the quarter was $58 million, compared to net
income of $66 million in the prior year
- First quarter Total Segment EBITDA was $364 million,
compared to $350 million in the prior year
- In the quarter, reported EPS were $0.05 as compared to $0.07
in the prior year - Adjusted EPS were $0.16 compared to $0.12 in
the prior year
- Within the Dow Jones segment, professional information
business revenues rose 14% and helped to underpin 10% Segment
EBITDA growth and the highest first quarter profit margins since
News Corp’s acquisition in 2007
- REA Group posted strong revenue growth driven by the
residential business, which benefited from a double digit yield
increase and improving listing volumes in Australia
- Book Publishing revenues grew 8%, while Segment EBITDA
increased 67%, driven by higher book sales combined with improved
returns
News Corporation (“News Corp” or the “Company”) (Nasdaq: NWS,
NWSA; ASX: NWS, NWSLV) today reported financial results for the
three months ended September 30, 2023.
Commenting on the results, Chief Executive Robert Thomson
said:
“We had a sterling start to the new Fiscal Year, with rising
revenues and increased profitability despite difficult economic
conditions in some of our markets. Our first quarter revenues were
slightly higher at $2.5 billion, while our profitability rose 4
percent, marking the second consecutive quarter of profit
growth.
Our positive performance in the quarter follows the three most
profitable years since the creation of the new News Corp. In our
view, these results certainly highlight the disparity between the
value of our company and our share price, which we believe does not
reflect our present profitability, yet alone the potential of our
incomparable, growing businesses.
The quarter particularly highlighted the prowess of Dow Jones,
led by its professional information business, where revenues surged
14 percent, driven by Risk & Compliance and Dow Jones Energy.
Book Publishing reported a 67 percent increase in profitability,
with the logistical issues at Amazon resolved, and both the
frontlist and backlist performing.
We are actively working to make the most of our premium content
for AI and are engaged in advanced discussions that we expect to
bring significant revenue to the company in return for the
authorized use of our peerless content. Our quest is to maximize
value for all investors, so we are assiduously reviewing our
structure.”
FIRST QUARTER RESULTS
The Company reported fiscal 2024 first quarter total revenues of
$2.50 billion, a 1% increase compared to $2.48 billion in the prior
year period, primarily driven by increased physical book sales and
improved returns at the Book Publishing segment resulting from the
absence of Amazon’s reset in the prior year and higher revenues at
the Dow Jones segment due to robust growth in its professional
information business. The increase was partly offset by lower
revenues at the Digital Real Estate Services segment due to
continued challenging housing market conditions in the U.S., a $14
million negative impact from foreign currency fluctuations and
lower advertising revenues at the News Media segment. Adjusted
Revenues (which excludes the foreign currency impact, acquisitions
and divestitures as defined in Note 2) were up 1% compared to the
prior year.
Net income for the quarter was $58 million, a 12% decrease
compared to net income of $66 million in the prior year, impacted
by non-cash impairment charges of $21 million at the News Media
segment related to the write- down of fixed assets associated with
the proposed combination of certain U.K. printing operations with
those of a third party, and lower Other, net. These impacts were
partially offset by higher Total Segment EBITDA, as discussed
below.
The Company reported first quarter Total Segment EBITDA of $364
million, a 4% increase compared to $350 million in the prior year
primarily due to higher revenues, as discussed above, and gross
cost savings related to the announced 5% headcount reduction
initiative. The increase was partly offset by higher sports
programming rights costs at the Subscription Video Services
segment, higher technology and employee costs at the Dow Jones
segment and higher employee costs at the Book Publishing segment.
Adjusted Total Segment EBITDA (as defined in Note 2) increased
5%.
Net income per share attributable to News Corporation
stockholders was $0.05 as compared to $0.07 in the prior year.
Adjusted EPS (as defined in Note 3) were $0.16 compared to $0.12
in the prior year.
SEGMENT REVIEW
For the three months ended
September 30,
2023
2022
% Change
(in millions)
Better/
(Worse)
Revenues:
Digital Real Estate Services
$
403
$
421
(4
)%
Subscription Video Services
486
502
(3
)%
Dow Jones
537
515
4
%
Book Publishing
525
487
8
%
News Media
548
553
(1
)%
Other
—
—
—
%
Total Revenues
$
2,499
$
2,478
1
%
Segment EBITDA:
Digital Real Estate Services
$
122
$
119
3
%
Subscription Video Services
93
111
(16
)%
Dow Jones
124
113
10
%
Book Publishing
65
39
67
%
News Media
14
18
(22
)%
Other
(54
)
(50
)
(8
)%
Total Segment EBITDA
$
364
$
350
4
%
Digital Real Estate Services
Revenues in the quarter decreased $18 million, or 4%, compared
to the prior year, reflecting an $11 million, or 2%, negative
impact from foreign currency fluctuations. Segment EBITDA in the
quarter increased $3 million, or 3%, compared to the prior year,
primarily due to higher revenues at REA Group and cost savings
initiatives at Move, which were largely offset by lower revenues at
Move and a $5 million, or 4%, negative impact from foreign currency
fluctuations. Adjusted Revenues and Adjusted Segment EBITDA (as
defined in Note 2) decreased 2% and increased 8%, respectively.
