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News Corporation Reports Second Quarter Results for Fiscal 2023

FISCAL 2023 SECOND QUARTER KEY FINANCIAL HIGHLIGHTS

  • Revenues in the quarter were $2.52 billion, a 7% decrease compared to $2.72 billion in the prior year, reflecting a $171 million, or 6%, negative impact from foreign currency fluctuations. Adjusted Revenues decreased 3%
  • Net income in the quarter was $94 million compared to $262 million in the prior year
  • Total Segment EBITDA in the quarter was $409 million compared to $586 million in the prior year
  • In the quarter, reported EPS were $0.12 compared to $0.40 in the prior year – Adjusted EPS were $0.14 compared to $0.44 in the prior year
  • At the Dow Jones segment, revenues from its professional information business grew 45%, benefiting from the acquisitions of OPIS and CMA and the ongoing momentum in its Risk & Compliance products
  • At the Subscription Video Services segment, higher streaming revenues from Foxtel’s Kayo and BINGE continued to offset broadcast revenue declines
  • Revenues at News UK continued to benefit from strong digital advertising revenue growth at The Sun, highlighting the brand’s successful expansion into the U.S. and increase in yield
  • Engaged in discussions with CoStar Group regarding a potential sale of Move

News Corporation (“News Corp” or the “Company”) (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) today reported financial results for the three months ended December 31, 2022.

Commenting on the results, Chief Executive Robert Thomson said:

“The second quarter highlighted the progress made in certain of our business segments. Obviously, a surge in interest rates and acute inflation had a tangible impact on all of our businesses. But we believe these challenges are more ephemeral than eternal. Just as our company passed the stress-test of the pandemic with record profits, the initiatives now underway, including an expected 5 percent headcount reduction, or around 1,250 positions this calendar year, will create a robust platform for future growth.

Even in the midst of the obvious global challenges, the professional information business at Dow Jones displayed particular promise, with revenues surging 45 percent year-over-year. That encouraging result highlights the value of our opportunistic acquisitions of OPIS and CMA, and continuing growth at our burgeoning Risk and Compliance business.

In terms of portfolio optimization, as publicly reported, we have been actively engaged in discussions with CoStar Group about a potential sale of Move. Any transaction would be designed to create shareholder value and strengthen Realtor.com®’s competitive position.”

SECOND QUARTER RESULTS

The Company reported fiscal 2023 second quarter total revenues of $2.52 billion, a 7% decrease compared to $2.72 billion in the prior year period. The decline was primarily due to a $171 million, or 6%, negative impact from foreign currency fluctuations, lower revenues at the Book Publishing segment primarily due to lower book sales and lower revenues at the Digital Real Estate Services segment due to challenging housing market conditions in Australia and the U.S. The decline was partially offset by higher Dow Jones segment revenues, which includes the acquisitions of OPIS and Chemical Market Analytics (“CMA”), and higher Subscription Video Services revenues on a constant currency basis. Adjusted Revenues (which excludes the foreign currency impact, acquisitions and divestitures as defined in Note 2) decreased 3%.

Net income for the quarter was $94 million, a 64% decline compared to $262 million in the prior year, primarily due to lower Total Segment EBITDA, as discussed below, and higher losses from equity affiliates due to losses from the Company’s investment in a newly launched sports wagering platform in Australia, partially offset by lower tax expense.

The Company reported second quarter Total Segment EBITDA of $409 million, a 30% decline compared to $586 million in the prior year, primarily due to higher costs at the Dow Jones segment, higher operating expenses at the News Media segment, partly due to inflationary pressures, lower revenues, as discussed above, and a $30 million, or 5%, negative impact from foreign currency fluctuations. The results this quarter also include $6 million of one-time costs related to the professional fees incurred by the Special Committee and the Company in connection with evaluating the proposal from the Murdoch Family Trust. Adjusted Total Segment EBITDA (as defined in Note 2) decreased 28%.

Net income per share attributable to News Corporation stockholders was $0.12 as compared to $0.40 in the prior year.

Adjusted EPS (as defined in Note 3) were $0.14 compared to $0.44 in the prior year.

SEGMENT REVIEW

 

 

For the three months ended

December 31,

 

For the six months ended

December 31,

 

 

2022

 

2021

 

%

Change

 

2022

 

2021

 

%

Change

 

 

(in millions)

 

Better/

(Worse)

 

(in millions)

 

Better/

(Worse)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

386

 

 

$

456

 

 

(15

)%

 

$

807

 

 

$

882

 

 

(9

)%

Subscription Video Services

 

 

462

 

 

 

498

 

 

(7

)%

 

 

964

 

 

 

1,008

 

 

(4

)%

Dow Jones

 

 

563

 

 

 

508

 

 

11

%

 

 

1,078

 

 

 

952

 

 

13

%

Book Publishing

 

 

531

 

 

 

617

 

 

(14

)%

 

 

1,018

 

 

 

1,163

 

 

(12

)%

News Media

 

 

579

 

 

 

638

 

 

(9

)%

 

 

1,132

 

 

 

1,214

 

 

(7

)%

Other

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

Total Revenues

 

$

2,521

 

 

$

2,717

 

 

(7

)%

 

$

4,999

 

 

$

5,219

 

 

(4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

128

 

 

$

178

 

 

(28

)%

 

$

247

 

 

$

316

 

 

(22

)%

Subscription Video Services

 

 

90

 

 

 

86

 

 

5

%

 

 

201

 

 

 

200

 

 

1

%

Dow Jones

 

 

139

 

 

 

144

 

 

(3

)%

 

 

252

 

 

 

239

 

 

5

%

Book Publishing

 

 

51

 

 

 

107

 

 

(52

)%

 

 

90

 

 

 

192

 

 

(53

)%

News Media

 

 

59

 

 

 

111

 

 

(47

)%

 

 

77

 

 

 

145

 

 

(47

)%

Other

 

 

(58

)

 

 

(40

)

 

(45

)%

 

 

(108

)

 

 

(96

)

 

(13

)%

Total Segment EBITDA

 

$

409

 

 

$

586

 

 

(30

)%

 

$

759

 

 

$

996

 

 

(24

)%

Digital Real Estate Services

Revenues in the quarter decreased $70 million, or 15%, compared to the prior year, reflecting a $26 million, or 5%, negative impact from foreign currency fluctuations. Segment EBITDA in the quarter decreased $50 million, or 28%, compared to the prior year, primarily due to the lower revenues and a $13 million, or 7%, negative impact from foreign currency fluctuations, partially offset by lower broker commissions at REA Group. Adjusted Revenues and Adjusted Segment EBITDA (as defined in Note 2) decreased 10% and 22%, respectively.

In the quarter, revenues at REA Group decreased $47 million, or 16%, to $240 million, driven by a $26 million, or 9%, negative impact from foreign currency fluctuations, lower financial services revenues due to declines in settlement activity and lower Australian residential revenues due to the decline in national listings, most notably in Sydney and Melbourne. The decline was partially offset by price increases and increased depth penetration in the Australian residential and commercial businesses, increased penetration of Premiere Plus and higher revenues from REA India. Australian national residential buy listing volumes in the quarter declined 21% compared to the prior year, with listings in Sydney and Melbourne down 34% and 31%, respectively.

Move’s revenues in the quarter decreased $23 million, or 14%, to $146 million, primarily as a result of lower real estate revenues. Real estate revenues, which represented 83% of total Move revenues, decreased $25 million, or 17%, driven by the impact of the macroeconomic environment on the housing market, including higher household interest rates, which has led to lower lead and transaction volumes. Revenues from the referral model, which includes the ReadyConnect Concierge℠ product, and the traditional lead generation product decreased due to these factors. The referral model generated 27% of total Move revenues in the quarter compared to 32% in the prior year. Based on Move’s internal data, average monthly unique users of Realtor.com®’s web and mobile sites for the fiscal second quarter declined 23% year-over-year to 66 million. Lead volume declined 37%.

