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News Corp Earnings Miss by a Penny

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Rupert Murdoch controlled diversified media conglomerate, News Corporation (NWSA - Free Report) reported first-quarter fiscal 2014 results. The publisher of The Wall Street Journal and owner of Dow Jones posted quarterly earnings of 3 cents a share that missed the Zacks Consensus Estimate by a penny, and fell approximately 50% from the prior-year quarter. Softness witnessed across the company’s Australian newspaper muted the company’s performance.

Including one-time items, the company reported quarterly earnings of 5 cents a share that showed a substantial improvement from a loss of 16 cents.

The company, which split from Twenty-First Century Fox, Inc. (FOXA - Free Report) on Jun 28, 2013, said that total revenue for the quarter came in at $2,072 million, down 3% from the year-ago quarter and also fell short of the Zacks Consensus Estimate of $2,189 million.

Total revenue of this Zacks Rank #3 (Hold) stock was adversely affected by lower advertising revenue that dropped 8% to $958 million, partially offset by a 12% jump in circulation and subscription revenue of $679 million.

Segments' Performance

We observe that revenue across News and Information Services segment fell 10% year over year to $1,495 million primarily due to waning advertising revenues, indicating a soft economic scenario in Australia and a decline in advertising revenues at Dow Jones and News UK. Australian newspapers revenues fell 22%. Adjusted segment EBITDA increased 12% to $133 million.

Cable Network Programming segment revenues came in at $132 million, while EBITDA was $29 million, reflecting the consolidation of FOX SPORTS Australia since Nov 2012, attributable to the acquisition of Consolidated Media Holdings Ltd. (“CMH”), a media investment company that has its operations in Australia.

Revenues at Digital Real Estate Services segment soared 11% year over year to $90 million while adjusted EBITDA jumped 43% to $50 million.

Book Publishing segment, which consists of HarperCollins Publishers, reported revenues of $328 million, down 7% from the prior year due to the divestment of the Women of Faith live events business, discontinuation of the third party distribution business in the U.S. and sluggishness witnessed in the Christian publishing marketplace. These were partially offset by a 30% increase in e-book sales. Adjusted EBITDA for News Corporation’s book publishing business, which competes with e-book devices sold by Inc. (AMZN - Free Report) and Apple Inc. (AAPL - Free Report) , came in at $43 million, increasing 8% year over year.

The Other segment, which comprises Amplify, a digital education business, posted revenues of $27 million that plunged 21% from the previous year. The divestment of Australian digital businesses in fiscal 2013 impacted the results. Adjusted EBITDA for the segment was a loss of $91 million compared with a loss of $52 million in the prior period.

Other Financial Aspects

News Corporation ended the quarter with cash and cash equivalents of $2,688 million, amounts due to Twenty-First Century Fox of $413 million, and shareholders’ equity of $12,821 million, excluding non-controlling interest of $118 million.

Capital expenditures for the year were $67 million, while the company generated negative free cash flow of $10 million.

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