In the quarter, revenues at REA Group increased $9 million, or
4%, to $261 million, driven by higher Australian residential
revenues due to price increases, increased depth penetration and an
increase in national listings, as well as $3 million, or 25%, of
higher revenues from REA India. The increase was partly offset by
an $11 million, or 4%, negative impact from foreign currency
fluctuations and $4 million of lower financial services revenues
due to a decrease in settlement activity. Australian national
residential buy listing volumes in the quarter increased 1%
compared to the prior year, with listings in Sydney and Melbourne
up 16% and 14%, respectively.
Move’s revenues in the quarter decreased $27 million, or 16%, to
$142 million, primarily as a result of lower real estate revenues.
Real estate revenues, which represented 80% of total Move revenues,
decreased $29 million, or 20%, driven by the continued impact of
the macroeconomic environment on the housing market, including
higher mortgage rates, which has led to lower lead and transaction
volumes. Revenues from the referral model, which includes the
ReadyConnect Concierge℠ product, and the traditional lead
generation product decreased due to these factors. Based on Move’s
internal data, average monthly unique users of Realtor.com®’s web
and mobile sites for the fiscal first quarter declined 12%
year-over-year to 76 million. Lead volume declined 11%, which was
an improvement from the prior quarter.
Subscription Video Services
Revenues of $486 million in the quarter decreased $16 million,
or 3%, compared with the prior year, due to a $21 million, or 4%,
negative impact from foreign currency fluctuations. Adjusted
Revenues of $507 million increased 1% compared to the prior year.
Higher revenues from Kayo and BINGE, driven by increases in both
volume and pricing, were partially offset by the impact from fewer
residential broadcast subscribers. Foxtel Group streaming
subscription revenues represented approximately 30% of total
circulation and subscription revenues in the quarter, as compared
to 25% in the prior year.
As of September 30, 2023, Foxtel’s total closing paid
subscribers were nearly 4.6 million, a 2% increase compared to the
prior year, primarily due to the growth in streaming subscribers
driven by Kayo and BINGE, partially offset by fewer residential
broadcast subscribers. Broadcast subscriber churn in the quarter
improved to 11.4%, compared to 14.2% in the prior year. Broadcast
ARPU for the quarter increased 3% year-over-year to A$85
(US$56).
As of September 30,
2023
2022
(in 000's)
Broadcast Subscribers
Residential
1,310
1,439
Commercial
233
219
Streaming Subscribers (Total (Paid))
Kayo
1,411 (1,403 paid)
1,270 (1,259 paid)
BINGE
1,506 (1,449 paid)
1,451 (1,342 paid)
Foxtel Now
167 (161 paid)
197 (191 paid)
Total Subscribers (Total (Paid))
4,646 (4,573 paid)
4,605 (4,465 paid)
Segment EBITDA of $93 million in the quarter decreased $18
million, or 16%, compared with the prior year, which includes the
$4 million, or 3%, negative impact from foreign currency
fluctuations. Adjusted Segment EBITDA of $97 million decreased 13%
compared to the prior year, primarily due to higher sports
programming rights costs driven mainly by contractual increases
across AFL and NRL partially offset by higher revenues in constant
currency and lower employee costs.
Dow Jones
Revenues in the quarter increased $22 million, or 4%, compared
to the prior year, driven by growth in circulation and subscription
revenues led by growth in professional information business
products. Digital revenues at Dow Jones in the quarter represented
81% of total revenues compared to 79% in the prior year. Adjusted
Revenues increased 3%.
Circulation and subscription revenues increased $22 million, or
5%, including a $4 million, or 1%, positive impact from foreign
currency fluctuations. Professional information business revenues
grew 14%, primarily due to 23% growth in Risk & Compliance
revenues, driven by both financial and corporate customers, and 20%
growth in Dow Jones Energy revenues (which includes OPIS and CMA)
as a result of price increases, new products and customers and a
modest benefit from new events and one-time items. Circulation
revenues increased 1%, primarily due to the continued growth in
digital-only subscriptions, which was helped as a result of
bundling, partially offset by lower print volume. Digital
circulation revenues accounted for 70% of circulation revenues for
the quarter, compared to 68% in the prior year.
During the first quarter, total average subscriptions to Dow
Jones’ consumer products reached 5.3 million, an 8% increase
compared to the prior year. Digital-only subscriptions to Dow
Jones’ consumer products grew 12%. Total subscriptions to The Wall
Street Journal grew 6% compared to the prior year, to 4.0 million
average subscriptions in the quarter. Digital-only subscriptions to
The Wall Street Journal grew 10% to over 3.4 million average
subscriptions in the quarter, and represented 87% of total Wall
Street Journal subscriptions.
