FISCAL 2024 SECOND QUARTER KEY
FINANCIAL HIGHLIGHTS
- Second quarter revenues were $2.59 billion, a 3% increase
compared to $2.52 billion in the prior year, driven by growth at
the Digital Real Estate Services, Dow Jones and Book Publishing
segments
- Net income in the quarter was $183 million, compared to net
income of $94 million in the prior year
- Second quarter Total Segment EBITDA was $473 million,
compared to $409 million in the prior year
- In the quarter, reported EPS were $0.27 as compared to $0.12
in the prior year - Adjusted EPS were $0.26 compared to $0.14 in
the prior year
- Dow Jones achieved its highest quarterly revenues and
Segment EBITDA since its acquisition in 2007, driven by strength in
professional information business revenues, which rose 13% compared
to the prior year
- REA Group posted record quarterly revenues of $292 million,
a 22% increase compared to the prior year, primarily driven by
robust Australian residential performance
- Book Publishing revenues grew 4%, while Segment EBITDA
increased 67%, driven by higher digital sales, which benefited from
strong audiobooks performance, and improved return rates
News Corporation (“News Corp” or the “Company”) (Nasdaq: NWS,
NWSA; ASX: NWS, NWSLV) today reported financial results for the
three months ended December 31, 2023.
Commenting on the results, Chief Executive Robert Thomson
said:
“News Corp again saw growth in both revenue and profitability
this quarter as we continue to realize the collective benefit of
our strategic shift to digital and subscription revenues, and away
from sometimes volatile advertising revenues.
Our net income rose to $183 million from $94 million in the same
quarter last year and our reported EPS was 27 cents, compared to 12
cents for the same period last year, driven by a 16% surge in Total
Segment EBITDA. We had particularly robust results across the three
core pillars of our business – Dow Jones, Book Publishing and
Digital Real Estate Services – and believe there are strong
prospects for further growth as difficult macro conditions ease in
some of our markets.
We expect to be a core content provider for Generative AI
companies, who need the highest quality, timely content to ensure
the relevance and accuracy of their products. We patently prefer
negotiation to litigation, courtship to courtrooms. But let’s be
clear, in my view those who repurpose without approval are stealing
and are undermining the very act of creativity – counterfeiting is
not creating, and the AI world is replete with content
counterfeiters.
I also want to draw attention to the plight of our colleague
Evan Gershkovich, who continues to be unjustly detained in a Moscow
prison, solely for being a highly professional journalist. We hope
that justice will prevail and thank all who publicly, and not so
publicly, have been working to secure his emancipation.”
SECOND QUARTER RESULTS
The Company reported fiscal 2024 second quarter total revenues
of $2.59 billion, a 3% increase compared to $2.52 billion in the
prior year period, primarily driven by higher Australian
residential revenues at REA Group, continued strong growth in the
professional information business at the Dow Jones segment,
increased digital sales and improved returns due to better sell
through of inventory at the Book Publishing segment and a $13
million, or 1%, positive impact from foreign currency fluctuations.
The increase was partly offset by lower revenues at Move due to
continued challenging housing market conditions in the U.S. 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 2% compared to the
prior year.
Net income for the quarter was $183 million, a 95% increase
compared to net income of $94 million in the prior year, driven by
higher Total Segment EBITDA, as discussed below, improved equity
losses of affiliates and higher Other, net. These impacts were
partially offset by higher income tax expense.
The Company reported second quarter Total Segment EBITDA of $473
million, a 16% increase compared to $409 million in the prior year
primarily due to higher revenues, as discussed above, lower costs
at the Book Publishing segment 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. Adjusted Total Segment EBITDA
(as defined in Note 2) increased 14%.
Net income per share attributable to News Corporation
stockholders was $0.27 as compared to $0.12 in the prior year.
Adjusted EPS (as defined in Note 3) were $0.26 compared to $0.14
in the prior year.
