What’s Next For News Corp’s Stock?
[Note: News Corp Fiscal 2024 Ended in June]
After a 14% rise since the beginning of 2024, we believe News Corp stock (NASDAQ: NWSA), a global, diversified media and information services company, could see further gains in the longer term. NWSA stock grew from around $24 to $28 (Jan 21.) during this period, underperforming the broader indices, with the S&P rising about 27% over the same time. In comparison, NWSA’s peer New York Times stock (NYSE: NYT) is up around 9% during the same period.
In Q1 2025, News Corp’s total revenues grew 3% year-over-year (y-o-y) to $2.6 billion, 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. In addition, its net income per share was $0.21 compared to $0.05 in the prior year. Also, its adjusted EPS was up 31% y-o-y to $0.21. Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
The company’s segment-wise review presents a largely optimistic picture, albeit with notable exceptions in two operating segments that are exhibiting declining trends: Subscription Video Services (revenue up 3% but EBITDA down 1%) and News Media segment (revenue down 5% and EBITDA up 14%). In the Subscription Video Services segment, higher costs related to Hubbl’s launch and escalated sports programming rights expenses, resulting from contractual rate increases and higher production costs, contributed to the decline in profitability. The news media businesses face ongoing print challenges and transition to digital platforms, particularly in the News Corp Australia division.
The increase in NWSA stock over the last 4-year period has been far from consistent and has largely been as volatile as the S&P 500. Returns for the stock were 25% in 2021, -18% in 2022, 36% in 2023, and 13% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
News Corp has agreed to sell its Australian cable TV unit Foxtel to DAZN for AUD 3.4 billion (USD 2.1 billion), including debt. The sale is anticipated to close in the first half of 2025, pending customary regulatory approvals and completion conditions. This move marks a strategic exit from a business that has struggled to compete with streaming platforms. Foxtel’s profitability has declined significantly since its launch in 1995, as subscribers switched to cheaper streaming services like Netflix. Despite efforts to adapt through streaming services Kayo and ESPN, Foxtel faced unsustainable costs, including soaring sports broadcasting rights fees and dwindling revenue. Ultimately, the company was forced to share broadcasting rights with free-to-air networks to offset its expenses.
Looking ahead, the company’s key divisions are poised for growth. Dow Jones will drive B2B growth through upselling and new products in Risk & Compliance and Energy, with circulation revenue growth expected to improve in the second half of 2025. In Digital Real Estate, Australian residential listings rose 14% in October, and the platform will continue to enhance technology and content to capitalize on interest rate cuts and adjacent growth opportunities. Book publishing profits are expected to continue improving in 2025, albeit at a more moderate pace. The subscription video services strategy will focus on scaling streaming products while retaining high-value customers, with decreased investment in Hubbl. Meanwhile, News Media will benefit from lower costs, operational efficiencies, and a new U.K. printing joint venture, despite a challenging ad market.
We forecast News Corp’s Revenues to be $10.4 billion for the fiscal year 2025, up 4% y-o-y. Looking at the bottom line, we now forecast earnings per share to be 90 cents. Given the changes to our revenues and EPS forecast, we have revised News Corp’s Valuation to $31 per share, based on a $0.90 expected EPS and a 34.5x P/E multiple for the fiscal year 2025 – 11% higher than the current market price. That said, the company’s stock appears cheap at the current price.
It is helpful to see how its peers stack up. Check out how News Corp’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
| Returns | Jan 2025 MTD [1] |
Since start of 2024 [1] |
2017-25 Total [2] |
| NWSA Return | 1% | 14% | 168% |
| S&P 500 Return | 3% | 27% | 170% |
| Trefis Reinforced Value Portfolio | 5% | 21% | 788% |
[1] Returns as of 1/22/2025
[2] Cumulative total returns since the end of 2016