For the three months ended
September 30,
2023
2022
% Change
(in thousands, except %)
Better/(Worse)
The Wall Street Journal
Digital-only subscriptions
3,457
3,157
10 %
Total subscriptions
3,991
3,778
6 %
Barron’s Group
Digital-only subscriptions
1,055
862
22 %
Total subscriptions
1,197
1,040
15 %
Total Consumer
Digital-only subscriptions
4,611
4,099
12 %
Total subscriptions
5,308
4,922
8 %
Advertising revenues decreased $3 million, or 3%, primarily due
to 6% and 2% declines in print and digital advertising revenues,
respectively. Digital advertising accounted for 66% of total
advertising revenues in the quarter, compared to 65% in the prior
year.
Segment EBITDA for the quarter increased $11 million, or 10%,
primarily as a result of the higher revenues discussed above. The
higher revenues were partially offset by higher technology and
employee costs. Adjusted Segment EBITDA increased 9%.
Book Publishing
Revenues in the quarter increased $38 million, or 8%, compared
to the prior year, primarily driven by the increase in physical
book sales and improved returns in the U.S. resulting from the
absence of the impact of Amazon’s reset of its inventory levels and
rightsizing of its warehouse footprint in the prior year. Key
titles in the quarter included Tom Lake by Ann Patchett, Demon
Copperhead by Barbara Kingsolver and The Collector by Daniel Silva.
Adjusted Revenues increased 6%. Digital sales increased 3% compared
to the prior year. Digital sales represented 22% of Consumer
revenues for the quarter compared to 23% in the prior year.
Backlist sales represented approximately 61% of total revenues in
the quarter compared to 65% in the prior year.
Segment EBITDA for the quarter increased $26 million, or 67%,
compared to the prior year, primarily driven by the higher revenues
discussed above, lower manufacturing costs, primarily due to
product mix, and lower freight and distribution costs as supply
chain challenges and inventory and inflationary pressures have
begun to ease, partly offset by higher employee costs. Adjusted
Segment EBITDA increased 59%.
News Media
Revenues in the quarter decreased $5 million, or 1%, as compared
to the prior year, primarily driven by lower advertising revenues,
partially offset by the $7 million, or 1%, positive impact from
foreign currency fluctuations and higher circulation and
subscription revenues. Within the segment, revenues at News Corp
Australia decreased 7%, driven by a 5% negative impact from foreign
currency fluctuations and lower advertising revenues, while News UK
increased 3% driven by the 7% positive impact from foreign currency
fluctuations. Adjusted Revenues for the segment decreased 2%
compared to the prior year.
Circulation and subscription revenues increased $6 million, or
2%, compared to the prior year, primarily due to a $5 million, or
2%, positive impact from foreign currency fluctuations, price
increases and digital subscriber growth, partially offset by lower
print volumes.
Advertising revenues decreased $10 million, or 5%, compared to
the prior year, primarily due to lower print and digital
advertising at News Corp Australia, lower print advertising at News
UK and a decline in traffic at some mastheads due to platform
related changes. The decline was partially offset by a $2 million,
or 1%, positive impact from foreign currency fluctuations.
In the quarter, Segment EBITDA decreased $4 million, or 22%,
compared to the prior year, driven by lower revenues, as discussed
above, and a $1 million, or 5%, negative impact from foreign
currency fluctuations. News UK also incurred one-time costs
pertaining to the proposed combination of print operations with DMG
Media which, pending regulatory approval, is expected to provide
long-term savings. The decrease was partially offset by lower
production costs at News UK, driven by lower volume. Adjusted
Segment EBITDA decreased 17%.
Digital revenues represented 37% of News Media segment revenues
in the quarter, compared to 36% in the prior year, and represented
35% of the combined revenues of the newspaper mastheads. Digital
subscribers and users across key properties within the News Media
segment are summarized below:
- Closing digital subscribers at News Corp Australia as of
September 30, 2023 were 1,049,000 (937,000 for news mastheads),
compared to 1,012,000 (929,000 for news mastheads) in the prior
year (Source: Internal data)
- The Times and Sunday Times closing digital subscribers,
including the Times Literary Supplement, as of September 30, 2023
were 572,000, compared to 532,000 in the prior year (Source:
Internal data). The previously disclosed methodology change
resulted in a 59,000 and 64,000 increase to the closing digital
subscriber number at September 30, 2023 and 2022, respectively
- The Sun’s digital offering reached 134 million global monthly
unique users in September 2023 (Source: Meta Pixel; prior year
comparable statistic unavailable)
- New York Post’s digital network reached 127 million unique
users in September 2023, compared to 151 million in the prior year
(Source: Google Analytics)
CASH FLOW
The following table presents a reconciliation of net cash used
in operating activities to free cash flow and free cash flow
available to News Corporation:
For the three months ended
September 30,
2023
2022
(in millions)
Net cash used in operating activities
$
(55
)
$
(31
)
Less: Capital expenditures
(124
)
(104
)
Free cash flow
(179
)
(135
)
Less: REA Group free cash flow
(39
)
(37
)
Plus: Cash dividends received from REA
Group
44
50
Free cash flow available to News
Corporation
$
(174
)
$
(122
)
Net cash used in operating activities of $(55) million for the
three months ended September 30, 2023 was $24 million higher than
$(31) million in the prior year, primarily due to higher working
capital and higher restructuring payments, partially offset by
lower tax payments and higher Total Segment EBITDA, as noted
above.