SEGMENT REVIEW
For the three months ended
December 31,
For the six months ended December
31,
2023
2022
% Change
2023
2022
% Change
(in millions)
Better/
(Worse)
(in millions)
Better/
(Worse)
Revenues:
Digital Real Estate Services
$
419
$
386
9
%
$
822
$
807
2
%
Subscription Video Services
470
462
2
%
956
964
(1
)%
Dow Jones
584
563
4
%
1,121
1,078
4
%
Book Publishing
550
531
4
%
1,075
1,018
6
%
News Media
563
579
(3
)%
1,111
1,132
(2
)%
Other
—
—
—
%
—
—
—
%
Total Revenues
$
2,586
$
2,521
3
%
$
5,085
$
4,999
2
%
Segment EBITDA:
Digital Real Estate Services
$
147
$
128
15
%
$
269
$
247
9
%
Subscription Video Services
77
90
(14
)%
170
201
(15
)%
Dow Jones
163
139
17
%
287
252
14
%
Book Publishing
85
51
67
%
150
90
67
%
News Media
52
59
(12
)%
66
77
(14
)%
Other
(51
)
(58
)
12
%
(105
)
(108
)
3
%
Total Segment EBITDA
$
473
$
409
16
%
$
837
$
759
10
%
Digital Real Estate Services
Revenues in the quarter increased $33 million, or 9%, compared
to the prior year, driven by strong performance at REA Group partly
offset by lower revenues at Move. Segment EBITDA in the quarter
increased $19 million, or 15%, compared to the prior year,
primarily due to higher revenues at REA Group partly offset by
lower revenues at Move and a $2 million, or 1%, negative impact
from foreign currency fluctuations. Adjusted Revenues and Adjusted
Segment EBITDA (as defined in Note 2) increased 8% and 16%,
respectively.
In the quarter, revenues at REA Group increased $52 million, or
22%, to $292 million, primarily driven by higher Australian
residential revenues due to price increases, increased depth
penetration, favorable geographic mix and an increase in national
listings, as well as an increase from financial services. The
increase was slightly offset by a $3 million, or 1%, negative
impact from foreign currency fluctuations. Australian national
residential buy listing volumes in the quarter increased 8%
compared to the prior year, with listings in Sydney and Melbourne
up 22% and 24%, respectively.
Move’s revenues in the quarter decreased $19 million, or 13%, to
$127 million, primarily as a result of lower real estate revenues.
Real estate revenues, which represented 82% of total Move revenues,
decreased $17 million, or 14%, 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 second quarter was flat compared to
the prior year at 66 million. Lead volume declined 7%, which was an
improvement from the prior quarter rate.
Subscription Video Services
Revenues of $470 million in the quarter increased $8 million, or
2%, compared with the prior year, driven by higher revenues from
Kayo and BINGE from increases in both volume and pricing, despite a
more difficult Summer sports season and inflationary pressures,
partially offset by the impact from fewer residential broadcast
subscribers and a $6 million, or 1%, negative impact from foreign
currency fluctuations. Adjusted Revenues of $476 million increased
3% compared to the prior year. Foxtel Group streaming subscription
revenues represented approximately 29% of total circulation and
subscription revenues in the quarter, as compared to 26% in the
prior year.
As of December 31, 2023, Foxtel’s total closing paid subscribers
were over 4.3 million, flat compared to the prior year, as growth
in streaming subscribers driven by Kayo and BINGE was offset by
fewer residential broadcast subscribers. Broadcast subscriber churn
in the quarter was flat compared to the prior year at 12.9%,
despite the completion of Foxtel’s migration project of subscribers
off cable. Broadcast ARPU for the quarter increased 3%
year-over-year to A$86 (US$56).
As of December 31,
2023
2022
(in 000's)
Broadcast Subscribers
Residential
1,273
1,401
Commercial
232
230
Streaming Subscribers (Total (Paid))
Kayo
1,183 (1,173 paid)
1,136 (1,126 paid)
BINGE
1,503 (1,471 paid)
1,439 (1,375 paid)
Foxtel Now
155 (150 paid)
183 (177 paid)
Total Subscribers (Total (Paid))
4,365 (4,317 paid)
4,414 (4,329 paid)
Segment EBITDA of $77 million in the quarter decreased $13
million, or 14%, compared with the prior year, which includes a $1
million, or 1%, negative impact from foreign currency fluctuations.
Adjusted Segment EBITDA of $78 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 and
$10 million of costs related to the upcoming launch of Hubbl
partially offset by higher revenues and lower technology and
marketing costs.
Dow Jones
Revenues in the quarter increased $21 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
78% of total revenues compared to 76% in the prior year. Adjusted
Revenues increased 3%.
Circulation and subscription revenues increased $24 million, or
6%, including a $3 million, or 1%, positive impact from foreign
currency fluctuations. Professional information business revenues
grew 13%, primarily due to 16% growth in Risk & Compliance
revenues to $72 million and 15% growth in Dow Jones Energy revenues
to $62 million. Circulation revenues were flat compared to the
prior year, as the continued growth in digital-only subscriptions,
which benefited from an increase in bundle offers, was offset by
lower print volume. Digital circulation revenues accounted for 70%
of circulation revenues for the quarter, compared to 69% in the
prior year.
During the second quarter, total average subscriptions to Dow
Jones’ consumer products were over 5.4 million, a 10% increase
compared to the prior year. Digital-only subscriptions to Dow
Jones’ consumer products grew 15%. Total subscriptions to The Wall
Street Journal grew 7% compared to the prior year, to over 4.0
million average subscriptions in the quarter. Digital-only
subscriptions to The Wall Street Journal grew 11% to over 3.5
million average subscriptions in the quarter, and represented 87%
of total Wall Street Journal subscriptions.
