Consumer Discretionary

News Corp earnings: "Our businesses are thriving"

Fri 04 Feb 22, 2:27pm (AEST)
news media

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Key Points

  • News Corp businesses delivered on all fronts, notably its digital real estate services
  • UBS thinks "traditional" media companies represent good value
  • Foxtel recorded 66 percent increase in total customers

News Corp (ASX: NWS) has largely avoided the recent tech rout, just 7% away from all-time highs. 

The company’s half-year FY22 results validated its resilient share price, posting a 15% increase in revenue to $5.2bn and 30% rise in earnings to $765m. 

News Corp declared a semi-annual cash dividend 10 cents per share with an ex-dividend date of Wednesday, 16 March. 

Chief Executive Robert Thomson said the “businesses are thriving, particularly at the Digital Real Estate Services, Dow Jones and Book Publishing segments, and there was a pronounced surge in profitability at our News Media segment.”

“Meanwhile, Foxtel’s streaming products flourished, with a 66 percent increase in total customers, and Kayo and BINGE both exceeding one million.”

Thomson also pointed out the company’s landmark agreements with Google, Facebook and Apple, deemed an “important source of subscriptions and of advertising revenue for our news sites.” 

Earnings breakdown 

The key earning segments for News Corp (% of overall earnings) include: 

  • Digital Real Estate Services $316m (31%)

  • Dow Jones $239m (24%)

  • Subscription Video Services $200m (20%)

  • Book Publishing $192m (19.3%)

  • News Media $145m (14.6%)

Aussie property won’t let you down 

REA Group (ASX: REA), which is majority-owned by News Corp, posted a 27% rise in earnings to $368m this morning, or an approximate $220m contribution to News Corp earnings.

Commenting on the Australian real estate scene, REA CEO Owen Wilson said “As anticipated, the removal of COVID restrictions saw a wave of new listings on realestate.com.au, with sellers making up for the time lost in lockdown and taking advantage of the significant buyer demand.”

Streaming services moderate

Earnings for subscription video services declined -1%, driven by higher investment into technology and streaming products. 

This might come as no surprise after Netflix posted its lowest year of subscriber growth since 2015. 

Media services

Dow Jones and book publishing segments posted mid-teens growth reflecting higher advertising revenues and strong consumption trends.

 

What brokers think

UBS released a note on Friday reiterating a Buy rating and a $41.50 target price (25% upside) for News Corp.

UBS viewed more 'traditional' media companies like News Corp and Nine Entertainment (ASX: NEC) as more reasonable priced compared to more tech-oriented ones.

 

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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