Free cash flow in the three months ended September 30, 2023 was
$(179) million compared to $(135) million in the prior year. Free
cash flow available to News Corporation in the three months ended
September 30, 2023 was $(174) million compared to $(122) million in
the prior year. The decrease in both free cash flow and free cash
flow available to News Corporation was primarily due to higher cash
used in operating activities, as mentioned above, and higher
capital expenditures. Foxtel’s capital expenditures for the three
months ended September 30, 2023 were $50 million compared to $40
million in the prior year.
Free cash flow and free cash flow available to News Corporation
are non-GAAP financial measures. Free cash flow is defined as net
cash provided by (used in) operating activities, less capital
expenditures, and free cash flow available to News Corporation is
defined as free cash flow, less REA Group free cash flow, plus cash
dividends received from REA Group.
The Company believes free cash flow provides useful information
to management and investors about the Company’s liquidity and cash
flow trends. The Company believes free cash flow available to News
Corporation, which adjusts free cash flow to exclude REA Group’s
free cash flow and include dividends received from REA Group,
provides management and investors with a measure of the amount of
cash flow that is readily available to the Company, as REA Group is
a separately listed public company in Australia and must declare a
dividend in order for the Company to have access to its share of
REA Group’s cash balance. The Company believes free cash flow
available to News Corporation provides a more conservative view of
the Company’s free cash flow because this presentation includes
only that amount of cash the Company actually receives from REA
Group, which has generally been lower than the Company’s unadjusted
free cash flow. A limitation of both free cash flow and free cash
flow available to News Corporation is that they do not represent
the total increase or decrease in the cash balance for the period.
Management compensates for the limitation of free cash flow and
free cash flow available to News Corporation by also relying on the
net change in cash and cash equivalents as presented in the
Company’s consolidated statements of cash flows prepared in
accordance with GAAP which incorporates all cash movements during
the period.
COMPARISON OF NON-GAAP TO U.S. GAAP INFORMATION
Adjusted Revenues, Total Segment EBITDA, Adjusted Total Segment
EBITDA, Adjusted Segment EBITDA, adjusted net income attributable
to News Corporation stockholders, Adjusted EPS, constant currency
revenues, free cash flow and free cash flow available to News
Corporation are non-GAAP financial measures contained in this
earnings release. The Company believes these measures are important
tools for investors and analysts to use in assessing the Company’s
underlying business performance and to provide for more meaningful
comparisons of the Company’s operating performance between periods.
These measures also allow investors and analysts to view the
Company’s business from the same perspective as Company management.
These non- GAAP measures may be different than similar measures
used by other companies and should be considered in addition to,
not as a substitute for, measures of financial performance
calculated in accordance with GAAP. Reconciliations for the
differences between non-GAAP measures used in this earnings release
and comparable financial measures calculated in accordance with
U.S. GAAP are included in Notes 1, 2, 3 and 4 and the
reconciliation of net cash used in operating activities to free
cash flow and free cash flow available to News Corporation is
included above.
Conference call
News Corporation’s earnings conference call can be heard live at
5:00 p.m. EST on November 9, 2023. To listen to the call, please
visit http://investors.newscorp.com.
Annual Meeting of Stockholders
News Corporation’s 2023 Annual Meeting of Stockholders will be
held exclusively via live webcast on Wednesday, November 15, 2023,
beginning at 10:00 a.m. EST. The webcast can be accessed at
www.virtualshareholdermeeting.com/NWS2023. A replay will be
available at the same location for a period of time following the
meeting.
Cautionary Statement Concerning Forward-Looking
Statements
This document contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include, but are not
limited to, statements regarding trends and uncertainties affecting
the Company’s business, results of operations and financial
condition, the Company’s strategy and strategic initiatives,
including potential acquisitions, investments and dispositions, the
Company’s cost savings initiatives, including announced headcount
reductions, and the outcome of contingencies such as litigation and
investigations. These statements are based on management’s views
and assumptions regarding future events and business performance as
of the time the statements are made. Actual results may differ
materially from these expectations due to the risks, uncertainties
and other factors described in the Company’s filings with the
Securities and Exchange Commission. More detailed information about
factors that could affect future results is contained in our
filings with the Securities and Exchange Commission. The “forward-
looking statements” included in this document are made only as of
the date of this document and we do not have and do not undertake
any obligation to publicly update any “forward-looking statements”
to reflect subsequent events or circumstances, and we expressly
disclaim any such obligation, except as required by law or
regulation.
