News Corporation Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Record first quarter revenue ($2.58B) and profitability ($415M), with profit margin up to 16.1%. Recurring circulation/subscription revenues expanded.
• Partnership with OpenAI and litigation against AI companies misusing journalism highlighted. Concerns over ad agency biases and market undervaluation of assets.
• Active discussions over Foxtel's future. REA's strategic stake value emphasized, with 61% of AUD 31B company worth ~USD 12.5B.
• Susan Panuccio stepping down as CFO after 8 years, new CFO announced. Lavinia to take over with Susan's support during transition.

Segment Performance

• Dow Jones: Revenues $552 million, up 3% y-o-y. Digital revenue accounts for 82% of total. B2B Professional Information revenues rose 8%, with Risk and Compliance up 16% to $81 million and Dow Jones Energy up 11% to $68 million. Consumer circulation revenues rose 1%, digital-only subs up 15%, while advertising revenues declined 7%.
• Digital Real Estate: Segment revenues $457 million, up 13% y-o-y. REA in Australia had strong quarter with listings up 7%, REA submitted bid for Rightmove but refused overpaying. REALTOR's revenues down 1% but adjacency growth seen.
• Book Publishing: Revenues $546 million, up 4% y-o-y. Profitability up 25%, digital revenues up 15% (audio books up 26%, e-books up 7%), backlist contributed 64% of consumer revenues.
• Subscription Video Services: Revenues $501 million, up 3% y-o-y. Streaming growth offset linear declines. Foxtel's streaming subscribers near 70% of paid, ARPU rising, advertising on streaming up over 45%.
• News Media: Profitability up 14% despite challenges. Australia digital subs 1.13M, NY Post Digital Network had 103M monthly unique users in September, cost discipline and OpenAI partnership impacting positively.

Guidance

• REA expected to reflect positive momentum in second quarter earnings. REALTOR's adjacency growth anticipated.
• Book Publishing expects momentum to stay strong ahead of seasonal gifting period.
• Subscription Video Services aims to scale streaming while retaining broadcast customers. Lower investment in Hubbl expected in remainder of fiscal 2025.
• News Media expects cost efficiencies from Talk TV retooling and U.K. print joint venture, though AI-related costs may increase.

Risks

• AI-related legal costs as News Corp defends against companies misusing journalism.
• Ad market volatility, including biases in ad agencies boycotting media properties.
• Market undervaluation of assets, particularly REA in the portfolio.

Q: Can you give sense on AI revenue split between Dow Jones and News Media segments and HarperCollins' AI revenue possibilities?

A: Can't be specific on AI revenue split due to confidentiality, but impact seen in News Media and Dow Jones. No specific info on HarperCollins' AI revenue yet.

Q: Dow Jones consumer circulation growth improvement?

A: Digital circulation revenue expected to improve as promo subs phase into higher paying tiers. Digital-only subs up 15%, and team expects positive digital trajectory to continue.

Q: Advertising at Dow Jones underperformance and recovery?

A: Softness in finance and tech, but expecting increase in digital advertising revenue across News Media properties.

Q: Foxtel shareholder loans status?

A: Balance sits at AUD 545 million post recent repayment.