Subscription Video Services

Revenues of $462 million in the quarter decreased $36 million, or 7%, compared with the prior year, due to a $52 million, or 10%, negative impact from foreign currency fluctuations. Adjusted Revenues of $514 million increased 3% compared to the prior year. Higher revenues from Kayo and BINGE, driven by increases in both volume and pricing, and higher commercial revenues were partially offset by the impact from fewer residential broadcast subscribers and lower advertising revenues. Foxtel Group streaming subscription revenues represented approximately 26% of total circulation and subscription revenues in the quarter, as compared to 19% in the prior year.

As of December 31, 2022, Foxtel’s total closing paid subscribers were over 4.3 million, a 10% increase compared to the prior year, primarily due to the growth in BINGE and Kayo subscribers, partially offset by lower residential broadcast subscribers. Broadcast subscriber churn in the quarter improved slightly to 12.9% from 13.0% in the prior year. Broadcast ARPU for the quarter increased 2% year-over-year to A$83 (US$55).

 

 

As of December 31,

 

 

2022

 

2021

 

 

(in 000's)

Broadcast Subscribers

 

 

 

 

Residential

 

1,401

 

1,564

Commercial

 

230

 

218

Streaming Subscribers (Total (Paid))

 

 

 

 

Kayo

 

1,136 (1,126 paid)

 

1,031 (1,013 paid)

BINGE

 

1,439 (1,375 paid)

 

1,037 (928 paid)

Foxtel Now

 

183 (177 paid)

 

219 (211 paid)

 

 

 

 

 

Total Subscribers (Total (Paid))

 

4,414 (4,329 paid)

 

4,075 (3,937 paid)

Segment EBITDA in the quarter increased $4 million, or 5%, compared with the prior year, reflecting a $10 million, or 11%, negative impact from foreign currency fluctuations. The growth was partially offset by higher sports programming rights and production costs, driven by contractual increases and enhanced digital rights, as well as higher entertainment rights costs due to an increase in content availability compared to the prior year. Adjusted Segment EBITDA increased 16%.

Dow Jones

Revenues in the quarter increased $55 million, or 11%, compared to the prior year, which includes $36 million and $18 million contributions from the acquisitions of OPIS and CMA, respectively. Adjusted Revenues at the Dow Jones segment increased 1% compared to the prior year, primarily due to the growth in circulation and subscription revenues from continued digital subscription gains and growth in Risk & Compliance products. The growth was partially offset by lower advertising revenues. Digital revenues at Dow Jones in the quarter represented 76% of total revenues compared to 72% in the prior year.

Circulation and subscription revenues increased $61 million, or 17%, which includes the contributions from the acquisitions of OPIS and CMA. Circulation revenue grew 3%, reflecting the continued growth in digital-only subscriptions, primarily at The Wall Street Journal. Professional information business revenues grew 45%, primarily driven by the acquisitions of OPIS and CMA and growth in Risk & Compliance products, partially offset by negative foreign currency fluctuations. Revenues from the Risk & Compliance products grew 13%, which includes a 7% negative impact from foreign currency fluctuations. Digital circulation revenues accounted for 69% of circulation revenues for the quarter, compared to 67% in the prior year.

During the second quarter, total average subscriptions to Dow Jones’ consumer products reached over 4.9 million, a 5% increase compared to the prior year. Digital-only subscriptions to Dow Jones’ consumer products grew 10%. Total subscriptions to The Wall Street Journal grew 4% compared to the prior year, to nearly 3.8 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 9% to over 3.1 million average subscriptions in the quarter, and represented 84% of total Wall Street Journal subscriptions.

 

 

For the three months ended December 31,

 

 

2022

 

2021

 

% Change

(in thousands, except %)

 

 

 

 

 

Better/(Worse)

The Wall Street Journal

 

 

 

 

 

 

Digital-only subscriptions

 

3,167

 

2,918

 

9

%

Total subscriptions

 

3,780

 

3,618

 

4

%

Barron’s Group

 

 

 

 

 

 

Digital-only subscriptions

 

894

 

757

 

18

%

Total subscriptions

 

1,062

 

963

 

10

%

Total Consumer

 

 

 

 

 

 

Digital-only subscriptions

 

4,139

 

3,774

 

10

%

Total subscriptions

 

4,943

 

4,707

 

5

%

Advertising revenues decreased $10 million, or 7%, primarily due to a 13% decline in print advertising revenues and a 3% decline in digital advertising revenues. Digital advertising accounted for 59% of total advertising revenues in the quarter, compared to 56% in the prior year.

Segment EBITDA for the quarter decreased $5 million, or 3%, which includes an $18 million combined contribution from the acquisitions of OPIS and CMA. The decline was primarily due to higher employee costs and higher marketing costs, partly due to timing. Adjusted Segment EBITDA decreased 16%.

Book Publishing

Revenues in the quarter decreased $86 million, or 14%, compared to the prior year, primarily driven by lower book sales due to slowing consumer demand industry-wide, difficult frontlist comparisons and some logistical constraints at Amazon. The decline also reflects a $22 million, or 4%, negative impact from foreign currency fluctuations. Key titles in the quarter included The Stories We Tell by Joanna Gaines, Demon Copperhead by Barbara Kingsolver and Faith Still Moves Mountains by Harris Faulkner. Adjusted Revenues decreased 11%. Digital sales declined 7% compared to the prior year due to lower e-book sales. Digital sales represented 19% of Consumer revenues for the quarter compared to 17% in the prior year. Backlist sales represented approximately 57% of total revenues in the quarter.

Segment EBITDA for the quarter decreased $56 million, or 52%, compared to the prior year, driven by lower revenues, as discussed above, ongoing supply chain, inventory and inflationary pressures on manufacturing, freight and distribution costs and a $2 million, or 2%, negative impact from foreign currency fluctuations, partially offset by lower costs due to lower sales volume and lower employee costs. These pressures are expected to continue to impact the business in the near term. Adjusted Segment EBITDA decreased 51%.

News Media

Revenues in the quarter decreased $59 million, or 9%, as compared to the prior year, driven by a $65 million, or 10%, negative impact from foreign currency fluctuations and lower advertising revenues in constant currency, partially offset by higher circulation and subscription revenues in constant currency. Within the segment, revenues at News Corp Australia and News UK decreased 13% and 10%, respectively, as both were impacted by negative foreign currency fluctuations. On a constant currency basis, revenues at News Corp Australia and News UK decreased 3% and increased 3%, respectively. Adjusted Revenues for the segment increased 1% compared to the prior year.

Circulation and subscription revenues decreased $20 million, or 7%, compared to the prior year, primarily due to a $31 million, or 11%, negative impact from foreign currency fluctuations and lower print volume. The decline was partially offset by cover price increases and digital subscriber growth.

Advertising revenues decreased $37 million, or 13%, compared to the prior year, primarily due to a $27 million, or 10%, negative impact from foreign currency fluctuations and lower print advertising at News UK and News Corp Australia. The decline was partially offset by growth in digital advertising, primarily at News UK (mainly at The Sun), and higher revenues at Wireless Group, partly due to the FIFA World Cup 2022.

In the quarter, Segment EBITDA decreased $52 million, or 47%, compared to the prior year, driven by lower revenues, as discussed above, and reflects a $5 million, or 5%, negative impact from foreign currency fluctuations. The decline was also due to approximately $22 million of higher costs related to TalkTV and other digital investments, primarily at News Corp Australia, the $21 million negative impact from higher newsprint prices, higher employee costs and higher marketing expenses, partially due to the increased spend in relation to the World Cup at News UK. The Segment EBITDA decline was partially offset by cost saving initiatives. Newsprint, production and distribution costs are expected to be higher in fiscal 2023 than the prior year due to supply chain and inflationary pressures, partially offset by the Company’s continued transition to digital products. Adjusted Segment EBITDA decreased 43%.

