In a busy few weeks for News Corp, the company has revealed the results for the first quarter of the 2023 financial year.
Revenues were steady close to US$2.5b. A slight drop year-on-year was attributed to foreign currency fluctuations and lower book publishing returns.
There were strong performances again from Dow Jones and REA.
From Australia, there was healthy performance from the Foxtel Group and News Corp Australia.
Commenting on the results in a statement, News Corp chief executive Robert Thomson said:
“While the macro environment is patently more volatile, the results highlight the resilience of News Corp and the potential for sustained growth and increased profitability.
“Headline revenues were down one percent to $2.5 billion, but the decline was obviously a consequence of foreign currency fluctuations. On an adjusted basis, our revenues grew a healthy three percent, building on the robust results from last year.
“Profitability for the quarter was $350 million, down 15 percent, although that reflects the forex headwinds and a fundamental reset by Amazon of its book inventory levels and warehouse footprint. We view neither factor as reflective of core business conditions or of our long-term potential.
“Dow Jones posted its best first quarter results since its acquisition with revenues rising 16 percent and Segment EBITDA an even more impressive 19 percent, benefiting from the successful integration of OPIS and Chemical Market Analytics, strong digital advertising growth, record digital subscriptions and continued momentum at Risk & Compliance.
“News Corp is building on a sturdy base. We have reported record profitability in each of the last two fiscal years and bolstered our fortunes through savvy investments and by streamlining the cost base.”
News Corp: Digital Real Estate Services
In the quarter, revenues at REA Group increased $6 million, or 2%, to $252 million, driven by higher Australian residential revenues due to price increases, the contribution from Premiere Plus, increased depth penetration and growth in national listings. The growth was partially offset by a $20 million, or 9%, negative impact from foreign currency fluctuations and lower financial services revenues due to declines in settlement activity. Australian national residential buy listing volumes in the quarter increased 5% compared to the prior year, with listings in Melbourne up 12% and Sydney up 5%, partly due to a number of state lockdowns in the prior year.
Foxtel CEO Patrick Delany
Subscription Video Services
Revenues of $502 million in the quarter decreased $8 million, or 2%, compared with the prior year, primarily due to a $40 million, or 8%, negative impact from foreign currency fluctuations.
Adjusted Revenues of $542 million increased 6% compared to the prior year, improving from the prior quarter rate. Higher revenues from Kayo and BINGE, higher commercial revenues and an increase in advertising revenues were partially offset by the impact from fewer residential broadcast subscribers. Foxtel Group streaming subscription revenues represented approximately 25% of total circulation and subscription revenues in the quarter, as compared to 19% in the prior year.
As of September 30, 2022, Foxtel’s total closing paid subscribers were nearly 4.5 million, a 16% 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 increased slightly to 14.2% from 14.0% in the prior year. Broadcast ARPU for the quarter increased 1% year-over-year to A$83 (US$57).
Total streaming subscribers September 30, 2022 (2021 in brackets)
Kayo 1,270,000 (1,079,000)
Binge 1,451,000 (885,000)
Foxtel Now 197,000 (239,000)
Total subscribers including Flash 4,605,000 (3,970,000)
Dow Jones
Circulation and subscription revenues increased $65 million, or 19%, which includes the contributions from the acquisitions of OPIS and CMA. Circulation revenue grew 5%, reflecting the continued strong growth in digital-only subscriptions at The Wall Street Journal. Professional information business revenues grew 40%, primarily driven by the acquisitions of OPIS and CMA and growth in Risk & Compliance products, partially offset by negative foreign currency fluctuations.
Digital circulation revenues accounted for 68% of circulation revenues for the quarter, compared to 66% in the prior year.
During the first quarter, total average subscriptions to Dow Jones’ consumer products reached over 4.9 million, an 8% increase compared to the prior year. Digital-only subscriptions to Dow Jones’ consumer products grew 13%. Total subscriptions to The Wall Street Journal grew 8% compared to the prior year, to nearly 3.8 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 13% to over 3.1 million average subscriptions in the quarter, and represented 84% of total Wall Street Journal subscriptions.
Advertising revenues increased $4 million, or 4%, primarily due to 11% growth in digital advertising revenues, driven by higher average yields, partially offset by a 6% decline in print advertising revenues. Digital advertising accounted for 65% of total advertising revenues in the quarter, compared to 61% in the prior year.
Book Publishing
Revenues in the quarter decreased $59 million, or 11%, compared to the prior year, primarily due to lower physical book sales due to Amazon’s reset of its inventory levels and rightsizing of its warehouse footprint which resulted in lower order volume and higher returns, despite consumer sales data remaining consistent with prior quarters.
News Media
Revenues in the quarter decreased $23 million, or 4%, as compared to the prior year, driven by a $62 million, or 11%, negative impact from foreign currency fluctuations, partially offset by higher circulation and subscription revenues and higher advertising revenues in constant currency.
Within the segment, revenues at News Corp Australia and News UK increased 1% and decreased 9%, respectively, as both were impacted by negative foreign currency fluctuations. The New York Post also saw higher revenues in the quarter. Adjusted Revenues for the segment increased 6% compared to the prior year.
Circulation and subscription revenues decreased $16 million, or 6%, compared to the prior year, primarily due to a $32 million, or 12%, negative impact from foreign currency fluctuations and lower print volume. The decline was partially offset by cover price increases, higher content licensing revenues and digital subscriber growth.
Advertising revenues decreased $10 million, or 4%, compared to the prior year, primarily due to a $22 million, or 9%, negative impact from foreign currency fluctuations, lower print advertising at News UK and lower revenues at Wireless Group, partly due to the absence of the Euro 2020, which occurred in the prior year period. The decline was partially offset by growth in digital advertising, primarily at News UK (mainly at The Sun), and the recovery of print advertising at News Corp Australia.
The positive contributions from News Corp Australia and the New York Post were more than offset by the negative contributions from News UK and Wireless Group and negative foreign currency fluctuations. Adjusted Segment EBITDA decreased 44%.
Digital revenues represented 36% of News Media segment revenues in the quarter, compared to 33% in the prior year, and represented 33% 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 September 30, 2022 were 1,012,000 (929,000 for news mastheads), compared to 897,000 (850,000 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 September 30, 2022 were 468,000, compared to 380,000 in the prior year (Source: Internal data).
New York Post’s digital network reached 151 million unique users in September 2022, compared to 151 million in the prior year (Source: Google Analytics).
See also: Record revenue and profits continue: News Corp reports full year results + reaction