News Corp earn­ings beat ex­pec­ta­tions

The Weekend Australian - - BUSINESS - DAR­REN DAVID­SON ME­DIA EDI­TOR

News Corp chief ex­ec­u­tive Robert Thom­son has sounded a de­fi­ant note for the com­pany with ev­ery seg­ment post­ing growth as real es­tate in­vest­ments and dig­i­tal sub­scrip­tions pushed profits higher.

Shares in News Corp fin­ished up 4.6 per cent to close at $19.70 as Mr Thom­son laid out growth plans for the group ahead of a pro­posed merger of the com­pany’s pay-TV busi­nesses.

Pend­ing de­fin­i­tive doc­u­men­ta­tion and reg­u­la­tory ap­proval, News is com­bin­ing Fox­tel and Fox Sports, with News Corp con- trolling 65 per cent of the new com­pany, and Tel­stra own­ing the re­main­der.

The new com­pany was “ex­pected to make a sub­stan­tial con­tri­bu­tion to our rev­enue and EBITDA, and fun­da­men­tally trans­form the na­ture of News Corp”, Mr Thom­son said on a call with an­a­lysts.

First-quar­ter rev­enue beat an­a­lysts’ rev­enue ex­pec­ta­tions, climb­ing 5 per cent amid gains in the dig­i­tal real es­tate busi­ness and grow­ing dig­i­tal sales in the news­pa­per unit, which helped off­set falls in print ad­ver­tis­ing.

The com­pany — which pub­lishes The Aus­tralian as well as other news­pa­pers in Aus­tralia, Bri­tain and the US — re­ported to­tal rev­enue of $US2.06 bil­lion ($2.68bn) in the three months to Septem­ber 30, com­pared with $US1.97bn in the prior pe­riod.

Earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­sa­tion im­proved 92 per cent to $US249 mil­lion, com­pared with $US130m in the prior year, partly boosted by a one-time $US46m tax ben­e­fit in Bri­tain.

Net in­come for the quar­ter was $US87m.

Growth was also boosted by the ac­qui­si­tions of Aus­tralian Regional Me­dia, Bri­tish talk­back ra­dio group Wire­less and a $US26m pos­i­tive im­pact from for­eign cur­rency fluc­tu­a­tions.

The dig­i­tal real es­tate busi­ness, in­clud­ing con­tri­bu­tions from REA Group and US list­ings busi­ness Move, re­ported a 20 per cent gain in rev­enue to $US271m. This means the seg­ment was once again the big­gest con­trib­u­tor to News Corp’s prof­itabil­ity.

“We saw the fruits of much labour to make this a more global and dig­i­tal com­pany, one in­creas­ingly de­fined by its grow­ing dig­i­tal real es­tate busi­ness and com­ple­mented by more re­cur­ring rev­enues from our ca­ble and satel­lite busi­nesses and sub­scrip­tion me­dia of­fer­ings,” Mr Thom­son said.

The com­pany’s news and in­for­ma­tion ser­vices busi­ness, which ac­counts for roughly twothirds of News Corp’s top line, re­ported a 2 per cent, or $US19m, in­crease in rev­enue. Dig­i­tal sub­scrip­tions were up at The Wall Street Jour­nal and other mast­heads in­clud­ing The Aus­tralian and The Times of Lon­don.

At the Dow Jones unit, pub­lisher of the WSJ, dig­i­tal sub­scrip­tions ac­counted for 60 per cent of rev­enues, a record num­ber.

News Corp Aus­tralia’s news­pa­pers main­tained their dig­i­tal growth mo­men­tum with sub­scrip­tions up 30 per cent com­pared to the same pe­riod a year ago.

The group recorded 375,000 paid sub­scribers, a bright spot for the news­pa­per in­dus­try as pub­lish­ers re­struc­ture to boost dig­i­tal-rev­enue streams.

The re­sults come af­ter Google an­nounced it would end its First Click Free pro­gram fol­low­ing sus­tained pres­sure by Mr Thom­son.

The move has been hailed as an im­por­tant first step for pub­lish­ers striv­ing to im­ple­ment a sus­tain­able busi­ness model in a dig­i­tal world, as pub­lish­ers rely more on get­ting read­ers to pay.

“Ru­pert (Mur­doch, ex­ec­u­tive chair­man), Lach­lan (Mur­doch, co-chair­man) and I, along with our col­leagues at News Corp, have long taken a prin­ci­pled, and of­ten soli­tary, stand to pro­tect in­tel­lec­tual prop­erty and safe­guard jour­nal­ism, so we ap­pre­ci­ate this sig­nif­i­cant first step taken by Google,” Mr Thom­son said.

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