Key Takeaways From News Corp’s Q2
News Corp (NASDAQ: NWSA) reported better-than-expected fiscal second quarter results, as both its revenue and earnings per share came in ahead of market expectations. In Q2, the company’s revenues grew 3% year-over-year (y-o-y) to $2.2 billion, primarily due to continued growth in the Digital Real Estate Service segment, a positive impact of foreign currency fluctuations and the acquisitions of Australian Regional Media (ARM) and Australian News Channel (ANC), partially offset by lower News America Marketing and print advertising revenues at the News and Information Services segment. The company’s total earnings before interest, taxes, depreciation, and amortization (EBITDA) was only 1% higher compared to the prior year, driven by continued growth in the Digital Real Estate Services and Book Publishing segments, partially offset by lower programming rights costs at the Cable Network Programming segment. The media company also posted negative earnings of 14 cents per share in the quarter.
We have created an Interactive Dashboard which outlines our forecasts for the company and our expectations for its Q3 2018 results. You can modify our forecasts to see the impact any changes would have on the company’s earnings and valuation.
Digital Real Estate – The Engine Of Growth
In Q2, Digital Real Estate segment revenues increased 21% y-o-y to $292 million, and the segment’s EBITDA further grew 25% y-0-y to $119 million, largely due to continued growth at REA Group and Move. At REA, revenues grew 24% y-o-y due to an increase in Australian residential depth revenue, benefiting from favorable product mix and higher prices, and the acquisition of Smartline. This was partially offset by the decline in revenue resulting from the sale of REA Group’s European business in fiscal 2017. The segment also saw a strong paid digital subscriber growth at key news mastheads, led by The Wall Street Journal with a 29% increase in its digital-only subscribers to approximately 1.4 million.
News And Information Services Remained Flat In Q2
The News and Information Services segment witnessed flat revenues in the second quarter, largely due to lower revenues at News America Marketing and weakness in the print advertising market – mainly in Australia and the U.S., offset by the acquisition of ARM in December 2016 and a positive impact from foreign currency fluctuations.
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