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NewsCorp shares climb on higher revenue and return to profit in Q3 update

The News Corporation Ltd (ASX: NWS) share price has climbed 2.86% higher this morning after the company posted a net profit in its Q3 2019 quarterly update and mixed underlying results.

What were the highlights of the News Corp update?

News Corp reported a strong quarterly result which was highlighted by the following financial results:

  • Revenues of $2.46 billion, 17% higher on prior corresponding period (pcp) revenues of $2.09 billion.
  • The company’s net profit after tax (NPAT) was $23 million compared to a net loss of $1.1 billion in Q3 2018, which were impacted by a $1.2 billion writedown in the prior year.
  • Total segment earnings before interest, tax, depreciation and amortisation (EBITDA) of $247 million compared to $181 million in the prior year.
  • The company’s adjusted earnings per share (EPS) came in at $0.04 per share compared to $0.06 in Q3 2018.

In terms of key segment results, News Corp also reported the following highlights:

  • Digital-only subscribers for The Wall Street Journal grew 19% in the quarter to a new record of 1.8 million during the period.
  • The company’s HarperCollins segment EBITDA grew 29% with impressive new releases and strong blacklist sales
  • Foxtel continues to be a top performer with 714,000 total paying over-the-top (OTT) services subscribers including Kayo Sports and Foxtel Now.
  • News Corp’s Digital Real Estate Services segment posted healthy growth in its revenues despite volatility in the U.S. and Australian property markets and foreign currency headwinds.

Is the News Corp share price in the buy zone?

Despite the positive statutory results, once the $1.2 billion writedown from prior periods is stripped out the operating numbers are a little more mixed.

With challenging conditions in the Australia media space at the moment, it’s positive to see strong results from the Kayo Sports segment and an overall increase in revenue compared to pcp.

The current share price of $17.06 isn’t far off News Corp’s 52-week low of $15.98 and it will be interesting to see the market reaction to this morning’s quarterly update, particularly given the stock is broadly flat year-to-date despite trading as high as $19.05 in early March.

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Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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