About News Corporation
News Corp (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) is a global,
diversified media and information services company focused on
creating and distributing authoritative and engaging content and
other products and services. The company comprises businesses
across a range of media, including: digital real estate services,
subscription video services in Australia, news and information
services and book publishing. Headquartered in New York, News Corp
operates primarily in the United States, Australia, and the United
Kingdom, and its content and other products and services are
distributed and consumed worldwide. More information is available
at: www.newscorp.com.
NEWS CORPORATION
CONSOLIDATED STATEMENTS
OF OPERATIONS
(Unaudited; in millions,
except per share amounts)
For the three months ended
September 30,
2023
2022
Revenues:
Circulation and subscription
$
1,129
$
1,111
Advertising
391
406
Consumer
502
467
Real estate
311
323
Other
166
171
Total Revenues
2,499
2,478
Operating expenses
(1,273
)
(1,273
)
Selling, general and administrative
(862
)
(855
)
Depreciation and amortization
(171
)
(179
)
Impairment and restructuring charges
(38
)
(21
)
Equity losses of affiliates
(2
)
(4
)
Interest expense, net
(23
)
(27
)
Other, net
(35
)
(18
)
Income before income tax expense
95
101
Income tax expense
(37
)
(35
)
Net income
58
66
Less: Net income attributable to
noncontrolling interests
(28
)
(26
)
Net income attributable to News
Corporation stockholders
$
30
$
40
Weighted average shares outstanding:
Basic
572
581
Diluted
574
583
Net income attributable to News
Corporation stockholders per share, basic and diluted
$
0.05
$
0.07
NEWS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in
millions)
As of September 30, 2023
As of June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
1,529
$
1,833
Receivables, net
1,559
1,425
Inventory, net
378
311
Other current assets
503
484
Total current assets
3,969
4,053
Non-current assets:
Investments
391
427
Property, plant and equipment, net
1,947
2,042
Operating lease right-of-use assets
998
1,036
Intangible assets, net
2,417
2,489
Goodwill
5,104
5,140
Deferred income tax assets
360
393
Other non-current assets
1,289
1,341
Total assets
$
16,475
$
16,921
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
324
$
440
Accrued expenses
1,153
1,123
Deferred revenue
624
622
Current borrowings
61
27
Other current liabilities
875
953
Total current liabilities
3,037
3,165
Non-current liabilities:
Borrowings
2,909
2,940
Retirement benefit obligations
134
134
Deferred income tax liabilities
147
163
Operating lease liabilities
1,081
1,128
Other non-current liabilities
431
446
Commitments and contingencies
Equity:
Class A common stock
4
4
Class B common stock
2
2
Additional paid-in capital
11,347
11,449
Accumulated deficit
(2,114
)
(2,144
)
Accumulated other comprehensive loss
(1,347
)
(1,247
)
Total News Corporation stockholders'
equity
7,892
8,064
Noncontrolling interests
844
881
Total equity
8,736
8,945
Total liabilities and equity
$
16,475
$
16,921
NEWS CORPORATION
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited; in
millions)
For the three months ended
September 30,
2023
2022
Operating activities:
Net income
$
58
$
66
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization
171
179
Operating lease expense
24
30
Equity losses of affiliates
2
4
Cash distributions received from
affiliates
2
1
Impairment charges
21
—
Other, net
35
18
Deferred income taxes and taxes
payable
19
(4
)
Change in operating assets and
liabilities, net of acquisitions:
Receivables and other assets
(129
)
(96
)
Inventories, net
(55
)
(61
)
Accounts payable and other liabilities
(203
)
(168
)
Net cash used in operating activities
(55
)
(31
)
Investing activities:
Capital expenditures
(124
)
(104
)
Acquisitions, net of cash acquired
(20
)
(3
)
Investments in equity affiliates and
other
(15
)
(8
)
Proceeds from property, plant and
equipment and other asset dispositions
—
4
Other, net
—
(19
)
Net cash used in investing activities
(159
)
(130
)
Financing activities:
Borrowings
925
328
Repayment of borrowings
(933
)
(337
)
Repurchase of shares
(29
)
(127
)
Dividends paid
(28
)
(31
)
Other, net
—
18
Net cash used in financing activities
(65
)
(149
)
Net change in cash and cash
equivalents
(279
)
(310
)
Cash and cash equivalents, beginning of
period
1,833
1,822
Exchange movement on opening cash
balance
(25
)
(54
)
Cash and cash equivalents, end of
period
$
1,529
$
1,458
NOTE 1 – TOTAL SEGMENT EBITDA
Segment EBITDA is defined as revenues less operating expenses
and selling, general and administrative expenses. Segment EBITDA
does not include: depreciation and amortization, impairment and
restructuring charges, equity losses of affiliates, interest
(expense) income, net, other, net and income tax (expense) benefit.
