VALUATION HIGHLIGHTS

1. Dow Jones constitute 36% of the Trefis price estimate for News Corp's stock.
2. Digital Real Estate constitutes 33% of the Trefis price estimate for News Corp's stock.
3. Book Publishing constitutes 18% of the Trefis price estimate for News Corp's stock.

WHAT HAS CHANGED?

1. News Corp Q1 2025 Snapshot

The company reported fiscal 2025 first quarter total revenues of $2.6 billion, a 3% increase year-over-year (y-o-y), primarily driven by higher Australian residential revenues at REA Group, higher digital book sales combined with improved returns at the Book Publishing segment and continued growth in the professional information business at the Dow Jones segment, in addition to a 1% positive impact from foreign currency fluctuations. The increase was partly offset by lower revenues in the News Media segment.

Net income per share attributable to News Corporation stockholders was $0.21 as compared to $0.05 in the prior year. Adjusted EPS was $0.21 compared to $0.16 in the prior year.

Note: News Corp's FY'24 ended on June 30, 2024. Q1 FY 25 refers to the quarter that ended on September 30, 2024

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below we highlight key drivers of News Corp's value that present opportunities for upside or downside to the current Trefis price estimate for News Corp.

Digital Real Estate

• Digital Real Estate Revenues: News Corp through REA offers digital advertising solutions to help real estate agents sell or rent properties and win new listings. The company generates revenues from advertising. REA owns and operates Australia's largest residential property website, realestate.com.au, and Australia's largest commercial property site, realcommercial.com.au. Moreover, the company acquired Move Inc. in the U.S. which will further drive the company's revenues. We estimate that the segment revenues will grow from $1.7 billion in FY 2024 to around $2.8 billion by the end of our forecast period. However, driven by a surge in the housing demand in Australia and benefits from the Move group of websites, digital real estate could grow at a higher rate. There could be an upside of more than 7% to the Trefis price estimate for News Corp's stock if the segment revenues were to increase to $3.5 billion by the end of our forecast period. On the other hand, if the real estate ad marketplace tends to be softer, it could lead to slower-than-expected advertising growth for News Corp. If the revenues only grow to around $2.0 billion during the Trefis forecast period, there could be a 8% downside to our price estimate.

BUSINESS SUMMARY

News Corp is a diversified media and information services company. The Company operates in four segments: News and Information Services, Subscription Video Services, Digital Real Estate Services, and Book Publishing. The company's overall business consists of a range of media, including news and information services, sports programming in Australia, digital real estate services, book publishing, and pay-TV distribution in Australia. The company distributes its content under various popular brands, including The Wall Street Journal, Dow Jones, Herald Sun, The Sun, The Times, HarperCollins Publishers, and Fox Sports Australia. The company also consolidated Foxtel and Fox Sports Australia (including Sky News), reflected in the revenue segment Subscription Video Services. This consolidation makes circulation and subscription revenues the biggest revenue stream for News Corp, guarding the company against the volatile advertising market.

SOURCES OF VALUE

The prime value contributor for News Corp consists of Dow Jones, News Corp Australia (which includes News Limited and its subsidiaries), News UK (formerly known as News International), and the New York Post. These generate revenue primarily through print and digital advertising sales and through circulation and subscriptions to its print and digital products. News Corp's Wall Street Journal is the leading circulation daily newspaper in the U.S., with an average print and digital circulation of ~4.3 million.

KEY TRENDS

Growth In Digital Content

Online media provides more abundantly available information, at a faster rate and cheaper prices when compared to print media. This has effectively rendered print newspapers obsolete, and as online reading is further made easier by tablets/smartphones, both physical circulation and print advertising within newspapers would likely see a decline going forward.

Migration To Other Media Alternatives

News Corp's businesses face competition from other sources of news, information, and entertainment content delivery, and consumers are migrating to other media alternatives. This reflects general trends in the newspaper industry, including declining newspaper buying by younger audiences and consumers' increasing reliance on the Internet for the delivery of news and information, often without charge.

Social Media To Drive Future Growth

Social networking leaders like Facebook have initiated a unique concept of "frictionless sharing" through their Open Graph tools, which enables publishers to instantly get their articles/content shared across a user's network of friends. Various media companies like Yahoo! and the Washington Post have adopted the Open Graph to increase user engagement, and we expect more websites to join the bandwagon if they are to increase both web traffic and user engagement. Additionally, the growing penetration and bandwidth capabilities of smartphones and tablets would play a major role in increasing traffic and viewership for media companies.