Rupert Murdoch's News Corp (ASX: NWS) has released a reasonable set of results for the second quarter, particularly considering the difficult operating environment faced by many of its business units. Perhaps the market was expecting the results to be weaker as the shares have shot higher.
Results
Having split from the film and entertainment business Twenty-First Century Fox Inc (ASX: FOX) in June 2013, the stand alone news and information company reported a 4% decline in revenues from US$2.32 billion to US$2.24 billion. The decline in revenues was blamed on lower advertising revenues but was partially offset by the consolidation of Fox Sports Australia into the accounts following the acquisition of outside interests.
The stand-out division for the group was Digital Real Estate Services which encompasses the firm's investment in REA Group Limited (ASX: REA). The division reported 18% growth in revenues in the second quarter.
At the earnings level, the Digital Real Estate and Book Publishing segments both contributed strongly to the result, offsetting declining earnings from the News and Information Services segment. Overall, adjusted earnings per share were flat at US31 cents per share compared to the previous corresponding period.
Insight
For investors in the Australian media sector – News Corp's News and Information Services segment is an important harbinger for judging how competitors APN News and Media Limited (ASX: APN) and Fairfax Media Limited (ASX: FXJ) are tracking. With News Corp reporting a 7% decline (adjusted for currency) in its Australian Newspapers revenue and describing the Australian advertising market as weak – the outlook for local peers when they report is not great.
Foolish takeaway
The market certainly appeared pleased (or perhaps relieved) with News Corp's results, sending the stock up over 8% in early morning trade. The stock has now risen from lows around $14.50, when it first separated from Fox, to its current price of $18.65.
