Strong Earnings Report Leads to Jump in Share Price of Murdoch’s News Corp

The Rupert Murdoch-owned publishing company saw its share price increase as profits almost doubled during the first half of the year.

Aug. 9, 2022

News Corp (NASDAQ: NWSA) is a publishing company that owns newspapers such as the Wall Street Journal, The Sun, The Australian, Barron’s, and many more. The company saw its share price increase by 2.12% after releasing its earnings report. According to CEO Robert Thomson:

“The News Media segment was the single largest contributor to the enhanced profit picture this fiscal year… bolstered by growth in digital advertising revenues and record digital subscriber numbers.”

What were the key points from News Corp’s earnings report?

In its Q4 earnings report, the company announced that total revenue for the year was up by 11% to $10.39 billion compared to $9.36 billion last year. During the same time, pre-tax income almost doubled from $450 million to $812 million. This was due to growth in all revenue lines, including contributions from recent acquisitions, an increase in digital subscriptions and advertising revenues, along with the additional week in fiscal 2022.

Reported earnings per share were $1.05 for the full year compared to $0.56 in 2021. This was due to a 50% increase in News Corp’s EBITDA from $210 million to $315 million. Dow Jones & Company achieved its highest full-year revenue and segment EBITDA since its acquisition in 2007, driven by strategic acquisitions, growth in its risk and compliance products, digital-only subscriptions, and record advertising revenues. 

News Corp announced in its earnings release that its decline in broadcasting was offset by strong growth from Foxtel — its streaming segment. Steaming revenues from Kayo and BINGE increased as total subscribers grew to 2.8 million by the end of the fiscal year. The segment’s revenue was down by 3% year-over-year due to currency fluctuations, but EBITDA was up by 23% to $81 million. This made it the third largest contributor, behind Digital Real Estate Services ($121 million) and Dow Jones & Co. ($106 million). 

News Corp saw its free cash flow decline from $731 million in 2021 to $663 million in 2022. This was due to capital expenditures increasing by $109 million and a greater cash flow from REA Group, which is a part of the Digital Real Estate Services Segment. A large portion of this increase in capital expenditure came from Foxtel. 

How do News Corp’s earnings impact investors?

Investors reacted positively to News Corp’s earnings release, with shares climbing by 2.12% the day the results were released. The share price is also up by 5.79% so far today. 

There has been a shift away from unprofitable tech stocks this year towards companies with strong cash generation abilities. News Corp has invested heavily in reducing its costs, such as closing down printing facilities for local newspapers in Australia and investing in its digital services. This has made the company significantly more profitable while allowing it to generate strong revenue growth. Investors who have typically kept away from old media companies are impressed by these results and are rethinking their position on media stocks and potentially even Rupert Murdoch himself.