News Corporation Beats Q1 Earnings, Revenues Rise Y/Y
Rupert Murdoch controlled News Corporation (NWSA) reported better-than-expected first-quarter fiscal 2015 results attributable to effective cost management, increased revenues at Book Publishing and Cable Network Programming divisions, and expanded digital offerings. The company recorded quarterly earnings of 9 cents a share that surpassed the Zacks Consensus Estimate of 3 cents, and rose threefold from the prior-year quarter.
Including one-time items, the publisher of The Wall Street Journal and New York Post, reported quarterly earnings of 11 cents a share compared with 5 cents in the year-ago quarter. Shares of this diversified media conglomerate rose roughly 4% during after-market trading hours yesterday.
The company is in a transitionary phase looking to diversify its revenue streams and expanding its digital properties via product launches and accretive acquisitions. News Corporation acquired Storyful, a step in the direction of enhancing online video offerings. It also completed the buyout of Harlequin Enterprises Limited from Torstar Corporation. Harlequin, which will form part of HarperCollins Publishers, is a leading publisher of women’s fiction and would help in augmenting its presence primarily in Europe and Asia Pacific.
News Corporation, which has a 61.6% stake in the digital real estate services company, REA, informed that the latter has acquired 17.2% stake in iProperty Group Limited, which has online property advertising operations in Malaysia, Indonesia, Hong Kong, Macau and Singapore with investments in the Philippines and India. The company is also acquiring Move, one of the leading providers of online real estate services, for $950 million. Move will form part of Digital Real Estate Services segment.
News Corporation, which split from Twenty-First Century Fox, Inc. (FOXA) on Jun 28, 2013, said that total revenue for the quarter came in at $2,150 million, up 4% from the year-ago quarter and also came ahead of the Zacks Consensus Estimate of $2,094 million.
Total revenue of this Zacks Rank #3 (Hold) stock was favorably impacted by its sturdy performance across the Digital Real Estate Services, Digital Education and Book Publishing divisions. The addition of Harlequin also contributed to the top line. This was partially offset by a decline in advertising revenues at the News and Information Services division and the sale of the Dow Jones Local Media Group.
Total advertising revenue dropped 4% to $920 million, while circulation and subscription revenue grew marginally by 0.6% to $683 million. Consumer revenue increased 25.4% to $390 million.
Segments Performance
Revenues from the News and Information Services segment fell 3% year over year to $1,451 million primarily due to a 7% decline in advertising revenues on account of softness in the print advertising market and the sale of the Dow Jones Local Media Group. Adjusted segment EBITDA plunged 19% to $104 million.
The Book Publishing segment, which consists of HarperCollins Publishers, reported revenues of $406 million, up 24% from the prior-year period, reflecting robust performance by the Divergent series by Veronica Roth and the addition of the Harlequin results. On the other hand, e-book sales surged 28%, contributing 22% to consumer revenues.
Adjusted EBITDA for News Corporation’s business book publishing, which competes with e-book devices sold by Amazon.com Inc. (AMZN) and Apple Inc. (AAPL), came in at $53 million, up 23% year over year.
The Cable Network Programming segment revenues came in at $139 million, up 5% from the year-ago quarter attributable to an increase in affiliate pricing and subscribers growth, whereas adjusted EBITDA was $32 million, up 10% year over year.
Revenues at the Digital Real Estate Services segment soared 24% year over year to $112 million, whereas adjusted EBITDA surged 32% to $58 million.
Revenues at the Digital Education division advanced 56% to $42 million, reflecting an increase in revenues at Amplify Learning, whereas adjusted EBITDA was a loss of $24 million compared with a loss of $51 million in the prior-year period.
Other Financial Aspects
News Corporation ended the quarter with cash and cash equivalents of $2,735 million, amount due from Twenty-First Century Fox of $60 million, and shareholders’ equity of $12,841 million, excluding non-controlling interest of $141 million.
Capital expenditures for the quarter were $114 million, while the company generated free cash flow of $73 million.
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