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News Corp (NWSA) Misses on Q4 Earnings, Revenues Beat

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Rupert Murdoch-controlled News Corporation (NWSA - Free Report) posted the fourth straight quarter of negative earnings surprise, when it reported results for the final quarter of fiscal 2016. However, what came as a respite was that the bottom line grew year over year. Expanded digital offerings, along with greater emphasis on real estate businesses and strong performance across the Book Publishing and Cable Network Programming divisions positively impacted the quarter. However, foreign currency headwinds and soft print advertising demand continue to weigh upon the company’s performance to an extent.

News Corporation recorded adjusted earnings of 10 cents a share that missed the Zacks Consensus Estimate by a couple of cents but increased 25% from 8 cents delivered in the year-ago quarter. Including one-time gain of $122 million ($75 million, net of tax) with respect to the litigation settlement between Move and Zillow Group, restructuring charges and discontinued operations, the publisher of The Wall Street Journal and New York Post reported quarterly earnings of 15 cents a share as against a loss of 65 cents posted in the year-ago period.

News Corporation, which split from Twenty-First Century Fox, Inc. (FOXA - Free Report) , stated that its total revenue for the reported quarter was $2,226 million, up 5% from the year-ago quarter and also ahead of the Zacks Consensus Estimate of $2,040 million. Adverse foreign currency fluctuations hurt total revenue by $54 million.

This Zacks Rank #3 (Hold) company’s adjusted revenues (excluding the impact of acquisitions and foreign currency fluctuations) jumped 6% year over year to $2,238 million.

Total advertising revenues remained almost flat at $972 million, whereas circulation and subscription revenues increased 6% to $694 million. Consumer revenues surged 12% to $414 million.

News Corporation, which offers e-books for devices sold by Amazon.com Inc. (AMZN - Free Report) and Apple Inc. (AAPL - Free Report) , is in a transitional phase, looking to diversify its revenue streams, along with expanding its digital properties via product launches and accretive acquisitions. The company recently entered into a deal to buy Wireless Group, which operates TalkSPORT, the sports radio network in the U.K., and a portfolio of radio stations in the U.K. and Ireland, for approximately $300 million.

Segmental Performance

Revenues from the News and Information Services segment inched up 1% year over year to $1,417 million in the reported quarter. Advertising revenues declined 5%, hurt by the adverse impact of foreign currency fluctuations, softness in the print advertising market, and a fall in free standing insert product revenues at News America Marketing. These were partly offset by higher digital advertising revenues and increase in-store product revenues at News America Marketing and one extra week in the quarter. Digital revenues accounted for 23% of segment revenues in the quarter under review compared with 19% in the year-ago period. Circulation and subscription revenues climbed 5%. Adjusted segment EBITDA grew 10% during the quarter.

The Book Publishing segment reported revenues of $433 million, up 11% from the prior-year period on account of popular titles such as The Nest, The Rainbow Comes and Goes, The World’s Worst Children and Jesus Calling, as well as a $19 million gain from the extra week and the expansion of HarperCollins. Digital sales constituted 19% of consumer revenues. EBITDA for News Corporation’s book publishing business surged 52%.

Revenues at the Digital Real Estate Services segment improved 21% year over year to $229 million on the back of sustained growth witnessed across REA Group Limited (up 17%) and Move (up 21%), coupled with the buyout of iProperty and Diakrit. Adjusted EBITDA increased 24%.

The Cable Network Programming segment’s revenues came in at $147 million, up 11% from the year-ago quarter. Adjusted EBITDA grew 14% year over year. Management highlighted that foreign currency headwinds hurt revenues by $5 million.

NEWS CORP NEW-A Price, Consensus and EPS Surprise

NEWS CORP NEW-A Price, Consensus and EPS Surprise | NEWS CORP NEW-A Quote

Other Financial Aspects

News Corporation ended the quarter with cash and cash equivalents of $1,832 million, borrowings of $369 million, and shareholders’ equity of $11,782 million, excluding non-controlling interest of $218 million.

Capital expenditures of $256 million were incurred during fiscal 2016, while free cash flow available to the company was $610 million.

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