For the three months ended
December 31,
2023
2022
% Change
(in thousands, except %)
Better/(Worse)
The Wall Street Journal
Digital-only subscriptions
3,528
3,167
11 %
Total subscriptions
4,052
3,780
7 %
Barron’s Group
Digital-only subscriptions
1,104
894
23 %
Total subscriptions
1,242
1,062
17 %
Total Consumer
Digital-only subscriptions
4,746
4,139
15 %
Total subscriptions
5,427
4,943
10 %
Advertising revenues decreased $5 million, or 4%, primarily due
to an 11% decline in print advertising revenues slightly offset by
1% growth in digital advertising revenues. Digital advertising
accounted for 62% of total advertising revenues in the quarter,
compared to 59% in the prior year.
Segment EBITDA for the quarter increased $24 million, or 17%,
primarily as a result of the higher revenues discussed above.
Adjusted Segment EBITDA increased 17%.
Book Publishing
Revenues in the quarter increased $19 million, or 4%, compared
to the prior year, primarily driven by the increase in digital book
sales and improved returns due to better sell through of inventory.
Key titles in the quarter included The Pioneer Woman Cooks –
Dinner’s Ready! by Ree Drummond, The Little Liar by Mitch Albom,
Tom Lake by Ann Patchett and My Effin’ Life by Geddy Lee. Adjusted
Revenues increased 2%. Digital sales increased 15% compared to the
prior year, driven by strong market growth for downloadable
audiobook sales, as well as the contribution from a new Spotify
partnership. Digital sales represented 21% of Consumer revenues for
the quarter compared to 19% in the prior year with audiobooks
accounting for approximately half of digital revenues. Backlist
sales represented approximately 60% of consumer revenues in the
quarter compared to 57% in the prior year.
Segment EBITDA for the quarter increased $34 million, or 67%,
compared to the prior year, primarily driven by the higher revenues
discussed above and lower manufacturing, freight and distribution
costs driven by product mix and the absence of prior year supply
chain challenges and inventory and inflationary pressures, partly
offset by higher employee costs. Adjusted Segment EBITDA increased
65%.
News Media
Revenues in the quarter decreased $16 million, or 3%, as
compared to the prior year, primarily driven by lower advertising
revenues, partially offset by the $13 million, or 2%, positive
impact from foreign currency fluctuations and higher circulation
and subscription revenues. Within the segment, revenues at News
Corp Australia decreased 6%, driven by lower advertising revenues,
while News UK was flat as lower advertising revenues were offset by
a 5% positive impact from foreign currency fluctuations and higher
circulation and subscription revenues. Adjusted Revenues for the
segment decreased 5% compared to the prior year.
Circulation and subscription revenues increased $12 million, or
5%, compared to the prior year, primarily due to a $7 million, or
3%, positive impact from foreign currency fluctuations, price
increases and digital subscriber growth, partially offset by lower
print volumes.
Advertising revenues decreased $24 million, or 9%, compared to
the prior year, primarily due to lower digital advertising across
the business units mainly driven by a decline in traffic at some
mastheads due to platform related changes and lower print
advertising at News Corp Australia. The decline was partially
offset by a $5 million, or 2%, positive impact from foreign
currency fluctuations.
In the quarter, Segment EBITDA decreased $7 million, or 12%,
compared to the prior year, driven by lower revenues, as discussed
above, partially offset by lower production costs at News UK driven
by lower volume and newsprint prices and a $2 million, or 3%,
positive impact from foreign currency fluctuations. Adjusted
Segment EBITDA decreased 15%.
Digital revenues represented 38% of News Media segment revenues
in the quarter, compared to 37% in the prior year, and represented
36% 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
December 31, 2023 were 1,051,000 (940,000 for news mastheads),
compared to 1,011,000 (924,000 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 December 31, 2023
were 575,000, compared to 550,000 in the prior year (Source:
Internal data). The previously disclosed methodology change
resulted in a 59,000 and 61,000 increase to the closing digital
subscriber number at December 31, 2023 and 2022, respectively
- The Sun’s digital offering reached 143 million global monthly
unique users in December 2023, compared to 194 million in the prior
year (Source: Meta Pixel)
- New York Post’s digital network reached 124 million unique
users in December 2023, compared to 141 million in the prior year
(Source: Google Analytics)
CASH FLOW
The following table presents a reconciliation of net cash
provided by operating activities to free cash flow and free cash
flow available to News Corporation:
For the six months ended December
31,
2023
2022
(in millions)
Net cash provided by operating
activities
$
305
$
161
Less: Capital expenditures
(236
)
(217
)
Free cash flow
69
(56
)
Less: REA Group free cash flow
(134
)
(96
)
Plus: Cash dividends received from REA
Group
44
50
Free cash flow available to News
Corporation
$
(21
)
$
(102
)
Net cash provided by operating activities of $305 million for
the six months ended December 31, 2023 was $144 million higher than
$161 million in the prior year, primarily due to higher Total
Segment EBITDA, as noted above, lower working capital and lower tax
payments, partially offset by higher restructuring payments.
