Here’s Why Digital Real Estate Is News Corp’s Most Valuable Business

-5.04%
Downside
26.29
Market
24.96
Trefis
NWSA: News logo
NWSA
News

News Corp (NASDAQ:NWSA) is primarily known for its News and Information segment, which includes the Wall Street Journal, and is responsible for more than half of News Corp’s revenue. However, this segment has been witnessing declines due to a fall in print circulation numbers and a shrinking print ad market, driven by the emergence of digital media. As a result, News Corp has diversified into various businesses, Digital Real Estate Services being one of them. In fact, we estimate that Digital Real Estate accounts for around 35% of the company’s value, which is especially notable since the segment only accounts for 11% of total revenues.

News Corp’s Digital Real Estate business generates revenue by selling online advertising services on its residential real estate and commercial property sites. The segment includes its 80% interest in Move Inc., which operates the widely used realtor.com in the U.S. News Corp aims to capitalize on the growing online real estate sector with Move’s content advantage.

nwsaoutlines1nwsaoutlines5

Relevant Articles
  1. Capital One Stock Gained 44% In The Last 6 Months, What’s Next?
  2. Up 8% Year To Date As 5G Gains Traction, What’s Next For Verizon Stock?
  3. Up 32% In The Last 12 Months, Where Is BNY Mellon Stock Headed?
  4. Rallying 30% YTD, What’s Spurring The Rally In Applied Materials’ Stock?
  5. Will UPS Stock Recover To Its Pre-Inflation Shock High of $230?
  6. Should You Pick Boeing Stock At $190?

According to our estimates, Digital Real Estate contributes 29% of the total company EBITDA. In fact, the Digital Real Estate segment’s margins are around three times those of the company’s other segments, due to the relatively low-cost nature of the business.

nwsaoutlines341

What is Driving The Division’s Impressive Growth

News Corp’s Digital Real Estate segment has grown in importance for the company, increasing from 4% of revenues in 2010 to 10% in 2016. Given the company’s focus on the segment, we expect its contribution to total revenues to further increase to 14% by the end of our forecast period, largely driven by demand for digital real estate services from millennials, who account for an increasingly large proportion of home sales (34% in 2016). Many younger people prefer searching the internet for real estate, which presents a massive opportunity for News Corp given the recent home buyer demographics shown below.

nwsaoutlines7

Going forward, we expect Digital Real Estate Services revenue to grow at compounded annual growth rate (CAGR) of nearly 5% through 2022, driven by rapid growth in the online real estate market and changing demographics in the U.S. News Corp is gradually diversifying its business due to secular headwinds, becoming more reliant on its digital real estate business for growth.

nwsaoutlines6

Have more questions about News Corp? See our complete analysis for News Corp 

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology