News Corp revenues up partially driven by ARM acquisition, while Foxtel revenues dip

News Corp has reported total revenues for the third quarter of 2017 of US$1.98bn, up from US$1.89bn in the year prior, with the revenue increase partially driven by the acquisition of Australian Regional Media from APN News & Media.

According to a statement filed to the ASX and the NASDAQ overnight, the  company – which locally publishes national broadsheet The Australian, Sydney tabloid The Daily Telegraph, Victoria’s Herald Sun and Queensland’s The Courier Mail – said its revenue for the quarter reflected growth in its News and Information Services segment, “driven by News America Marketing and the acquisitions of Australian Regional Media (“ARM”) and Wireless Group plc (“Wireless Group”), partially offset by lower print advertising revenues, as well as continued strong performance at the Digital Real Estate Services and Book Publishing segments”.

Revenues for the company’s News & Information segment posted revenues of $1.263bn for the quarter, up from $1.231bn in 2016.

The acquisition of ARM from APN News & Media contributed an extra $20m in advertising revenue to the segment, however a total increase of 4% in advertising revenues was “partially offset” by weakness in the print advertising market, a decline in circulation and falling subscription revenues thanks to negative foreign currency fluctuations.

Circulation and subscription revenues decreased by 1%. Digital revenues represented 24% of the segment’s revenues for the quarter.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the segment was $123m compared to a loss of $187m in the prior year.

The quarterly update also revealed digital subscribers for News Corp Australia’s mastheads which as of March 31 stood at 333,400 (including ARM) compared to 261,500 in the prior year.

News Corp CEO Robert Thomson said: “In the third quarter, we saw particular progress in our quest to be more digital and global, while there was tangible improvement in operating efficiencies. We posted solid revenue growth and substantial earnings growth, highlighted by momentum in Digital Real Estate Services, where continued to expand traffic, revenue and profitability.

“At News and Information Services, while print advertising remains volatile, we saw some moderation this quarter. Overall, the segment was a source of growth this quarter – in both revenues and profitability – driven by, in particular, the robust performance of in-store product at News America Marketing, digital subscriber gains of more than 300,000 at the Wall Street Journal and the benefits of ongoing cost control.

“The quarter was also characterised by an intensifying social and commercial debate over the dysfunctionality of the digital duopoly, and the lack of transparency in audience and advertising metrics. With brands in search of authenticated audiences and trusted advertising environments, we firmly believe that our mastheads offer veracity and value, and we are rapidly developing a new digital ad platform to offer clearly defined demographics from across our range of prestigious properties.”

Robert Thompson: The quarter was also characterised by an intensifying social and commercial debate over the dysfunctionality of the digital duopoly

News Corp’s Cable Network Programming total revenue increased US$15m – 14% up on the prior year – primarily due to the acquisition of Sky News and favourable foreign currency fluctuations.

Looking specifically at Foxtel,  its revenues decreased 3% in Australian currency.

Foxtel’s total closing subscribers were 2.8m as of March 31, with closing cable and satellite subscribers 1% lower compared to a year ago.

In the third quarter, cable and satellite subscription churn was 16.1% compared to 14.3% in the prior year.

The company’s net income was nil – compared to $32m in the prior year – primarily due to $21m in losses related to Foxtel management’s decision to shut down Presto in January and a $14 million loss resulting from the change in the fair value of Foxtel’s investment in Ten Network Holdings.

Foxtel EBITDA in Australian dollars decreased 13% for the quarter, due to lower revenues and planning increases in programming costs, specifically investments in sports.


For the company’s Digital Real Estate Services segment – which includes the REA Group – revenues in the quarter increased US$25m, up 13% on the year prior due to the continued growth at REA and New York-based Move.

“The growth was partially offset by the $9m and $4m impact from REA Group’s divestiture of its European business and Move’s sale of its TigerLead® product, respectively,” the ASX statement reads.

Segment EBITDA in the quarter increased $36m, or 92%, compared to the prior year, due to higher revenues, $13m of lower legal costs at Move and the absence of $7m of transaction costs related to iProperty in the prior year. This was partially offset by increased costs related to higher revenues and increased marketing expenses.

In the quarter, revenues at REA Group increased 10% to US$117m from US$106m in the prior year due to an increase in Australian residential depth revenue.

The company’s Book Publishing segment saw its revenues in the March quarter increase US$16m while digital sales increased 7% and represented 22% of consumer revenues for the quarter.

Segment EBITDA for the quarter increased $1m, or 3%, compared to the prior year.



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