Free cash flow in the six months ended December 31, 2023 was $69
million compared to $(56) million in the prior year. Free cash flow
available to News Corporation in the six months ended December 31,
2023 was $(21) million compared to $(102) million in the prior
year. The improvement in both free cash flow and free cash flow
available to News Corporation was primarily due to higher cash
provided by operating activities, as mentioned above, partially
offset by higher capital expenditures. Foxtel’s capital
expenditures for the six months ended December 31, 2023 were $82
million compared to $84 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. Free cash flow and free cash
flow available to News Corporation may not be comparable to
similarly titled measures reported by other companies, since
companies and investors may differ as to what items should be
included in the calculation of free cash flow.
Neither free cash flow nor free cash flow available to News
Corporation represents the total increase or decrease in the cash
balance for the period and should be considered in addition to, not
as a substitute for, 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.
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.
OTHER ITEMS
Dividends
The Company declared today a semi-annual cash dividend of $0.10
per share for Class A Common Stock and Class B Common Stock. This
dividend is payable on April 10, 2024 to stockholders of record as
of March 13, 2024.
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
provided by 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 February 7, 2024. To listen to the call, please
visit http://investors.newscorp.com.
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
December 31,
For the six months ended December
31,
2023
2022
2023
2022
Revenues:
Circulation and subscription
$
1,119
$
1,085
$
2,248
$
2,196
Advertising
438
464
829
870
Consumer
527
512
1,029
979
Real estate
327
301
638
624
Other
175
159
341
330
Total Revenues
2,586
2,521
5,085
4,999
Operating expenses
(1,281
)
(1,294
)
(2,554
)
(2,567
)
Selling, general and administrative
(832
)
(818
)
(1,694
)
(1,673
)
Depreciation and amortization
(179
)
(174
)
(350
)
(353
)
Impairment and restructuring charges
(13
)
(19
)
(51
)
(40
)
Equity losses of affiliates
(1
)
(29
)
(3
)
(33
)
Interest expense, net
(25
)
(26
)
(48
)
(53
)
Other, net
22
(6
)
(13
)
(24
)
Income before income tax expense
277
155
372
256
Income tax expense
(94
)
(61
)
(131
)
(96
)
Net income
183
94
241
160
Net income attributable to noncontrolling
interests
(27
)
(27
)
(55
)
(53
)
Net income attributable to News
Corporation stockholders
$
156
$
67
$
186
$
107
Weighted average shares outstanding:
Basic
572
576
572
579
Diluted
574
578
574
581
Net income attributable to News
Corporation stockholders per share:
Basic
$
0.27
$
0.12
$
0.33
$
0.18
Diluted
$
0.27
$
0.12
$
0.32
$
0.18
NEWS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in
millions)
As of December 31, 2023
As of June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
1,724
$
1,833
Receivables, net
1,516
1,425
Inventory, net
297
311
Other current assets
466
484
Total current assets
4,003
4,053
Non-current assets:
Investments
424
427
Property, plant and equipment, net
1,985
2,042
Operating lease right-of-use assets
1,007
1,036
Intangible assets, net
2,423
2,489
Goodwill
5,214
5,140
Deferred income tax assets, net
305
393
Other non-current assets
1,320
1,341
Total assets
$
16,681
$
16,921
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
243
$
440
Accrued expenses
1,095
1,123
Deferred revenue
510
622
Current borrowings
58
27
Other current liabilities
878
953
Total current liabilities
2,784
3,165
Non-current liabilities:
Borrowings
2,984
2,940
Retirement benefit obligations
136
134
Deferred income tax liabilities, net
129
163
Operating lease liabilities
1,090
1,128
Other non-current liabilities
456
446
Commitments and contingencies
Equity:
Class A common stock
4
4
Class B common stock
2
2
Additional paid-in capital
11,334
11,449
Accumulated deficit
(1,958
)
(2,144
)
Accumulated other comprehensive loss
(1,200
)
(1,247
)
Total News Corporation stockholders'
equity
8,182
8,064
Noncontrolling interests
920
881
Total equity
9,102
8,945
Total liabilities and equity
$
16,681
$
16,921
