News Corp Earnings Review: Digital Real Estate Growth Can’t Offset Declines

May 6th, 2016 by Trefis Team
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News Corp (NASDAQ:NWSA) announced its fiscal third quarter earnings on Thursday, May 5, reporting a 7% year on year (y-o-y) drop in revenues. The company saw revenue declines in each of its segments except for digital real estate, which rose 14% y-o-y, driven by continued growth at REA Group and Move. Book publishing revenues saw weakness, as revenues from American Sniper and the Divergent series slowed down, and e-book sales failed to pick up in the quarter. Furthermore, the absence of the Asian Cup and Cricket World Cup caused cable network programming revenues to fall.

In terms of the bottom line, due to one-time pre-tax charges of $280 million for the settlement of litigation and related claims at News America Marketing, News Corp’s operating costs shot up 8% on an annual basis. Consequently, the company’s EBITDA margin dropped to negative 6.5%.

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As per our expectations, the news and information segment remained a challenge for News Corp, due to continued headwinds in print, offset slightly by growth digital advertising and circulation (increased paid digital subscribers at The Wall Street Journal).

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See the links below for more information and analysis about News Corp:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to the full Trefis analysis for News Corp.

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