Digital revenues represented 37% of News Media segment revenues in the quarter, compared to 34% in the prior year, and represented 35% of the combined revenues of the newspaper mastheads. Digital subscribers and users across key properties within the News Media segment are summarized below:

  • Closing digital subscribers at News Corp Australia as of December 31, 2022 were 1,011,000 (924,000 for news mastheads), compared to 909,000 (861,000 for news mastheads) in the prior year (Source: Internal data)
  • The Times and Sunday Times closing digital subscribers, including the Times Literary Supplement, as of December 31, 2022 were 489,000, compared to 399,000 in the prior year (Source: Internal data)
  • The Sun’s digital offering reached 194 million global monthly unique users in December 2022, compared to 163 million in the prior year (Source: Google Analytics)
  • New York Post’s digital network reached 141 million unique users in December 2022, compared to 160 million in the prior year (Source: Google Analytics)

CASH FLOW

The following table presents a reconciliation of net cash provided by operating activities to free cash flow and free cash flow available to News Corporation:

 

 

For the six months ended

December 31,

 

 

2022

 

2021

 

 

(in millions)

Net cash provided by operating activities

 

$

161

 

 

$

430

 

Less: Capital expenditures

 

 

(217

)

 

 

(208

)

Free cash flow

 

 

(56

)

 

 

222

 

Less: REA Group free cash flow

 

 

(96

)

 

 

(121

)

Plus: Cash dividends received from REA Group

 

 

50

 

 

 

43

 

Free cash flow available to News Corporation

 

$

(102

)

 

$

144

 

Net cash provided by operating activities of $161 million for the six months ended December 31, 2022 was $269 million lower than $430 million in the prior year, primarily due to lower Total Segment EBITDA, as noted above, and higher working capital, partially offset by lower restructuring and tax payments.

Free cash flow in the six months ended December 31, 2022 was $(56) million compared to $222 million in the prior year. Free cash flow available to News Corporation in the six months ended December 31, 2022 was $(102) million compared to $144 million in the prior year period. The decrease in both free cash flow and free cash flow available to News Corporation was primarily due to lower cash provided by operating activities, as mentioned above. Foxtel’s capital expenditures for the six months ended December 31, 2022 were $84 million compared to $89 million in the prior year.

Free cash flow and free cash flow available to News Corporation are non-GAAP financial measures. Free cash flow is defined as net cash provided by operating activities, less capital expenditures, and free cash flow available to News Corporation is defined as free cash flow, less REA Group free cash flow, plus cash dividends received from REA Group.

The Company believes free cash flow provides useful information to management and investors about the Company’s liquidity and cash flow trends. The Company believes free cash flow available to News Corporation, which adjusts free cash flow to exclude REA Group’s free cash flow and include dividends received from REA Group, provides management and investors with a measure of the amount of cash flow that is readily available to the Company, as REA Group is a separately listed public company in Australia and must declare a dividend in order for the Company to have access to its share of REA Group’s cash balance. The Company believes free cash flow available to News Corporation provides a more conservative view of the Company’s free cash flow because this presentation includes only that amount of cash the Company actually receives from REA Group, which has generally been lower than the Company’s unadjusted free cash flow. A limitation of both free cash flow and free cash flow available to News Corporation is that they do not represent the total increase or decrease in the cash balance for the period. Management compensates for the limitation of free cash flow and free cash flow available to News Corporation by also relying on the net change in cash and cash equivalents as presented in the Company’s consolidated statements of cash flows prepared in accordance with GAAP which incorporates all cash movements during the period.

SUBSEQUENT EVENTS

Potential Disposition of Move

In January 2023, the Company announced that it was engaged in discussions with CoStar Group, Inc. regarding a potential sale of its subsidiary, Move, Inc. However, there is no assurance regarding the timing or completion of any transaction.

OTHER ITEMS

Dividends

The Company today declared a semi-annual cash dividend of $0.10 per share for Class A Common Stock and Class B Common Stock. The dividend is payable on April 12, 2023 to stockholders of record as of March 15, 2023.

Withdrawal of Proposal to Explore Potential Combination with Fox Corporation (“Fox”)

In October 2022, the Company announced that its Board of Directors (the “Board”), following the receipt of letters from K. Rupert Murdoch and the Murdoch Family Trust, had formed a special committee of independent and disinterested members of the Board (the “Special Committee”) to begin exploring a potential combination with Fox (the “Potential Transaction”). In January 2023, the Board of Directors received a letter from Mr. Murdoch withdrawing the proposal to explore the Potential Transaction. As a result of the letter, the Special Committee has been dissolved.

COMPARISON OF NON-GAAP TO U.S. GAAP INFORMATION

Adjusted Revenues, Total Segment EBITDA, Adjusted Total Segment EBITDA, Adjusted Segment EBITDA, adjusted net income attributable to News Corporation stockholders, Adjusted EPS, constant currency revenues, free cash flow and free cash flow available to News Corporation are non-GAAP financial measures contained in this earnings release. The Company believes these measures are important tools for investors and analysts to use in assessing the Company’s underlying business performance and to provide for more meaningful comparisons of the Company’s operating performance between periods. These measures also allow investors and analysts to view the Company’s business from the same perspective as Company management. These non-GAAP measures may be different than similar measures used by other companies and should be considered in addition to, not as a substitute for, measures of financial performance calculated in accordance with GAAP. Reconciliations for the differences between non-GAAP measures used in this earnings release and comparable financial measures calculated in accordance with U.S. GAAP are included in Notes 1, 2, 3 and 4 and the reconciliation of net cash provided by operating activities to free cash flow and free cash flow available to News Corporation is included above.

Conference call

News Corporation’s earnings conference call can be heard live at 5:00 p.m. EST on February 9, 2023. To listen to the call, please visit http://investors.newscorp.com.

Cautionary Statement Concerning Forward-Looking Statements

This document contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding trends and uncertainties affecting the Company’s business, results of operations and financial condition, the Company’s strategy and strategic initiatives, including potential acquisitions, investments and dispositions, and the outcome of contingencies such as litigation and investigations. These statements are based on management’s views and assumptions regarding future events and business performance as of the time the statements are made. Actual results may differ materially from these expectations due to the risks, uncertainties and other factors described in the Company’s filings with the Securities and Exchange Commission. More detailed information about factors that could affect future results is contained in our filings with the Securities and Exchange Commission. The “forward-looking statements” included in this document are made only as of the date of this document and we do not have and do not undertake any obligation to publicly update any “forward-looking statements” to reflect subsequent events or circumstances, and we expressly disclaim any such obligation, except as required by law or regulation.

About News Corporation

News Corp (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. The company comprises businesses across a range of media, including: digital real estate services, subscription video services in Australia, news and information services and book publishing. Headquartered in New York, News Corp operates primarily in the United States, Australia, and the United Kingdom, and its content and other products and services are distributed and consumed worldwide. More information is available at: www.newscorp.com.