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited; in
millions)
For the six months ended December
31,
2023
2022
Operating activities:
Net income
$
241
$
160
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
350
353
Operating lease expense
48
57
Equity losses of affiliates
3
33
Cash distributions received from
affiliates
3
5
Impairment charges
24
—
Deferred income taxes and taxes
payable
67
17
Other, net
13
24
Change in operating assets and
liabilities, net of acquisitions:
Receivables and other assets
(69
)
(351
)
Inventories, net
50
(11
)
Accounts payable and other liabilities
(425
)
(126
)
Net cash provided by operating
activities
305
161
Investing activities:
Capital expenditures
(236
)
(217
)
Acquisitions, net of cash acquired
(20
)
(15
)
Investments in equity affiliates and
other, net
(22
)
(92
)
Proceeds from property, plant and
equipment and other asset dispositions
—
8
Other, net
—
(21
)
Net cash used in investing activities
(278
)
(337
)
Financing activities:
Borrowings
1,049
407
Repayment of borrowings
(1,044
)
(462
)
Repurchase of shares
(56
)
(178
)
Dividends paid
(85
)
(89
)
Other, net
(8
)
10
Net cash used in financing activities
(144
)
(312
)
Net change in cash and cash
equivalents
(117
)
(488
)
Cash and cash equivalents, beginning of
period
1,833
1,822
Effect of exchange rate changes on cash
and cash equivalents
8
(6
)
Cash and cash equivalents, end of
period
$
1,724
$
1,328
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 tables reconcile net income
to Total Segment EBITDA for the three and six months ended December
31, 2023 and 2022:
For the three months ended
December 31,
2023
2022
Change
% Change
(in millions)
Net income
$
183
$
94
$
89
95
%
Add:
Income tax expense
94
61
33
54
%
Other, net
(22
)
6
(28
)
**
Interest expense, net
25
26
(1
)
(4
)%
Equity losses of affiliates
1
29
(28
)
(97
)%
Impairment and restructuring charges
13
19
(6
)
(32
)%
Depreciation and amortization
179
174
5
3
%
Total Segment EBITDA
$
473
$
409
$
64
16
%
For the six months ended December
31,
2023
2022
Change
% Change
(in millions)
Net income
$
241
$
160
$
81
51
%
Add:
Income tax expense
131
96
35
36
%
Other, net
13
24
(11
)
(46
)%
Interest expense, net
48
53
(5
)
(9
)%
Equity losses of affiliates
3
33
(30
)
(91
)%
Impairment and restructuring charges
51
40
11
28
%
Depreciation and amortization
350
353
(3
)
(1
)%
Total Segment EBITDA
$
837
$
759
$
78
10
%
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 tables reconcile reported revenues and reported
Total Segment EBITDA to Adjusted Revenues and Adjusted Total
Segment EBITDA for the three and six months ended December 31, 2023
and 2022:
Revenues
Total Segment EBITDA
For the three months ended
December 31,
For the three months ended
December 31,
2023
2022
Difference
2023
2022
Difference
(in millions)
(in millions)
As reported
$
2,586
$
2,521
$
65
$
473
$
409
$
64
Impact of acquisitions
(5
)
—
(5
)
—
6
(6
)
Impact of foreign currency
fluctuations
(13
)
—
(13
)
—
—
—
Net impact of U.K. Newspaper Matters
—
—
—
2
3
(1
)
As adjusted
$
2,568
$
2,521
$
47
$
475
$
418
$
57
Revenues
Total Segment EBITDA
For the six months ended December
31,
For the six months ended December
31,
2023
2022
Difference
2023
2022
Difference
(in millions)
(in millions)
As reported
$
5,085
$
4,999
$
86
$
837
$
759
$
78
Impact of acquisitions
(12
)
—
(12
)
(1
)
6
(7
)
Impact of foreign currency
fluctuations
1
—
1
8
—
8
Net impact of U.K. Newspaper Matters
—
—
—
5
9
(4
)
As adjusted
$
5,074
$
4,999
$
75
$
849
$
774
$
75
Foreign Exchange Rates
Average foreign exchange rates used in the calculation of the
impact of foreign currency fluctuations for the three and six
months ended December 31, 2023 and 2022 are as follows:
Fiscal Year 2024
Q1
Q2
U.S. Dollar per Australian Dollar
$0.65
$0.65
U.S. Dollar per British Pound Sterling
$1.27
$1.24
Fiscal Year 2023
Q1
Q2
U.S. Dollar per Australian Dollar
$0.68
$0.66
U.S. Dollar per British Pound Sterling
$1.17
$1.17
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three and six months ended December 31, 2023 and 2022 are as
follows:
For the three months ended
December 31,
2023
2022
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
418
$
386
8
%
Subscription Video Services
476
462
3
%
Dow Jones
581
563
3
%
Book Publishing
543
531
2
%
News Media
