News Corp Q1 results for fiscal 2023: revenue dips 1%

News Corporation today reported fiscal 2023 first quarter total revenues of $2.48 billion (A$3.81 billion), a 1% decrease compared to $2.5 billion (AU$3.84 billion) in the prior year period.

The decline was reported as primarily due to a $153 million (A$235 million), or 6%, negative impact from foreign currency fluctuations and lower revenues at the Book Publishing segment due to lower physical book sales from Amazon, partially offset by higher Dow Jones segment revenues, which included the acquisitions of OPIS and Chemical Market Analytics. Adjusted Revenues increased 3%.

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While REA Group’s residential business continued to benefit from price increases, favourable depth penetration and product mix, and growth in national listings.

And at the Subscription Video Services segment, Foxtel saw its streaming revenues from Kayo and BINGE continue to offset broadcast revenue declines.

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The Company reported first quarter Total Segment EBITDA of $350 million (A$537 million), a 15% decline compared to $410 million (A$630 million) in the prior year, primarily due to an increase in costs, partly due to inflationary pressures, lower revenues, and a $23 million (A$35 million), or 6%, negative impact from foreign currency fluctuations. Adjusted Total Segment EBITDA decreased 13%.

Net income per share attributable to News Corporation stockholders was $0.07 (A$0.11) as compared to $0.33 (A$0.51) in the prior year.

Adjusted EPS were $0.12 (A$0.18) compared to $0.23 (A$0.35) in the prior year.

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“Headline revenues were down one percent to $2.5 billion (A$3.84 billion), but the decline was obviously a consequence of foreign currency fluctuations. On an adjusted basis, our revenues grew a healthy three percent, building on the robust results from last year.

“Profitability for the quarter was $350 million (A$537 million), down 15 percent, although that reflects the forex headwinds and a fundamental reset by Amazon of its book inventory levels and warehouse footprint. We view neither factor as reflective of core business conditions or of our long-term potential.

“Dow Jones posted its best first quarter results since its acquisition with revenues rising 16 percent and Segment EBITDA an even more impressive 19 percent, benefiting from the successful integration of OPIS and Chemical Market Analytics, strong digital advertising growth, record digital subscriptions and continued momentum at Risk & Compliance.”

Thomson said: “At Subscription Video Services, Foxtel had another strong quarter. Streaming subscriber penetration continues to expand, and costs have been thoughtfully controlled. Foxtel has recently renewed or signed valuable long‐term sports rights and content agreements, including the AFL, WWE and NBCUniversal. We have obvious optionality at Foxtel, where the conversation is no longer about how much capital we plan to invest – but the potential for capital return.

“Foxtel’s streaming services attained 2.8 million paying subscribers as of the end of September, surging 34% versus the prior year and accounting for 63% of the total paying subscriber base.

“Kayo and BINGE added nearly three quarters of a million paying subscribers in the past year alone, underscoring the potential of Foxtel in a still‐expanding Australian market. Foxtel Group delivered record audiences for the recent AFL and NRL finals. Meanwhile, motorsport, the Rugby League World Cup and T20 World Cup Cricket are bolstering subscriber loyalty as we near the spring selling season.”

News Corp CFO Susan Panuccio added: “In Subscription Video Services, revenues for the quarter were US$502 million, down approximately 2% compared to the prior year on a reported basis due to foreign currency headwinds. Importantly, on an adjusted basis, revenues rose 6% versus the prior year, accelerating from the prior quarter rate of 4% growth.

“Streaming revenues accounted for 25% of circulation and subscription revenues, versus 19% in the prior year and again more than offset broadcast revenue declines.

“Total closing paid subscribers across the Foxtel Group reached almost 4.5 million at quarter end, up 16% year‐over‐year, with the growth rate improving 3 percentage points from the fourth quarter. Total subscribers, including trialists, reached over 4.6 million.

“Total paid streaming subscribers reached over 2.8 million, increasing 34% versus the prior year and adding 117,000 sequentially, with streaming subscribers now representing 63% of Foxtel’s total paid subscriber base.

“Kayo paying subscribers reached almost 1.3 million, up nearly 19% year‐over‐year, slightly down from the fourth quarter levels due to typical seasonal patterns with the end of the AFL and NRL seasons in September.

“Binge paying subscribers grew a robust 67% year‐over‐year to over 1.3 million subscribers, benefiting from the release of the House of the Dragon and the popularity of the Foxtel original series, The Twelve.

“Foxtel ended the quarter with over 1.4 million residential broadcast subscribers, down 10% year‐over‐year, similar to the fourth quarter rate. Broadcast churn was 14.2% compared to 14% in the prior year, partly reflecting the acceleration of migrating subscribers off cable. Broadcast ARPU rose over 1% to approximately A$83.

“Segment EBITDA in the quarter of US$111 million fell 3% versus the prior year, significantly impacted by currency with Adjusted Segment EBITDA increasing 5%.”

On Outlook, Panuccio said: “In Subscription Video Services, we remain pleased with the performance of the streaming products and the ongoing focus on Broadcast ARPU and churn as we continue to migrate customers from cable to streaming.”

Thomson concluded: “News Corp is building on a sturdy base. We have reported record profitability in each of the last two fiscal years and bolstered our fortunes through savvy investments and by streamlining the cost base.”

News Corp shares were at A$25.93 at the time of publication, and has a market capitalisation of US$9.96 billion (A$15.3 billion).


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