NEWS CORPORATION

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)

   

 

 

For the three months ended

December 31,

 

For the six months ended

December 31,

 

 

2022

 

2021

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

1,085

 

 

$

1,072

 

 

$

2,196

 

 

$

2,149

 

Advertising

 

 

464

 

 

 

519

 

 

 

870

 

 

 

924

 

Consumer

 

 

512

 

 

 

594

 

 

 

979

 

 

 

1,118

 

Real estate

 

 

301

 

 

 

352

 

 

 

624

 

 

 

672

 

Other

 

 

159

 

 

 

180

 

 

 

330

 

 

 

356

 

Total Revenues

 

 

2,521

 

 

 

2,717

 

 

 

4,999

 

 

 

5,219

 

Operating expenses

 

 

(1,294

)

 

 

(1,279

)

 

 

(2,567

)

 

 

(2,523

)

Selling, general and administrative

 

 

(818

)

 

 

(852

)

 

 

(1,673

)

 

 

(1,700

)

Depreciation and amortization

 

 

(174

)

 

 

(168

)

 

 

(353

)

 

 

(333

)

Impairment and restructuring charges

 

 

(19

)

 

 

(23

)

 

 

(40

)

 

 

(45

)

Equity losses of affiliates

 

 

(29

)

 

 

(6

)

 

 

(33

)

 

 

(6

)

Interest expense, net

 

 

(26

)

 

 

(21

)

 

 

(53

)

 

 

(43

)

Other, net

 

 

(6

)

 

 

(7

)

 

 

(24

)

 

 

130

 

Income before income tax expense

 

 

155

 

 

 

361

 

 

 

256

 

 

 

699

 

Income tax expense

 

 

(61

)

 

 

(99

)

 

 

(96

)

 

 

(170

)

Net income

 

 

94

 

 

 

262

 

 

 

160

 

 

 

529

 

Less: Net income attributable to noncontrolling interests

 

 

(27

)

 

 

(27

)

 

 

(53

)

 

 

(98

)

Net income attributable to News Corporation stockholders

 

$

67

 

 

$

235

 

 

$

107

 

 

$

431

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

576

 

 

 

592

 

 

 

579

 

 

 

592

 

Diluted

 

 

578

 

 

 

595

 

 

 

581

 

 

 

595

 

 

 

 

 

 

 

 

 

 

Net income attributable to News Corporation stockholders per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.12

 

 

$

0.40

 

 

$

0.18

 

 

$

0.73

 

Diluted

 

$

0.12

 

 

$

0.40

 

 

$

0.18

 

 

$

0.72

 

NEWS CORPORATION

 

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions)

   

 

 

As of December 31,

2022

 

As of June 30,

2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,328

 

 

$

1,822

 

Receivables, net

 

 

1,636

 

 

 

1,502

 

Inventory, net

 

 

328

 

 

 

311

 

Other current assets

 

 

471

 

 

 

458

 

Total current assets

 

 

3,763

 

 

 

4,093

 

 

 

 

 

 

Non-current assets:

 

 

 

 

Investments

 

 

524

 

 

 

488

 

Property, plant and equipment, net

 

 

2,045

 

 

 

2,103

 

Operating lease right-of-use assets

 

 

1,021

 

 

 

891

 

Intangible assets, net

 

 

2,585

 

 

 

2,671

 

Goodwill

 

 

5,167

 

 

 

5,169

 

Deferred income tax assets

 

 

386

 

 

 

422

 

Other non-current assets

 

 

1,400

 

 

 

1,384

 

Total assets

 

$

16,891

 

 

$

17,221

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

308

 

 

$

411

 

Accrued expenses

 

 

1,052

 

 

 

1,236

 

Deferred revenue

 

 

591

 

 

 

604

 

Current borrowings

 

 

27

 

 

 

293

 

Other current liabilities

 

 

961

 

 

 

975

 

Total current liabilities

 

 

2,939

 

 

 

3,519

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

Borrowings

 

 

2,998

 

 

 

2,776

 

Retirement benefit obligations

 

 

156

 

 

 

155

 

Deferred income tax liabilities

 

 

179

 

 

 

198

 

Operating lease liabilities

 

 

1,092

 

 

 

947

 

Other non-current liabilities

 

 

471

 

 

 

483

 

Commitments and contingencies

 

 

 

 

Equity:

 

 

 

 

Class A common stock

 

 

4

 

 

 

4

 

Class B common stock

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

11,550

 

 

 

11,779

 

Accumulated deficit

 

 

(2,186

)

 

 

(2,293

)

Accumulated other comprehensive loss

 

 

(1,255

)

 

 

(1,270

)

Total News Corporation stockholders' equity

 

 

8,115

 

 

 

8,222

 

Noncontrolling interests

 

 

941

 

 

 

921

 

Total equity

 

 

9,056

 

 

 

9,143

 

Total liabilities and equity

 

$

16,891

 

 

$

17,221

 

NEWS CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

   

 

 

For the six months ended

December 31,

 

 

2022

 

2021

Operating activities:

 

 

 

 

Net income

 

$

160

 

 

$

529

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

353

 

 

 

333

 

Operating lease expense

 

 

57

 

 

 

64

 

Equity losses of affiliates

 

 

33

 

 

 

6

 

Cash distributions received from affiliates

 

 

5

 

 

 

7

 

Other, net

 

 

24

 

 

 

(130

)

Deferred income taxes and taxes payable

 

 

17

 

 

 

79

 

Change in operating assets and liabilities, net of acquisitions:

 

 

 

 

Receivables and other assets

 

 

(351

)

 

 

(222

)

Inventories, net

 

 

(11

)

 

 

6

 

Accounts payable and other liabilities

 

 

(126

)

 

 

(242

)

Net cash provided by operating activities

 

 

161

 

 

 

430

 

Investing activities:

 

 

 

 

Capital expenditures

 

 

(217

)

 

 

(208

)

Acquisitions, net of cash acquired

 

 

(15

)

 

 

(21

)

Investments in equity affiliates and other

 

 

(92

)

 

 

(46

)

Proceeds from property, plant and equipment and other asset dispositions

 

 

8

 

 

 

(2

)

Other, net

 

 

(21

)

 

 

28

 

Net cash used in investing activities

 

 

(337

)

 

 

(249

)

Financing activities:

 

 

 

 

Borrowings

 

 

407

 

 

 

495

 

Repayment of borrowings

 

 

(462

)

 

 

(500

)

Repurchase of shares

 

 

(178

)

 

 

(43

)

Dividends paid

 

 

(89

)

 

 

(86

)

Other, net

 

 

10

 

 

 

(64

)

Net cash used in financing activities

 

 

(312

)

 

 

(198

)

Net change in cash and cash equivalents

 

 

(488

)

 

 

(17

)

Cash and cash equivalents, beginning of period

 

 

1,822

 

 

 

2,236

 

Exchange movement on opening cash balance

 

 

(6

)

 

 

(35

)

Cash and cash equivalents, end of period

 

$

1,328

 

 

$

2,184

 

NOTE 1 – TOTAL SEGMENT EBITDA

Segment EBITDA is defined as revenues less operating expenses and selling, general and administrative expenses. Segment EBITDA does not include: depreciation and amortization, impairment and restructuring charges, equity losses of affiliates, interest (expense) income, net, other, net and income tax (expense) benefit. Management believes that Segment EBITDA is an appropriate measure for evaluating the operating performance of the Company’s business segments because it is the primary measure used by the Company’s chief operating decision maker to evaluate the performance of and allocate resources within the Company’s businesses. Segment EBITDA provides management, investors and equity analysts with a measure to analyze the operating performance of each of the Company’s business segments and its enterprise value against historical data and competitors’ data, although historical results may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).

Total Segment EBITDA is a non-GAAP measure and should be considered in addition to, not as a substitute for, net income (loss), cash flow and other measures of financial performance reported in accordance with GAAP. In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment and restructuring charges, which are significant components in assessing the Company’s financial performance. The Company believes that the presentation of Total Segment EBITDA provides useful information regarding the Company’s operations and other factors that affect the Company’s reported results. Specifically, the Company believes that by excluding certain one-time or non-cash items such as impairment and restructuring charges and depreciation and amortization, as well as potential distortions between periods caused by factors such as financing and capital structures and changes in tax positions or regimes, the Company provides users of its consolidated financial statements with insight into both its core operations as well as the factors that affect reported results between periods but which the Company believes are not representative of its core business. As a result, users of the Company’s consolidated financial statements are better able to evaluate changes in the core operating results of the Company across different periods. The following tables reconcile net income to Total Segment EBITDA for the three and six months ended December 31, 2022 and 2021:

 

 

For the three months ended December 31,

 

 

2022

 

2021

 

Change

 

% Change

 

 

(in millions)

 

 

Net income

 

$

94

 

$

262

 

$

(168

)

 

(64

)%

Add:

 

 

 

 

 

 

 

 

Income tax expense

 

 

61

 

 

99

 

 

(38

)

 

(38

)%

Other, net

 

 

6

 

 

7

 

 

(1

)

 

(14

)%

Interest expense, net

 

 

26

 

 

21

 

 

5

 

 

24

%

Equity losses of affiliates

 

 

29

 

 

6

 

 

23

 

 

**

Impairment and restructuring charges

 

 

19

 

 

23

 

 

(4

)

 

(17

)%

Depreciation and amortization

 

 

174

 

 

168

 

 

6

 

 

4

%

Total Segment EBITDA

 

$

409

 

$

586

 

$

(177

)

 

(30

)%

** - Not meaningful

 

 

For the six months ended December 31,

 

 

2022

 

2021

 

Change

 

% Change

 

 

(in millions)

 

 

Net income

 

$

160

 

$

529

 

 

$

(369

)

 

(70

)%

Add:

 

 

 

 

 

 

 

 

Income tax expense

 

 

96

 

 

170

 

 

 

(74

)

 

(44

)%

Other, net

 

 

24

 

 

(130

)

 

 

154

 

 

**

Interest expense, net

 

 

53

 

 

43

 

 

 

10

 

 

23

%

Equity losses of affiliates

 

 

33

 

 

6

 

 

 

27

 

 

**

Impairment and restructuring charges

 

 

40

 

 

45

 

 

 

(5

)

 

(11

)%

Depreciation and amortization

 

 

353

 

 

333

 

 

 

20

 

 

6

%

Total Segment EBITDA

 

$

759

 

$

996

 

 

$

(237

)

 

(24

)%

** - Not meaningful

NOTE 2 – ADJUSTED REVENUES, ADJUSTED TOTAL SEGMENT EBITDA AND ADJUSTED SEGMENT EBITDA

The Company uses revenues, Total Segment EBITDA and Segment EBITDA excluding the impact of acquisitions, divestitures, fees and costs, net of indemnification, related to the claims and investigations arising out of certain conduct at The News of the World (the “U.K. Newspaper Matters”), charges for other significant, non-ordinary course legal or regulatory matters (“litigation charges”) and foreign currency fluctuations (“Adjusted Revenues,” “Adjusted Total Segment EBITDA” and “Adjusted Segment EBITDA,” respectively) to evaluate the performance of the Company’s core business operations exclusive of certain items that impact the comparability of results from period to period such as the unpredictability and volatility of currency fluctuations. The Company calculates the impact of foreign currency fluctuations for businesses reporting in currencies other than the U.S. dollar by multiplying the results for each quarter in the current period by the difference between the average exchange rate for that quarter and the average exchange rate in effect during the corresponding quarter of the prior year and totaling the impact for all quarters in the current period.

The calculation of Adjusted Revenues, Adjusted Total Segment EBITDA and Adjusted Segment EBITDA may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what type of events warrant adjustment. Adjusted Revenues, Adjusted Total Segment EBITDA and Adjusted Segment EBITDA are not measures of performance under generally accepted accounting principles and should not be construed as substitutes for amounts determined under GAAP as measures of performance. However, management uses these measures in comparing the Company’s historical performance and believes that they provide meaningful and comparable information to investors to assist in their analysis of our performance relative to prior periods and our competitors.

The following tables reconcile reported revenues and reported Total Segment EBITDA to Adjusted Revenues and Adjusted Total Segment EBITDA for the three and six months ended December 31, 2022 and 2021:

 

 

Revenues

 

 

Total Segment EBITDA

 

 

For the three months ended

December 31,

 

 

For the three months ended

December 31,

 

 

2022

 

2021

 

Difference

 

 

2022

 

2021

 

Difference

 

 

(in millions)

 

 

(in millions)

As reported

 

$

2,521

 

 

$

2,717

 

$

(196

)

 

 

$

409

 

 

$

586

 

$

(177

)

Impact of acquisitions

 

 

(64

)

 

 

 

 

(64

)

 

 

 

(13

)

 

 

 

 

(13

)

Impact of divestitures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

(3

)

Impact of foreign currency fluctuations

 

 

171

 

 

 

 

 

171

 

 

 

 

30

 

 

 

 

 

30

 

Net impact of U.K. Newspaper Matters

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

4

 

 

(1

)

As adjusted

 

$

2,628

 

 

$

2,717

 

$

(89

)

 

 

$

429

 

 

$

593

 

$

(164

)

 

 

Revenues

 

 

Total Segment EBITDA

 

 

For the six months ended

December 31,

 

 

For the six months ended

December 31,

 

 

2022

 

2021

 

Difference

 

 

2022

 

2021

 

Difference

 

 

(in millions)

 

 

(in millions)

As reported

 

$

4,999

 

 

$

5,219

 

 

$

(220

)

 

 

$

759

 

 

$

996

 

$

(237

)

Impact of acquisitions

 

 

(126

)

 

 

 

 

 

(126

)

 

 

 

(31

)

 

 

 

 

(31

)

Impact of divestitures

 

 

 

 

 

(1

)

 

 

1

 

 

 

 

 

 

 

5

 

 

(5

)

Impact of foreign currency fluctuations

 

 

324

 

 

 

 

 

 

324

 

 

 

 

53

 

 

 

 

 

53

 

Net impact of U.K. Newspaper Matters

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

6

 

 

3

 

As adjusted

 

$

5,197

 

 

$

5,218

 

 

$

(21

)

 

 

$

790

 

 

$

1,007

 

$

(217

)

Foreign Exchange Rates

Average foreign exchange rates used in the calculation of the impact of foreign currency fluctuations for the three and six months ended December 31, 2022 and 2021 are as follows:

 

 

Fiscal Year 2023

 

 

Q1

 

Q2

U.S. Dollar per Australian Dollar

 

$0.68

 

$0.66

U.S. Dollar per British Pound Sterling

 

$1.17

 

$1.17

 

 

 

 

 

 

 

Fiscal Year 2022

 

 

Q1

 

Q2

U.S. Dollar per Australian Dollar

 

$0.74

 

$0.73

U.S. Dollar per British Pound Sterling

 

$1.38

 

$1.35

Adjusted Revenues and Adjusted Segment EBITDA by segment for the three and six months ended December 31, 2022 and 2021 are as follows:

 

 

For the three months ended December 31,

 

 

2022

 

2021

 

% Change

 

 

(in millions)

 

Better/(Worse)

Adjusted Revenues:

 

 

 

 

 

 

Digital Real Estate Services

 

$

409

 

 

$

456

 

 

(10

)%

Subscription Video Services

 

 

514

 

 

 

498

 

 

3

%

Dow Jones

 

 

515

 

 

 

508

 

 

1

%

Book Publishing

 

 

548

 

 

 

617

 

 

(11

)%

News Media

 

 

642

 

 

 

638

 

 

1

%

Other

 

 

 

 

 

 

 

%

Adjusted Total Revenues

 

$

2,628

 

 

$

2,717

 

 

(3

)%

 

 

 

 

 

 

 

Adjusted Segment EBITDA:

 

 

 

 

 

 

Digital Real Estate Services

 

$

142

 

 

$

181

 

 

(22

)%

Subscription Video Services

 

 

100

 

 

 

86

 

 

16

%

Dow Jones

 

 

121

 

 

 

144

 

 

(16

)%

Book Publishing

 

 

52

 

 

 

107

 

 

(51

)%

News Media

 

 

63

 

 

 

111

 

 

(43

)%

Other

 

 

(49

)

 

 

(36

)

 

(36

)%

Adjusted Total Segment EBITDA

 

$

429

 

 

$

593

 

 

(28

)%

 

 

For the six months ended December 31,

 

 

2022

 

2021

 

% Change

 

 

(in millions)

 

Better/(Worse)

Adjusted Revenues:

 

 

 

 

 

 

Digital Real Estate Services

 

$

846

 

 

$

881

 

 

(4

)%

Subscription Video Services

 

 

1,056

 

 

 

1,008

 

 

5

%

Dow Jones

 

 

987

 

 

 

952

 

 

4

%

Book Publishing

 

 

1,056

 

 

 

1,163

 

 

(9

)%

News Media

 

 

1,252

 

 

 

1,214

 

 

3

%

Other

 

 

 

 

 

 

 

%

Adjusted Total Revenues

 

$

5,197

 

 

$

5,218

 

 

%

 

 

 

 

 

 

 

Adjusted Segment EBITDA:

 

 

 

 

 

 

Digital Real Estate Services

 

$

272

 

 

$

321

 

 

(15

)%

Subscription Video Services

 

 

220

 

 

 

200

 

 

10

%

Dow Jones

 

 

215

 

 

 

239

 

 

(10

)%

Book Publishing

 

 

94

 

 

 

192

 

 

(51

)%

News Media

 

 

82

 

 

 

145

 

 

(43

)%

Other

 

 

(93

)

 

 

(90

)

 

(3

)%

Adjusted Total Segment EBITDA

 

$

790

 

 

$

1,007

 

 

(22

)%

The following tables reconcile reported revenues and Segment EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA by segment for the three and six months ended December 31, 2022 and 2021:

 

 

For the three months ended December 31, 2022

 

 

As Reported

 

Impact of

Acquisitions

 

Impact of

Divestitures

 

Impact of

Foreign

Currency

Fluctuations

 

Net Impact

of U.K.

Newspaper

Matters

 

As Adjusted

 

 

(in millions)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

386

 

 

$

(3

)

 

$

 

$

26

 

$

 

$

409

 

Subscription Video Services

 

 

462

 

 

 

 

 

 

 

 

52

 

 

 

 

514

 

Dow Jones

 

 

563

 

 

 

(54

)

 

 

 

 

6

 

 

 

 

515

 

Book Publishing

 

 

531

 

 

 

(5

)

 

 

 

 

22

 

 

 

 

548

 

News Media

 

 

579

 

 

 

(2

)

 

 

 

 

65

 

 

 

 

642

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

2,521

 

 

$

(64

)

 

$

 

$

171

 

$

 

$

2,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

128

 

 

$

1

 

 

$

 

$

13

 

$

 

$

142

 

Subscription Video Services

 

 

90

 

 

 

 

 

 

 

 

10

 

 

 

 

100

 

Dow Jones

 

 

139

 

 

 

(18

)

 

 

 

 

 

 

 

 

121

 

Book Publishing

 

 

51

 

 

 

(1

)

 

 

 

 

2

 

 

 

 

52

 

News Media

 

 

59

 

 

 

(1

)

 

 

 

 

5

 

 

 

 

63

 

Other

 

 

(58

)

 

 

6

 

 

 

 

 

 

 

3

 

 

(49

)

Total Segment EBITDA

 

$

409

 

 

$

(13

)

 

$

 

$

30

 

$

3

 

$

429

 

 

 

For the six months ended December 31, 2022

 

 

As Reported

 

Impact of

Acquisitions

 

Impact of

Divestitures

 

Impact of

Foreign

Currency

Fluctuations

 

Net Impact

of U.K.

Newspaper

Matters

 

As Adjusted

 

 

(in millions)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

807

 

 

$

(7

)

 

$

 

$

46

 

$

 

$

846

 

Subscription Video Services

 

 

964

 

 

 

 

 

 

 

 

92

 

 

 

 

1,056

 

Dow Jones

 

 

1,078

 

 

 

(106

)

 

 

 

 

15

 

 

 

 

987

 

Book Publishing

 

 

1,018

 

 

 

(6

)

 

 

 

 

44

 

 

 

 

1,056

 

News Media

 

 

1,132

 

 

 

(7

)

 

 

 

 

127

 

 

 

 

1,252

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

4,999

 

 

$

(126

)

 

$

 

$

324

 

$

 

$

5,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

247

 

 

$

3

 

 

$

 

$

22

 

$

 

$

272

 

Subscription Video Services

 

 

201

 

 

 

 

 

 

 

 

19

 

 

 

 

220

 

Dow Jones

 

 

252

 

 

 

(37

)

 

 

 

 

 

 

 

 

215

 

Book Publishing

 

 

90

 

 

 

(1

)

 

 

 

 

5

 

 

 

 

94

 

News Media

 

 

77

 

 

 

(2

)

 

 

 

 

7

 

 

 

 

82

 

Other

 

 

(108

)

 

 

6

 

 

 

 

 

 

 

9

 

 

(93

)

Total Segment EBITDA

 

$

759

 

 

$

(31

)

 

$

 

$

53

 

$

9

 

$

790

 

 

 

For the three months ended December 31, 2021

 

 

As Reported

 

Impact of

Acquisitions

 

Impact of

Divestitures

 

Impact of

Foreign

Currency

Fluctuations

 

Net Impact

of U.K.

Newspaper

Matters

 

As Adjusted

 

 

(in millions)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

456

 

 

$

 

$

 

$

 

$

 

$

456

 

Subscription Video Services

 

 

498

 

 

 

 

 

 

 

 

 

 

 

498

 

Dow Jones

 

 

508

 

 

 

 

 

 

 

 

 

 

 

508

 

Book Publishing

 

 

617

 

 

 

 

 

 

 

 

 

 

 

617

 

News Media

 

 

638

 

 

 

 

 

 

 

 

 

 

 

638

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

2,717

 

 

$

 

$

 

$

 

$

 

$

2,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

178

 

 

$

 

$

3

 

$

 

$

 

$

181

 

Subscription Video Services

 

 

86

 

 

 

 

 

 

 

 

 

 

 

86

 

Dow Jones

 

 

144

 

 

 

 

 

 

 

 

 

 

 

144

 

Book Publishing

 

 

107

 

 

 

 

 

 

 

 

 

 

 

107

 

News Media

 

 

111

 

 

 

 

 

 

 

 

 

 

 

111

 

Other

 

 

(40

)

 

 

 

 

 

 

 

 

4

 

 

(36

)

Total Segment EBITDA

 

$

586

 

 

$

 

$

3

 

$

 

$

4

 

$

593

 

 

 

For the six months ended December 31, 2021

 

 

As Reported

 

Impact of

Acquisitions

 

Impact of

Divestitures

 

Impact of

Foreign

Currency

Fluctuations

 

Net Impact

of U.K.

