The consolidation of Australian television assets helped News Corp boost revenue substantially in the June quarter, but also led to higher costs that weighed on the company’s bottom line.
News Corp in April completed the merger of Foxtel and Fox Sports Australia, and wound up with a controlling stake in the resulting entity, which is now one of the largest pay-TV, sports and entertainment outlets in Australia.
The deal helped propel a 29% increase in year-over-year revenue to $2.69 billion. Adjusted revenue, which factors out the effects of the Foxtel transaction, rose 5.2%.
The results were also boosted by strong sales and profit growth at the company’s book-publishing and digital-real-estate divisions. At the company’s news and information-services business, the largest unit that houses publications such as The Wall Street Journal, Times of London and New York Post, revenue increased 1% compared with the year-earlier quarter.
"News Corp is now a more substantial company after the Foxtel transaction, with a much higher percentage of recurring, subscription-based revenues, which should help offset a volatile advertising environment," said News Corp Chief Executive Robert Thomson in a written statement.
Charges related to the Foxtel transaction contributed to a net loss of $372 million, compared with a loss of $430 million in the year-earlier quarter. Earnings before interest, taxes, depreciation and amortization rose 45% to $312 million.
When leaving out the merger-related charges, the company reported adjusted earnings per share of 8 cents. Analysts polled by Thomson Reuters had forecast revenue of $2.65 billion and earnings per share of 6 cents.
In the news unit, circulation revenue gains were boosted by a 9% increase at Dow Jones, the Journal’s publisher. The Journal added 100,000 digital subscribers in the quarter. In the June quarter, the Journal averaged 1.59 million digital subscribers.
Advertising revenue for the entire news unit declined 2%, while circulation and subscription revenue increased 5%.
Earnings before interest, taxes, depreciation and amortization declined 9% in the news unit. That was because of higher costs at Dow Jones and lower revenue at News Corp’s papers in Australia.
The digital-real-estate business posted a 19% increase in revenue to $299 million. Ebitda rose 14% in the division.
Revenue in News Corp’s book-publishing segment rose 20% to $490 million, boosted by strong sales of "Magnolia Table," by Joanna Gaines, "I’ll Be Gone in the Dark," by Michelle McNamara and "Girl Wash Your Face," by Rachel Hollis. Ebitda for the unit rose 82%.
Write to Lukas I. Alpert at [email protected]
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