550
579
(5
)%
Other
—
—
—
%
Adjusted Total Revenues
$
2,568
$
2,521
2
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
149
$
128
16
%
Subscription Video Services
78
90
(13
)%
Dow Jones
163
139
17
%
Book Publishing
84
51
65
%
News Media
50
59
(15
)%
Other
(49
)
(49
)
—
%
Adjusted Total Segment EBITDA
$
475
$
418
14
%
For the six months ended December
31,
2023
2022
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
829
$
807
3
%
Subscription Video Services
983
964
2
%
Dow Jones
1,114
1,078
3
%
Book Publishing
1,057
1,018
4
%
News Media
1,091
1,132
(4
)%
Other
—
—
—
%
Adjusted Total Revenues
$
5,074
$
4,999
2
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
277
$
247
12
%
Subscription Video Services
175
201
(13
)%
Dow Jones
286
252
13
%
Book Publishing
146
90
62
%
News Media
65
77
(16
)%
Other
(100
)
(93
)
(8
)%
Adjusted Total Segment EBITDA
$
849
$
774
10
%
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the three and six months ended December 31, 2023 and
2022:
For the three months ended
December 31, 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
$
419
$
(4
)
$
3
$
—
$
418
Subscription Video Services
470
—
6
—
476
Dow Jones
584
—
(3
)
—
581
Book Publishing
550
(1
)
(6
)
—
543
News Media
563
—
(13
)
—
550
Other
—
—
—
—
—
Total Revenues
$
2,586
$
(5
)
$
(13
)
$
—
$
2,568
Segment EBITDA:
Digital Real Estate Services
$
147
$
—
$
2
$
—
$
149
Subscription Video Services
77
—
1
—
78
Dow Jones
163
—
—
—
163
Book Publishing
85
—
(1
)
—
84
News Media
52
—
(2
)
—
50
Other
(51
)
—
—
2
(49
)
Total Segment EBITDA
$
473
$
—
$
—
$
2
$
475
For the three months ended
December 31, 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
$
386
$
—
$
—
$
—
$
386
Subscription Video Services
462
—
—
—
462
Dow Jones
563
—
—
—
563
Book Publishing
531
—
—
—
531
News Media
579
—
—
—
579
Other
—
—
—
—
—
Total Revenues
$
2,521
$
—
$
—
$
—
$
2,521
Segment EBITDA:
Digital Real Estate Services
$
128
$
—
$
—
$
—
$
128
Subscription Video Services
90
—
—
—
90
Dow Jones
139
—
—
—
139
Book Publishing
51
—
—
—
51
News Media
59
—
—
—
59
Other
(58
)
6
—
3
(49
)
Total Segment EBITDA
$
409
$
6
$
—
$
3
$
418
For the six months ended December
31, 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
$
822
$
(7
)
$
14
$
—
$
829
Subscription Video Services
956
—
27
—
983
Dow Jones
1,121
—
(7
)
—
1,114
Book Publishing
1,075
(5
)
(13
)
—
1,057
News Media
1,111
—
(20
)
—
1,091
Other
—
—
—
—
—
Total Revenues
$
5,085
$
(12
)
$
1
$
—
$
5,074
Segment EBITDA:
Digital Real Estate Services
$
269
$
1
$
7
$
—
$
277
Subscription Video Services
170
—
5
—
175
Dow Jones
287
—
(1
)
—
286
Book Publishing
150
(2
)
(2
)
—
146
News Media
66
—
(1
)
—
65
Other
(105
)
—
—
5
(100
)
Total Segment EBITDA
$
837
$
(1
)
$
8
$
5
$
849
For the six months ended December
31, 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
$
807
$
—
$
—
$
—
$
807
Subscription Video Services
964
—
—
—
964
Dow Jones
1,078
—
—
—
1,078
Book Publishing
1,018
—
—
—
1,018
News Media
1,132
—
—
—
1,132
Other
—
—
—
—
—
Total Revenues
$
4,999
$
—
$
—
$
—
$
4,999
Segment EBITDA:
Digital Real Estate Services
$
247
$
—
$
—
$
—
$
247
Subscription Video Services
201
—
—
—
201
Dow Jones
252
—
—
—
252
Book Publishing
90
—
—
—
90
News Media
77
—
—
—
77
Other
(108
)
6
—
9
(93
)
Total Segment EBITDA
$
759
$
6
$
—
$
9
$
774
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 tables reconcile 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 and six months ended December 31,
2023 and 2022:
For the three months ended
December 31, 2023
For the three months ended
December 31, 2022
(in millions, except per share data)
Net income attributable to
stockholders
EPS
Net income attributable to
stockholders
EPS
Net income
$
183
$
94
Net income attributable to noncontrolling
interests
(27
)
(27
)
Net income attributable to News
Corporation stockholders
$
156
$
0.27
$
67
$
0.12
U.K. Newspaper Matters
2
0.01
3
0.01
Impairment and restructuring charges
(a)
13
0.02
19
0.02
Other, net
(22
)
(0.04
)
6
0.01
Tax impact on items above
1
—
(12
)
(0.02
)
Impact of noncontrolling interest on items
above
(1
)
—
—
—
As adjusted
$
149
$
0.26
$
83
$
0.14
(a)
During the three months ended December 31,
2023, the Company recognized non-cash impairment charges of $1
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.
