What To Expect From News Corp’s Fiscal 2019
News Corp (NASDAQ: NWSA) reported solid fiscal fourth quarter results, as both its revenue and earnings per share came in ahead of market expectations. In Q4, the company’s revenues grew 29% year-over-year (y-o-y) to $2.7 billion, primarily due to continued growth in the Digital Real Estate business and broad growth in other segments as well. News Corp consolidated Foxtel and Fox Sports Australia (including Sky News), reflecting in the newly formed revenue segment – Subscription Video Services. This consolidation will make circulation and subscription revenues the biggest revenue stream for News Corp for the first time, guarding the company against the volatile advertising market. In addition, the company’s total earnings before interest, taxes, depreciation, and amortization (EBITDA) grew more than 40% y-o-y. However, the media company also posted a net loss of $355 million as reported, accounting for a non-cash impact of $337 million from the combination of Foxtel and Fox Sports Australia, which is narrower than a year-ago net loss of $424 million.
Our $17 price estimate for News Corp’s stock is almost 10% ahead of the current market price. We have created an interactive dashboard on what to expect from News Corp’s fiscal 2019 earnings which outline our forecasts for the company’s full-year fiscal 2019 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 Q4, Digital Real Estate segment revenues increased 20% y-o-y to $299 million, and the segment’s EBITDA further grew 14% y-0-y to $99 million, largely due to continued growth at REA Group and Move. We expect this trend to continue in the near term, and accordingly, expect the company to post strong numbers in the Digital Real Estate segment at both REA and Move in fiscal 2019 as well.
Future Outlook
The combination of the Digital Real Estate Services and Subscription Video Services is expected to account for significantly more than half of News Corp profits. At News and Information Services – while pre-advertising trends continue downwards, they have been relatively stable, but visibility remains limited. As a consequence, the company is focused on driving higher penetration of digital paid subscriptions, particularly in Australia and at News UK in fiscal 2019. At Subscription Video Services, the company will focus on launching new OTT products, 4K, the next generation of the IQ Box and managing its broadcast base. In Book Publishing, underlying trends seem relatively stable and the company will be focused on its foreign language penetration. Some of HarperCollins’ next fiscal releases include the recent release of The Other Woman and Home Body. 
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