Management believes that Segment EBITDA is an appropriate measure
for evaluating the operating performance of the Company’s business
segments because it is the primary measure used by the Company’s
chief operating decision maker to evaluate the performance of and
allocate resources within the Company’s businesses. Segment EBITDA
provides management, investors and equity analysts with a measure
to analyze the operating performance of each of the Company’s
business segments and its enterprise value against historical data
and competitors’ data, although historical results may not be
indicative of future results (as operating performance is highly
contingent on many factors, including customer tastes and
preferences).
Total Segment EBITDA is a non-GAAP measure and should be
considered in addition to, not as a substitute for, net income
(loss), cash flow and other measures of financial performance
reported in accordance with GAAP. In addition, this measure does
not reflect cash available to fund requirements and excludes items,
such as depreciation and amortization and impairment and
restructuring charges, which are significant components in
assessing the Company’s financial performance. The Company believes
that the presentation of Total Segment EBITDA provides useful
information regarding the Company’s operations and other factors
that affect the Company’s reported results. Specifically, the
Company believes that by excluding certain one-time or non-cash
items such as impairment and restructuring charges and depreciation
and amortization, as well as potential distortions between periods
caused by factors such as financing and capital structures and
changes in tax positions or regimes, the Company provides users of
its consolidated financial statements with insight into both its
core operations as well as the factors that affect reported results
between periods but which the Company believes are not
representative of its core business. As a result, users of the
Company’s consolidated financial statements are better able to
evaluate changes in the core operating results of the Company
across different periods. The following table reconciles net income
to Total Segment EBITDA for the three months ended September 30,
2023 and 2022:
For the three months ended
September 30,
2023
2022
Change
% Change
(in millions)
Net income
$
58
$
66
$
(8
)
(12
)%
Add:
Income tax expense
37
35
2
6
%
Other, net
35
18
17
94
%
Interest expense, net
23
27
(4
)
(15
)%
Equity losses of affiliates
2
4
(2
)
(50
)%
Impairment and restructuring charges
38
21
17
81
%
Depreciation and amortization
171
179
(8
)
(4
)%
Total Segment EBITDA
$
364
$
350
$
14
4
%
NOTE 2 – ADJUSTED REVENUES, ADJUSTED TOTAL SEGMENT EBITDA AND
ADJUSTED SEGMENT EBITDA
The Company uses revenues, Total Segment EBITDA and Segment
EBITDA excluding the impact of acquisitions, divestitures, fees and
costs, net of indemnification, related to the claims and
investigations arising out of certain conduct at The News of the
World (the “U.K. Newspaper Matters”), charges for other
significant, non-ordinary course legal or regulatory matters
(“litigation charges”) and foreign currency fluctuations (“Adjusted
Revenues,” “Adjusted Total Segment EBITDA” and “Adjusted Segment
EBITDA,” respectively) to evaluate the performance of the Company’s
core business operations exclusive of certain items that impact the
comparability of results from period to period such as the
unpredictability and volatility of currency fluctuations. The
Company calculates the impact of foreign currency fluctuations for
businesses reporting in currencies other than the U.S. dollar by
multiplying the results for each quarter in the current period by
the difference between the average exchange rate for that quarter
and the average exchange rate in effect during the corresponding
quarter of the prior year and totaling the impact for all quarters
in the current period.
The calculation of Adjusted Revenues, Adjusted Total Segment
EBITDA and Adjusted Segment EBITDA may not be comparable to
similarly titled measures reported by other companies, since
companies and investors may differ as to what type of events
warrant adjustment. Adjusted Revenues, Adjusted Total Segment
EBITDA and Adjusted Segment EBITDA are not measures of performance
under generally accepted accounting principles and should not be
construed as substitutes for amounts determined under GAAP as
measures of performance. However, management uses these measures in
comparing the Company’s historical performance and believes that
they provide meaningful and comparable information to investors to
assist in their analysis of our performance relative to prior
periods and our competitors.
