News Corp: Digital revenues grow to 30% as news subscriptions build

• The growth was partially offset by lower print advertising revenues

News Corporation has reported 2018 fourth quarter total revenues of US$2.69 billion, a 29% increase compared to $2.08 billion in the prior year period, reflecting the inclusion of Foxtel’s results, following the merger with Fox Sports, continued strong growth in the book publishing and digital real estate services segments and a $29 million positive impact from foreign currency fluctuations.

The growth was partially offset by lower print advertising revenues at the news and information services segment. Adjusted revenues (which exclude the foreign currency impact, acquisitions and divestitures) increased 5%.

The company reported fiscal 2018 full year total revenues of $9.02 billion, an 11% increase compared to $8.14 billion in the prior year period, reflecting the inclusion of Foxtel’s results, strong growth in the digital real estate services and book publishing segments and a $172 million positive impact from foreign currency fluctuations. The growth was partially offset by lower print advertising and News America marketing revenues at the news and information services segment. Adjusted revenues increased 2%.

For the Australian businesses, News Corp reported revenues lifted 1% for the full year in the news and information segment.

CEO Robert Thomson reported confidence that new rights acquisitions, including cricket, would lift subscriber numbers at Foxtel. However the subscription TV service reported lower subscription and advertising revenues in the full year.

Commenting on the results, chief executive Robert Thomson said:

“Fiscal 2018 was a year of operational and transformational success at News Corp, with robust performance across our businesses, and positive and profound changes in the character of our revenue flows, which were more global, digital and subscription-based. We generated strong revenue and Segment EBITDA growth in the Digital Real Estate Services and Book Publishing segments, which, together with the consolidation of Foxtel, drove over $1 billion in profitability for the year.

“Digital Real Estate Services continue to flourish and we expanded into meaningful adjacencies, broadening our audience and our revenue sources. HarperCollins’s success underscores the importance of intelligent editors and great writers in creating premium content. Algorithms are, as yet, unable to write empathetic, compelling books. We also saw meaningful operational improvements at the News and Information Services segment led by higher digital paid subscribers and disciplined cost initiatives, notably in Australia. Mastheads like The Times, The Sunday Times and The Wall Street Journal reached new heights in their digital transformation, with digital paid subscribers now exceeding print subscribers. The new Foxtel is focused on product innovation and leveraging its valuable content.

“News Corp is now a more substantial company after the Foxtel transaction, with a much higher percentage of recurring, subscription-based revenues, which should help offset a volatile advertising environment.

“We are marking five years since our Separation and are confident News Corp has a lustrous future, built on a strong digital and global foundation.”

Fiscal 2018 full year revenues increased $50 million, or 1%, compared to the prior year, including the $119 million positive impact from foreign currency fluctuations.

Within the segment, News UK, Dow Jones and News Corp Australia revenues grew 4%, 2% and 1%, respectively, while revenues at News America Marketing declined 6%. Adjusted revenues for the segment were 3% lower compared to the prior year.

Advertising revenues declined $76 million, or 3%, while circulation and subscription revenues increased $105 million, or 5%, driven by the factors discussed above in the fourth quarter segment results.

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