Newspaper

Matters

 

As Adjusted

 

 

(in millions)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

882

 

 

$

 

$

(1

)

 

$

 

$

 

$

881

 

Subscription Video Services

 

 

1,008

 

 

 

 

 

 

 

 

 

 

 

 

1,008

 

Dow Jones

 

 

952

 

 

 

 

 

 

 

 

 

 

 

 

952

 

Book Publishing

 

 

1,163

 

 

 

 

 

 

 

 

 

 

 

 

1,163

 

News Media

 

 

1,214

 

 

 

 

 

 

 

 

 

 

 

 

1,214

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

5,219

 

 

$

 

$

(1

)

 

$

 

$

 

$

5,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

 

$

316

 

 

$

 

$

5

 

 

$

 

$

 

$

321

 

Subscription Video Services

 

 

200

 

 

 

 

 

 

 

 

 

 

 

 

200

 

Dow Jones

 

 

239

 

 

 

 

 

 

 

 

 

 

 

 

239

 

Book Publishing

 

 

192

 

 

 

 

 

 

 

 

 

 

 

 

192

 

News Media

 

 

145

 

 

 

 

 

 

 

 

 

 

 

 

145

 

Other

 

 

(96

)

 

 

 

 

 

 

 

 

 

6

 

 

(90

)

Total Segment EBITDA

 

$

996

 

 

$

 

$

5

 

 

$

 

$

6

 

$

1,007

 

NOTE 3 – ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO NEWS CORPORATION STOCKHOLDERS AND ADJUSTED EPS

The Company uses net income (loss) attributable to News Corporation stockholders and diluted earnings per share (“EPS”) excluding expenses related to U.K. Newspaper Matters, litigation charges, impairment and restructuring charges and “Other, net”, net of tax, recognized by the Company or its equity method investees, as well as the settlement of certain pre-Separation tax matters (“adjusted net income (loss) attributable to News Corporation stockholders” and “adjusted EPS,” respectively), to evaluate the performance of the Company’s operations exclusive of certain items that impact the comparability of results from period to period, as well as certain non-operational items. The calculation of adjusted net income (loss) attributable to News Corporation stockholders and adjusted EPS may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what type of events warrant adjustment. Adjusted net income (loss) attributable to News Corporation stockholders and adjusted EPS are not measures of performance under generally accepted accounting principles and should not be construed as substitutes for consolidated net income (loss) attributable to News Corporation stockholders and net income (loss) per share as determined under GAAP as a measure of performance. However, management uses these measures in comparing the Company’s historical performance and believes that they provide meaningful and comparable information to investors to assist in their analysis of our performance relative to prior periods and our competitors.

The following tables reconcile reported net income attributable to News Corporation stockholders and reported diluted EPS to adjusted net income attributable to News Corporation stockholders and adjusted EPS for the three and six months ended December 31, 2022 and 2021:

 

 

For the three months ended

December 31, 2022

 

For the three months ended

December 31, 2021

(in millions, except per share data)

 

Net income

attributable to

stockholders

 

EPS

 

Net income

attributable to

stockholders

 

EPS

Net income

 

$

94

 

 

 

 

$

262

 

 

 

Less: Net income attributable to noncontrolling interests

 

 

(27

)

 

 

 

 

(27

)

 

 

Net income attributable to News Corporation stockholders

 

$

67

 

 

$

0.12

 

 

$

235

 

 

$

0.40

 

U.K. Newspaper Matters

 

 

3

 

 

 

0.01

 

 

 

4

 

 

 

0.01

 

Impairment and restructuring charges

 

 

19

 

 

 

0.02

 

 

 

23

 

 

 

0.04

 

Equity losses of affiliates (a)

 

 

 

 

 

 

 

 

3

 

 

 

0.01

 

Other, net

 

 

6

 

 

 

0.01

 

 

 

7

 

 

 

0.01

 

Tax impact on items above

 

 

(12

)

 

 

(0.02

)

 

 

(10

)

 

 

(0.02

)

Impact of noncontrolling interest on items above

 

 

 

 

 

 

 

 

(2

)

 

 

(0.01

)

As adjusted

 

$

83

 

 

$

0.14

 

 

$

260

 

 

$

0.44

 

(a)

 

During the three months ended December 31, 2021, the Company recognized a non-cash impairment charge related to an equity method investment.

 

 

For the six months ended

December 31, 2022

 

For the six months ended

December 31, 2021

(in millions, except per share data)

 

Net income

attributable to

stockholders

 

EPS

 

Net income

attributable to

stockholders

 

EPS

Net income

 

$

160

 

 

 

 

$

529

 

 

 

Less: Net income attributable to noncontrolling interests

 

 

(53

)

 

 

 

 

(98

)

 

 

Net income attributable to News Corporation stockholders

 

$

107

 

 

$

0.18

 

 

$

431

 

 

$

0.72

 

U.K. Newspaper Matters

 

 

9

 

 

 

0.02

 

 

 

6

 

 

 

0.01

 

Impairment and restructuring charges

 

 

40

 

 

 

0.07

 

 

 

45

 

 

 

0.08

 

Equity losses of affiliates (a)

 

 

 

 

 

 

 

 

3

 

 

 

0.01

 

Other, net

 

 

24

 

 

 

0.04

 

 

 

(130

)

 

 

(0.22

)

Tax impact on items above

 

 

(27

)

 

 

(0.05

)

 

 

2

 

 

 

 

Impact of noncontrolling interest on items above

 

 

(1

)

 

 

 

 

 

41

 

 

 

0.07

 

As adjusted

 

$

152

 

 

$

0.26

 

 

$

398

 

 

$

0.67

 

(a)

 

During the six months ended December 31, 2021, the Company recognized a non-cash impairment charge related to an equity method investment.

NOTE 4 – CONSTANT CURRENCY REVENUES

The Company believes that the presentation of revenues excluding the impact of foreign currency fluctuations (“constant currency revenues”) provides useful information regarding the performance of the Company’s core business operations exclusive of distortions between periods caused by the unpredictability and volatility of currency fluctuations. The Company calculates the impact of foreign currency fluctuations for businesses reporting in currencies other than the U.S. dollar as described in Note 2.

Constant currency revenues are not measures of performance under generally accepted accounting principles and should not be construed as substitutes for revenues as determined under GAAP as measures of performance. However, management uses these measures in comparing the Company’s historical performance and believes that they provide meaningful and comparable information to investors to assist in their analysis of our performance relative to prior periods and our competitors.

The following tables reconcile reported revenues to constant currency revenues for the three and six months ended December 31, 2022:

 

 

Q2 Fiscal

2022

 

Q2 Fiscal

2023

 

FX impact

 

Q2 Fiscal

2023

constant

currency

 

% Change -

reported

 

% Change -

constant

currency

 

 

($ in millions)

 

Better/(Worse)

Consolidated results:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

1,072

 

$

1,085

 

$

(82

)

 

$

1,167

 

1

%

 

9

%

Advertising

 

 

519

 

 

464

 

 

(33

)

 

 

497

 

(11

)%

 

(4

)%

Consumer

 

 

594

 

 

512

 

 

(22

)

 

 

534

 

(14

)%

 

(10

)%

Real estate

 

 

352

 

 

301

 

 

(20

)

 

 

321

 

(14

)%

 

(9

)%

Other

 

 

180

 

 

159

 

 

(14

)

 

 

173

 

(12

)%

 

(4

)%

Total revenues

 

$

2,717

 

$

2,521

 

$

(171

)

 

$

2,692

 

(7

)%

 

(1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

3

 

$

3

 

$

 

 

$

3

 

%

 

%

Advertising

 

 

33

 

 

33

 

 

(1

)

 

$

34

 

%

 

3

%

Real estate

 

 

352

 

 

301

 

 

(20

)

 

$

321

 

(14

)%

 

(9

)%

Other

 

 

68

 

 

49

 

 

(5

)

 

$

54

 

(28

)%

 

(21

)%

Total Digital Real Estate Services segment revenues

 

$

456

 

$

386

 

$

(26

)

 

$

412

 

(15

)%

 

(10

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

REA Group revenues

 

$

287

 

$

240

 

$

(26

)

 

$

266

 

(16

)%

 

