NEWS CORP Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Sold Foxtel to DAZN for an enterprise value of AUD 3.4 billion, with News Corp holding ~6% stake in DAZN. Foxtel's financials now reported as discontinued operations.
• Revenues on continuing operations grew 5% to $2.24 billion, profitability rose 20% to $478 million. Net income from continuing operations jumped 58% to $306 million, EPS from continuing operations was $0.40. Overall margin increased from 18.7% to 21.4%.
• Credit ratings upgraded to investment grade by S&P Global and Moody's.
• Strong performance in Digital Real Estate, Dow Jones, and Book Publishing. News Media saw segment EBITDA growth despite revenue decline, benefiting from OpenAI revenues and partnerships.
• Partnership with OpenAI, legal action against Perplexity, and progress in AI-related collaborations.

Segment Performance

• Digital Real Estate: Revenue increased 13% to $473 million, with segment EBITDA reaching $185 million, up 26%.
• Dow Jones: Revenue grew 3% to $600 million, and segment EBITDA expanded 7% to $174 million.
• Book Publishing: Revenue rose 8% to $595 million, and segment EBITDA surged 19% to $101 million.
• News Media: Revenue declined 2% to $570 million, but segment EBITDA grew impressively by 30% to $74 million.

Guidance

• Market trends mixed geographically; currency translation expected to be a headwind in the second half.
• Dow Jones expects improved growth in the second half, focusing on B2B growth and cost efficiencies.
• Digital Real Estate anticipates modestly higher reinvestment in the second half.
• Book Publishing growth to moderate in the second half due to prior year comparisons.
• News Media faces challenging second half with advertising conditions and forex headwinds.

Risks

• Regulatory approvals required for the Foxtel deal to close.
• Uncertainty regarding transactional tariffs impacting demand for certain products.
• Market trends and competitive landscape posing challenges to segment performances.

Question and Answer

Q: David Karnovsky on Foxtel deal structure and strategic review A: Robert Thomson discussed the deal being subject to regulatory approvals, partnership with DAZN, and ongoing portfolio review for company structure optimization.

Q: Kane Hannan on Dow Jones second half growth A: Robert Thomson and Lavanya Chandrashekar talked about circulation trends, pricing strategy, and seasonality contributing to expected second half growth for Dow Jones.

Q: Jason Bazinet on Spotify partnership A: Robert Thomson mentioned audience expansion and consumer behavior change as outcomes of the Spotify partnership.

Q: Entcho Raykovski on proceeds from Foxtel sale A: Robert Thomson noted focus on shareholder returns, $1 billion buyback provision, and free cash flow management.

Q: David Joyce on Dow Jones pricing and Book Publishing titles A: Robert Thomson and Lavanya Chandrashekar discussed pricing trajectory for Dow Jones and upcoming book releases for Book Publishing.

Q: Craig Huber on company structure optimization A: Robert Thomson talked about ongoing portfolio review and the value of Realtor in the company's structure.

Q: Brian Han on Dow Jones growth and investment A: Robert Thomson discussed growth expectations for Dow Jones and potential investments in the business.

Q: Evan Karatzas on Dow Jones margin and Factiva impact A: Lavanya Chandrashekar talked about the impact of Factiva on revenue and margin discipline for Dow Jones in the second half.