For the six months ended December
31, 2023
For the six months ended December
31, 2022
(in millions, except per share data)
Net income attributable to
stockholders
EPS
Net income attributable to
stockholders
EPS
Net income
$
241
$
160
Less: Net income attributable to
noncontrolling interests
(55
)
(53
)
Net income attributable to News
Corporation stockholders
$
186
$
0.32
$
107
$
0.18
U.K. Newspaper Matters
5
0.01
9
0.02
Impairment and restructuring charges
(a)
51
0.09
40
0.07
Other, net
13
0.02
24
0.04
Tax impact on items above
(18
)
(0.03
)
(27
)
(0.05
)
Impact of noncontrolling interest on items
above
2
0.01
(1
)
—
As adjusted
$
239
$
0.42
$
152
$
0.26
(a)
During the six months ended December 31,
2023, the Company recognized non-cash impairment charges of $22
million at the News Media segment related to the write-down of
fixed assets associated with the proposed combination of certain
U.K. printing operations with those of a third party.
NOTE 4 – CONSTANT CURRENCY REVENUES
The Company believes that the presentation of revenues excluding
the impact of foreign currency fluctuations (“constant currency
revenues”) provides useful information regarding the performance of
the Company’s core business operations exclusive of distortions
between periods caused by the unpredictability and volatility of
currency fluctuations. The Company calculates the impact of foreign
currency fluctuations for businesses reporting in currencies other
than the U.S. dollar as described in Note 2.
Constant currency revenues are not measures of performance under
generally accepted accounting principles and should not be
construed as substitutes for revenues as determined under GAAP as
measures of performance. However, management uses these measures in
comparing the Company’s historical performance and believes that
they provide meaningful and comparable information to investors to
assist in their analysis of our performance relative to prior
periods and our competitors.
The following tables reconcile reported revenues to constant
currency revenues for the three and six months ended December 31,
2023:
Q2 Fiscal 2023
Q2 Fiscal 2024
FX impact
Q2 Fiscal 2024 constant
currency
% Change - reported
% Change - constant currency
($ in millions)
Better/(Worse)
Consolidated results:
Circulation and subscription
$
1,085
$
1,119
$
5
$
1,114
3
%
3
%
Advertising
464
438
4
434
(6
)%
(6
)%
Consumer
512
527
6
521
3
%
2
%
Real estate
301
327
(2
)
329
9
%
9
%
Other
159
175
—
175
10
%
10
%
Total revenues
$
2,521
$
2,586
$
13
$
2,573
3
%
2
%
Digital Real Estate Services:
Circulation and subscription
$
3
$
2
$
—
$
2
(33
)%
(33
)%
Advertising
33
32
—
$
32
(3
)%
(3
)%
Real estate
301
327
(2
)
$
329
9
%
9
%
Other
49
58
(1
)
$
59
18
%
20
%
Total Digital Real Estate Services segment
revenues
$
386
$
419
$
(3
)
$
422
9
%
9
%
REA Group revenues
$
240
$
292
$
(3
)
$
295
22
%
23
%
Subscription Video Services:
Circulation and subscription
$
405
$
404
$
(5
)
$
409
—
%
1
%
Advertising
47
51
(1
)
$
52
9
%
11
%
Other
10
15
—
$
15
50
%
50
%
Total Subscription Video Services segment
revenues
$
462
$
470
$
(6
)
$
476
2
%
3
%
Q2 Fiscal 2023
Q2 Fiscal 2024
FX impact
Q2 Fiscal 2024 constant
currency
% Change - reported
% Change - constant currency
($ in millions)
Better/(Worse)
Dow Jones:
Circulation and subscription
$
417
$
441
$
3
$
438