(7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription Video Services:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

433

 

$

405

 

$

(45

)

 

$

450

 

(6

)%

 

4

%

Advertising

 

 

55

 

 

47

 

 

(5

)

 

$

52

 

(15

)%

 

(5

)%

Other

 

 

10

 

 

10

 

 

(2

)

 

$

12

 

%

 

20

%

Total Subscription Video Services segment revenues

 

$

498

 

$

462

 

$

(52

)

 

$

514

 

(7

)%

 

3

%

 

 

Q2 Fiscal

2022

 

Q2 Fiscal

2023

 

FX impact

 

Q2 Fiscal

2023

constant

currency

 

% Change -

reported

 

% Change -

constant

currency

 

 

($ in millions)

 

Better/(Worse)

Dow Jones:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

356

 

$

417

 

$

(6

)

 

$

423

 

17

%

 

19

%

Advertising

 

 

141

 

 

131

 

 

 

 

$

131

 

(7

)%

 

(7

)%

Other

 

 

11

 

 

15

 

 

 

 

$

15

 

36

%

 

36

%

Total Dow Jones segment revenues

 

$

508

 

$

563

 

$

(6

)

 

$

569

 

11

%

 

12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Book Publishing:

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

594

 

 

512

 

 

(22

)

 

$

534

 

(14

)%

 

(10

)%

Other

 

 

23

 

 

19

 

 

 

 

$

19

 

(17

)%

 

(17

)%

Total Book Publishing segment revenues

 

$

617

 

$

531

 

$

(22

)

 

$

553

 

(14

)%

 

(10

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

News Media:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

280

 

$

260

 

$

(31

)

 

$

291

 

(7

)%

 

4

%

Advertising

 

 

290

 

 

253

 

 

(27

)

 

$

280

 

(13

)%

 

(3

)%

Other

 

 

68

 

 

66

 

 

(7

)

 

$

73

 

(3

)%

 

7

%

Total News Media segment revenues

 

$

638

 

$

579

 

$

(65

)

 

$

644

 

(9

)%

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

News UK

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

139

 

$

129

 

$

(20

)

 

$

149

 

(7

)%

 

7

%

Advertising

 

 

95

 

 

83

 

 

(10

)

 

$

93

 

(13

)%

 

(2

)%

Other

 

 

29

 

 

26

 

 

(3

)

 

$

29

 

(10

)%

 

%

Total News UK revenues

 

$

263

 

$

238

 

$

(33

)

 

$

271

 

(10

)%

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

News Corp Australia

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

117

 

$

107

 

$

(11

)

 

$

118

 

(9

)%

 

1

%

Advertising

 

 

131

 

 

113

 

 

(12

)

 

$

125

 

(14

)%

 

(5

)%

Other

 

 

40

 

 

32

 

 

(3

)

 

$

35

 

(20

)%

 

(13

)%

Total News Corp Australia revenues

 

$

288

 

$

252

 

$

(26

)

 

$

278

 

(13

)%

 

(3

)%

 

 

Q2 YTD

Fiscal 2022

 

Q2 YTD

Fiscal 2023

 

FX impact

 

Q2 YTD

Fiscal 2023

constant

currency

 

% Change -

reported

 

% Change -

constant

currency

 

 

($ in millions)

 

Better/(Worse)

Consolidated results:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

2,149

 

$

2,196

 

$

(157

)

 

$

2,353

 

2

%

 

9

%

Advertising

 

 

924

 

 

870

 

 

(61

)

 

 

931

 

(6

)%

 

1

%

Consumer

 

 

1,118

 

 

979

 

 

(44

)

 

 

1,023

 

(12

)%

 

(8

)%

Real estate

 

 

672

 

 

624

 

 

(34

)

 

 

658

 

(7

)%

 

(2

)%

Other

 

 

356

 

 

330

 

 

(28

)

 

 

358

 

(7

)%

 

1

%

Total revenues

 

$

5,219

 

$

4,999

 

$

(324

)

 

$

5,323

 

(4

)%

 

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

6

 

$

6

 

$

 

 

$

6

 

%

 

%

Advertising

 

 

66

 

 

68

 

 

(2

)

 

$

70

 

3

%

 

6

%

Real estate

 

 

672

 

 

624

 

 

(34

)

 

$

658

 

(7

)%

 

(2

)%

Other

 

 

138

 

 

109

 

 

(10

)

 

$

119

 

(21

)%

 

(14

)%

Total Digital Real Estate Services segment revenues

 

$

882

 

$

807

 

$

(46

)

 

$

853

 

(9

)%

 

(3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

REA Group revenues

 

$

533

 

$

492

 

$

(46

)

 

$

538

 

(8

)%

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription Video Services:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

873

 

$

830

 

$

(79

)

 

$

909

 

(5

)%

 

4

%

Advertising

 

 

114

 

 

111

 

 

(10

)

 

$

121

 

(3

)%

 

6

%

Other

 

 

21

 

 

23

 

 

(3

)

 

$

26

 

10

%

 

24

%

Total Subscription Video Services segment revenues

 

$

1,008

 

$

964

 

$

(92

)

 

$

1,056

 

(4

)%

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Dow Jones:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

705

 

$

831

 

$

(15

)

 

$

846

 

18

%

 

20

%

Advertising

 

 

231

 

 

225

 

 

 

 

$

225

 

(3

)%

 

(3

)%

Other

 

 

16

 

 

22

 

 

 

 

$

22

 

38

%

 

38

%

Total Dow Jones segment revenues

 

$

952

 

$

1,078

 

$

(15

)

 

$

1,093

 

13

%

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Book Publishing:

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

1,118

 

 

979

 

 

(44

)

 

$

1,023

 

(12

)%

 

(8

)%

Other

 

 

45

 

 

39

 

 

 

 

$

39

 

(13

)%

 

(13

)%

Total Book Publishing segment revenues

 

$

1,163

 

$

1,018

 

$

(44

)

 

$

1,062

 

(12

)%

 

(9

)%

 

 

Q2 YTD

Fiscal 2022

 

Q2 YTD

Fiscal 2023

 

FX impact

 

Q2 YTD

Fiscal 2023

constant

currency

 

% Change -

reported

 

% Change -

constant

currency

 

 

($ in millions)

 

Better/(Worse)

News Media:

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

565

 

$

529

 

$

(63

)

 

$

592

 

(6

)%

 

5

%

Advertising

 

 

513

 

 

466

 

 

(49

)

 

$

515

 

(9

)%

 

%

Other

 

 

136

 

 

137

 

 

(15

)

 

$

152

 

1

%

 

12

%

Total News Media segment revenues

 

$

1,214

 

$

1,132

 

$

(127

)

 

$

1,259

 

(7

)%

 

4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

News UK

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

284

 

$

263

 

$

(43

)

 

$

306

 

(7

)%

 

8

%

Advertising

 

 

163

 

 

144

 

 

(19

)

 

$

163

 

(12

)%

 

%

Other

 

 

60

 

 

52

 

 

(8

)

 

$

60

 

(13

)%

 

%

Total News UK revenues

 

$

507

 

$

459

 

$

(70

)

 

$

529

 

(9

)%

 

4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

News Corp Australia

 

 

 

 

 

 

 

 

 

 

 

 

Circulation and subscription

 

$

235

 

$

219

 

$

(20

)

 

$

239

 

(7

)%

 

2

%

Advertising

 

 

232

 

 

217

 

 

(20

)

 

$

237

 

(6

)%

 

2

%

Other

 

 

74

 

 

71

 

 

(6

)

 

$

77

 

(4

)%

 

4

%

Total News Corp Australia revenues

 

$

541

 

$

507

 

$

(46

)

 

$

553

 

(6

)%

 

2

%

 

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