News Corp bets on digital property growth. Is it a Buy?

News Corp (ASX: NWS) like many other media organizations is going through a period of change and transformation. The rise of the digital media and the popularity of online websites have adversely impacted print advertising revenue.

In the first quarter earnings report for the financial year 2016, News Corp reported a 4% decline in revenue to US$ 2.01 billion, compared to US$ 2.11 billion same period last year. First quarter Earnings declined by 15% as the print business continues to suffer from challenging business conditions. Foreign exchange fluctuations also had a negative impact on the earnings.

News Corp’s largest revenue generating segment, news and information services proved to be the biggest drag on revenue.  Lower print advertising revenue in Australia and News America marketing, a premier coupon publishing business in the U.S. were primarily responsible for the fall in revenue. Another segment, book publishing faced a similar situation with stagnant or zero growth in revenue base.

However, despite all the doom and gloom in the print business, News Corp is strategically moving away from the print business and towards the digital and online space. The digital real estate services business segment increased revenue by 71% compared to last year. With the recent acquisition of new real estate websites, News Corp has most likely become the world’s largest digital property listing company.

In November 2014, News Corp acquired U.S. online real estate group Move Inc. The acquisition will give News Corp a significant footprint in the online real estate market in the U.S. where it expects the real estate market to keep getting healthier. In Australia, News Corp’s digital real estate business, REA Group Limited (ASX: REA) – the owner of – provided solid growth in revenue.

News Corp’s Australian Stock Exchange (ASX) listed stock price has lifted by 24.52% in one year. The shift towards a more global and digital future as a strategy is setting the company up for a likely prosperous future. The recently announced takeover by REA Group of iProperty Group Ltd (ASX: IPP) will give the company access to the lucrative real estate markets throughout Southeast Asia.

News Corp’s key competitor in Australia, Fairfax Media Limited (ASX: FXJ) is also pursuing a digital growth strategy. Its online real estate website posted a solid 68% growth in revenue year-to-date (YTD).

Foolish takeaway

Media businesses are in the process of transition from a print-focused to a digital-focused business. The new digital strategies put into place are already showing good results. News Corp’s current share price does not fully reflect the future growth potential from new digital ventures. So a Foolish investor may want to a keep close eye on this stock as it could likely be undervalued.

A Billionaire's Investing Secrets – and 2 New ASX Ideas for You

Now you can discover the investing secrets of $60 BILLION man Warren Buffett -- widely recognized as the world's greatest investor. Plus, you'll get two brand new ASX ideas! Your copy of The Motley Fool's brand-new report "The Wisdom of Warren Buffett -- Plus 2 ASX Shares Buffett Could Love" is FREE when you click here.

Motley Fool contributor Qaiser Malik does not own shares in any of the companies mentioned in this article.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!