The following table reconciles reported revenues and reported
Total Segment EBITDA to Adjusted Revenues and Adjusted Total
Segment EBITDA for the three months ended September 30, 2023 and
2022:
Revenues
Total Segment EBITDA
For the three months ended
September 30,
For the three months ended
September 30,
2023
2022
Difference
2023
2022
Difference
(in millions)
(in millions)
As reported
$
2,499
$
2,478
$
21
$
364
$
350
$
14
Impact of acquisitions
(7
)
—
(7
)
(1
)
—
(1
)
Impact of foreign currency
fluctuations
14
—
14
8
—
8
Net impact of U.K. Newspaper Matters
—
—
—
3
6
(3
)
As adjusted
$
2,506
$
2,478
$
28
$
374
$
356
$
18
Foreign Exchange Rates
Average foreign exchange rates used in the calculation of the
impact of foreign currency fluctuations for the three months ended
September 30, 2023 and 2022 are as follows:
Fiscal Year 2024
Q1
U.S. Dollar per Australian Dollar
$0.65
U.S. Dollar per British Pound Sterling
$1.27
Fiscal Year 2023
Q1
U.S. Dollar per Australian Dollar
$0.68
U.S. Dollar per British Pound Sterling
$1.17
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three months ended September 30, 2023 and 2022 are as follows:
For the three months ended
September 30,
2023
2022
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
411
$
421
(2
)%
Subscription Video Services
507
502
1
%
Dow Jones
533
515
3
%
Book Publishing
514
487
6
%
News Media
541
553
(2
)%
Other
—
—
—
%
Adjusted Total Revenues
$
2,506
$
2,478
1
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
128
$
119
8
%
Subscription Video Services
97
111
(13
)%
Dow Jones
123
113
9
%
Book Publishing
62
39
59
%
News Media
15
18
(17
)%
Other
(51
)
(44
)
(16
)%
Adjusted Total Segment EBITDA
$
374
$
356
5
%
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the three months ended September 30, 2023 and
2022:
For the three months ended
September 30, 2023
As Reported
Impact of Acquisitions
Impact of Foreign Currency
Fluctuations
Net Impact of U.K. Newspaper
Matters
As Adjusted
(in millions)
Revenues:
Digital Real Estate Services
$
403
$
(3
)
$
11
$
—
$
411
Subscription Video Services
486
—
21
—
507
Dow Jones
537
—
(4
)
—
533
Book Publishing
525
(4
)
(7
)
—
514
News Media
548
—
(7
)
—
541
Other
—
—
—
—
—
Total Revenues
$
2,499
$
(7
)
$
14
$
—
$
2,506
Segment EBITDA:
Digital Real Estate Services
$
122
$
1
$
5
$
—
$
128
Subscription Video Services
93
—
4
—
97
Dow Jones
124
—
(1
)
—
123
Book Publishing
65
(2
)
(1
)
—
62
News Media
14
—
1
—
15
Other
(54
)
—
—
3
(51
)
Total Segment EBITDA
$
364
$
(1
)
$
8
$
3
$
374
For the three months ended
September 30, 2022
As Reported
Impact of Acquisitions
Impact of Foreign Currency
Fluctuations
Net Impact of U.K. Newspaper
Matters
As Adjusted
(in millions)
Revenues:
Digital Real Estate Services
$
421
$
—
$
—
$
—
$
421
Subscription Video Services
502
—
—
—
502
Dow Jones
515
—
—
—
515
Book Publishing
487
—
—
—
487
News Media
553
—
—
—
553
Other
—
—
—
—
—
Total Revenues
$
2,478
$
—
$
—
$
—
$
2,478
Segment EBITDA:
Digital Real Estate Services
$
119
$
—
$
—
$
—
$
119
Subscription Video Services
111
—
—
—
111
Dow Jones
113
—
—
—
113
Book Publishing
39
—
—
—
39
News Media
18
—
—
—
18
Other
(50
)
—
—
6
(44
)
Total Segment EBITDA
$
350
$
—
$
—
$
6
$
356
NOTE 3 – ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO NEWS
CORPORATION STOCKHOLDERS AND ADJUSTED EPS
The Company uses net income (loss) attributable to News
Corporation stockholders and diluted earnings per share (“EPS”)
excluding expenses related to U.K. Newspaper Matters, litigation
charges, impairment and restructuring charges and “Other, net”, net
of tax, recognized by the Company or its equity method investees,
as well as the settlement of certain pre-Separation tax matters
(“adjusted net income (loss) attributable to News Corporation
stockholders” and “adjusted EPS,” respectively), to evaluate the
performance of the Company’s operations exclusive of certain items
that impact the comparability of results from period to period, as
well as certain non-operational items. The calculation of adjusted
net income (loss) attributable to News Corporation stockholders and
adjusted EPS may not be comparable to similarly titled measures
reported by other companies, since companies and investors may
differ as to what type of events warrant adjustment. Adjusted net
income (loss) attributable to News Corporation stockholders and
adjusted EPS are not measures of performance under generally
accepted accounting principles and should not be construed as
substitutes for consolidated net income (loss) attributable to News
Corporation stockholders and net income (loss) per share as
determined under GAAP as a measure of performance. However,
management uses these measures in comparing the Company’s
historical performance and believes that they provide meaningful
and comparable information to investors to assist in their analysis
of our performance relative to prior periods and our
competitors.
The following table reconciles reported net income attributable
to News Corporation stockholders and reported diluted EPS to
adjusted net income attributable to News Corporation stockholders
and adjusted EPS for the three months ended September 30, 2023 and
2022:
For the three months ended
September 30, 2023
For the three months ended
September 30, 2022
(in millions, except per share data)
Net income attributable to
stockholders
EPS
Net income attributable to
stockholders
EPS
Net income
$
58
$
66
Less: Net income attributable to
noncontrolling interests
(28
)
(26
)
Net income attributable to News
Corporation stockholders
$
30
$
0.05
$
40
$
0.07
U.K. Newspaper Matters
3
0.01
6
0.01
Impairment and restructuring charges
(a)
38
0.06
21
0.04
Other, net
35
0.06
18
0.03
Tax impact on items above
(19
)
(0.03
)
(15
)
(0.03
)
Impact of noncontrolling interest on items
above
3
0.01
(1
)
—
As adjusted
$
90
$
0.16
$
69
$
0.12
(a)
During the three months ended September
30, 2023, the Company recognized non-cash impairment charges of $21
million at the News Media segment related to the write-down of
fixed assets associated with the proposed combination of certain
U.K. printing operations with those of a third party.
