Rupert Murdoch-controlled News Corporation (NWSA - Free Report) commenced fiscal 2017 on a dismal note, slipping into loss in the first quarter. The loss figure also shows considerable deterioration from the year-ago quarter's earnings figure. Total revenue also declined year over year and fell short of expectations. Foreign currency headwinds and soft print advertising demand continue to weigh upon the company’s performance. However, expanded digital offerings along with greater emphasis on real estate businesses came as a respite.
News Corporation recorded adjusted loss of 1 cent a share that came in line with the Zacks Consensus Estimate but fell sharply from earnings of 5 cents delivered in the year-ago quarter. Including one-time items, the publisher of The Wall Street Journal and New York Post reported quarterly loss of 3 cents a share as against earnings of 30 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 $1,965 million, down 2% from the year-ago quarter and also below the Zacks Consensus Estimate of $1,983 million. Adverse foreign currency fluctuations hurt total revenue by $36 million.
The company’s adjusted revenues (excluding the impact of acquisitions and foreign currency fluctuations) came in at $1,964 million, reflecting a decline of 2% year over year.
Total advertising revenues declined 8.8% to $670 million, whereas circulation and subscription revenues fell 2.8% to $621 million. Consumer revenues decreased 4.6% to $374 million but revenues from real estate surged 18.6% to $172 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.
Revenues from the News and Information Services segment declined 5% year over year to $1,222 million in the reported quarter. Adjusted revenues fell 4% from the prior-year period. Advertising revenues plunged 11%, hurt by the adverse impact of foreign currency fluctuations and softness in the print advertising market, partly offset by higher digital advertising revenues and increased in-store product revenues at News America Marketing.
Circulation and subscription revenues dipped 4%; however, excluding the impact of foreign currency fluctuations, the figure inched up 1% on account of increase in subscription pricing, selected rise in cover prices in the U.K. and Australia and jump in paid digital subscribers, partly neutralized by fall in print volume. Digital revenues accounted for 24% of segment revenues in the quarter under review compared with 20% in the year-ago period. Adjusted segment EBITDA plummeted 27% during the quarter.
The Book Publishing segment reported revenues of $389 million, down 5% from the prior-year period on account of absence of revenues from Go Set a Watchman by Harper Lee, partly offset by the sustained expansion of HarperCollins and popular titles such as The Black Widow by Daniel Silva, Hillbilly Elegy by J.D. Vance and Jesus Always by Sarah Young. Digital sales constituted 20% of consumer revenues. Adjusted revenues for the segment fell 5%. On the other hand, adjusted EBITDA for News Corporation’s book publishing business increased 14%.
Revenues at the Digital Real Estate Services segment advanced 18% year over year to $226 million on the back of sustained growth witnessed across REA Group Limited (up 22%) and Move (up 9%), coupled with the buyout of iProperty and Diakrit. Adjusted revenues grew 10% in the quarter under review, while adjusted EBITDA increased 16%.
The Cable Network Programming segment’s revenues came in at $128 million, up 3% from the year-ago quarter on the back of increased advertising revenues. Adjusted revenues inched up 1%, whereas adjusted EBITDA plunged 29% year over year.
Other Financial Aspects
News Corporation ended the quarter with cash and cash equivalents of $1,499 million, borrowings of $377 million and shareholders’ equity of $11,530 million, excluding non-controlling interest of $216 million.
Capital expenditures of $49 million were incurred during the quarter, while free cash flow available to the company was negative $317 million.
News Corporation carries a Zacks Rank #4 (Sell).
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