6
%
5
%
Advertising
131
126
—
$
126
(4
)%
(4
)%
Other
15
17
—
$
17
13
%
13
%
Total Dow Jones segment revenues
$
563
$
584
$
3
$
581
4
%
3
%
Book Publishing:
Consumer
512
527
6
$
521
3
%
2
%
Other
19
23
—
$
23
21
%
21
%
Total Book Publishing segment revenues
$
531
$
550
$
6
$
544
4
%
2
%
News Media:
Circulation and subscription
$
260
$
272
$
7
$
265
5
%
2
%
Advertising
253
229
5
$
224
(9
)%
(11
)%
Other
66
62
1
$
61
(6
)%
(8
)%
Total News Media segment revenues
$
579
$
563
$
13
$
550
(3
)%
(5
)%
News UK
Circulation and subscription
$
129
$
141
$
8
$
133
9
%
3
%
Advertising
83
76
4
$
72
(8
)%
(13
)%
Other
26
22
1
$
21
(15
)%
(19
)%
Total News UK revenues
$
238
$
239
$
13
$
226
—
%
(5
)%
News Corp Australia
Circulation and subscription
$
107
$
106
$
(1
)
$
107
(1
)%
—
%
Advertising
113
96
(1
)
$
97
(15
)%
(14
)%
Other
32
34
—
$
34
6
%
6
%
Total News Corp Australia revenues
$
252
$
236
$
(2
)
$
238
(6
)%
(6
)%
Q2 YTD Fiscal 2023
Q2 YTD Fiscal 2024
FX impact
Q2 YTD Fiscal 2024 constant
currency
% Change - reported
% Change - constant currency
($ in millions)
Better/(Worse)
Consolidated results:
Circulation and subscription
$
2,196
$
2,248
$
(4
)
$
2,252
2
%
3
%
Advertising
870
829
3
826
(5
)%
(5
)%
Consumer
979
1,029
13
1,016
5
%
4
%
Real estate
624
638
(11
)
649
2
%
4
%
Other
330
341
(2
)
343
3
%
4
%
Total revenues
$
4,999
$
5,085
$
(1
)
$
5,086
2
%
2
%
Digital Real Estate Services:
Circulation and subscription
$
6
$
5
$
—
$
5
(17
)%
(17
)%
Advertising
68
67
—
$
67
(1
)%
(1
)%
Real estate
624
638
(11
)
$
649
2
%
4
%
Other
109
112
(3
)
$
115
3
%
6
%
Total Digital Real Estate Services segment
revenues
$
807
$
822
$
(14
)
$
836
2
%
4
%
REA Group revenues
$
492
$
553
$
(14
)
$
567
12
%
15
%
Subscription Video Services:
Circulation and subscription
$
830
$
819
$
(23
)
$
842
(1
)%
1
%
Advertising
111
113
(4
)
$
117
2
%
5
%
Other
23
24
—
$
24
4
%
4
%
Total Subscription Video Services segment
revenues
$
964
$
956
$
(27
)
$
983
(1
)%
2
%
Dow Jones:
Circulation and subscription
$
831
$
877
$
7
$
870
6
%
5
%
Advertising
225
217
—
$
217
(4
)%
(4
)%
Other
22
27
—
$
27
23
%
23
%
Total Dow Jones segment revenues
$
1,078
$
1,121
$
7
$
1,114
4
%
3
%
Book Publishing:
Consumer
979
1,029
13
$
1,016
5
%
4
%
Other
39
46
—
$
46
18
%
18
%
Total Book Publishing segment revenues
$
1,018
$
1,075
$
13
$
1,062
6
%
4
%
Q2 YTD Fiscal 2023
Q2 YTD Fiscal 2024
FX impact
Q2 YTD Fiscal 2024 constant
currency
% Change - reported
% Change - constant currency
($ in millions)
Better/(Worse)
News Media:
Circulation and subscription
$
529
$
547
$
12
$
535
3
%
1
%
Advertising
466
432
7
$
425
(7
)%
(9
)%
Other
137
132
1
$
131
(4
)%
(4
)%
Total News Media segment revenues
$
1,132
$
1,111
$
20
$
1,091
(2
)%
(4
)%
News UK
Circulation and subscription
$
263
$
285
$
18
$
267
8
%
2
%
Advertising
144
135
7
$
128
(6
)%
(11
)%
Other
52
47
3
$
44
(10
)%
(15
)%
Total News UK revenues
$
459
$
467
$
28
$
439
2
%
(4
)%
News Corp Australia
Circulation and subscription
$
219
$
213
$
(6
)
$
219
(3
)%
—
%
Advertising
217
189
(5
)
$
194
(13
)%
(11
)%
Other
71
72
(2
)
$
74
1
%
4
%
Total News Corp Australia revenues
$
507
$
474
$
(13
)
$
487
(7
)%
(4
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240207253722/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
News (ASX:NWSLV)
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