NOTE 4 – CONSTANT CURRENCY REVENUES
The Company believes that the presentation of revenues excluding
the impact of foreign currency fluctuations (“constant currency
revenues”) provides useful information regarding the performance of
the Company’s core business operations exclusive of distortions
between periods caused by the unpredictability and volatility of
currency fluctuations. The Company calculates the impact of foreign
currency fluctuations for businesses reporting in currencies other
than the U.S. dollar as described in Note 2.
Constant currency revenues are not measures of performance under
generally accepted accounting principles and should not be
construed as substitutes for revenues as determined under GAAP as
measures of performance. However, management uses these measures in
comparing the Company’s historical performance and believes that
they provide meaningful and comparable information to investors to
assist in their analysis of our performance relative to prior
periods and our competitors.
The following tables reconcile reported revenues to constant
currency revenues for the three months ended September 30,
2023:
Q1 Fiscal 2023
Q1 Fiscal
2024
FX impact
Q1 Fiscal 2024
constant currency
% Change - reported
% Change - constant currency
($ in millions)
Better/(Worse)
Consolidated results:
Circulation and subscription
$
1,111
$
1,129
$
(9
)
$
1,138
2
%
2
%
Advertising
406
391
(1
)
392
(4
)%
(3
)%
Consumer
467
502
7
495
7
%
6
%
Real estate
323
311
(9
)
320
(4
)%
(1
)%
Other
171
166
(2
)
168
(3
)%
(2
)%
Total revenues
$
2,478
$
2,499
$
(14
)
$
2,513
1
%
1
%
Digital Real Estate Services: Circulation and subscription
$
3
$
3
$
—
$
3
—
%
—
%
Advertising
35
35
—
$
35
—
%
—
%
Real estate
323
311
(9
)
$
320
(4
)%
(1
)%
Other
60
54
(2
)
$
56
(10
)%
(7
)%
Total Digital Real Estate
Services segment revenues
$
421
$
403
$
(11
)
$
414
(4
)%
(2
)%
REA Group revenues
$
252
$
261
$
(11
)
$
272
4
%
8
%
Subscription Video Services:
Circulation and subscription
$
425
$
415
$
(18
)
$
433
(2
)%
2
%
Advertising
64
62
(3
)
$
65
(3
)%
2
%
Other
13
9
—
$
9
(31
)%
(31
)%
Total Subscription Video Services segment
revenues
$
502
$
486
$
(21
)
$
507
(3
)%
1
%
Q1 Fiscal 2023
Q1 Fiscal
2024
FX impact
Q1 Fiscal 2024
constant currency
% Change - reported
% Change - constant currency
($ in millions)
Better/(Worse)
Dow Jones:
Circulation and subscription
$
414
$
436
$
4
$
432
5
%
4
%
Advertising
94
91
—
$
91
(3
)%
(3
)%
Other
7
10
—
$
10
43
%
43
%
Total Dow Jones segment revenues
$
515
$
537
$
4
$
533
4
%
3
%
Book Publishing:
Consumer
467
502
7
$
495
7
%
6
%
Other
20
23
—
$
23
15
%
15
%
Total Book Publishing segment
revenues
$
487
$
525
$
7
$
518
8
%
6
%
News Media:
Circulation and subscription
$
269
$
275
$
5
$
270
2
%
—
%
Advertising
213
203
2
$
201
(5
)%
(6
)%
Other
71
70
—
$
70
(1
)%
(1
)%
Total News Media segment
revenues
$
553
$
548
$
7
$
541
(1
)%
(2
)%
News UK
Circulation and subscription
$
134
$
144
$
10
$
134
7
%
—
%
Advertising
61
59
3
$
56
(3
)%
(8
)%
Other
26
25
2
$
23
(4
)%
(12
)%
Total News UK revenues
$
221
$
228
$
15
$
213
3
%
(4
)%
News Corp Australia
Circulation and subscription
$
112
$
107
$
(5
)
$
112
(4
)%
—
%
Advertising
104
93
(4
)
$
97
(11
)%
(7
)%
Other
39
38
(2
)
$
40
(3
)%
3
%
Total News Corp Australia revenues
$
255
$
238
$
(11
)
$
249
(7
)%
(2
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109323318/en/
Investor Relations Michael Florin
212-416-3363 mflorin@newscorp.com
Anthony Rudolf 212-416-3040 arudolf@newscorp.com
Corporate Communications Jim
Kennedy 212-416-4064 jkennedy@newscorp.com
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