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Earnings: News Corp share price up 5% today despite posting major loss

ASX 200 News

The News Corporation (ASX: NWS) share price is on the rise this morning following the release of its fourth quarter and full year financial results. The News Corp share price was up 5% to $19.42 in mid-morning trade today, despite reporting a significant drop in revenues for FY 2020.

Revenues are down

News Corp reported full year total revenues of $9.01 billion for the 12 months to June 30 2020. This result was a significant 11% decline compared to the year prior.

The drop was mainly due to a 4% negative impact from the coronavirus pandemic and the divesture of New Corp’s News America Marketing division. The negative impact of foreign currency fluctuations as well as a reduction in revenues from the group’s Foxtel division also had an impact on the bottom line.

In contrast, growth subscription revenues from New Corp’s Dow Jones segment impacted positively on the company’s overall revenue growth.

News Corp recorded an overall net loss of $1.55 billion for the full year. This compared with an overall net income of $228 million in FY 2019. The net loss was largely attributed to $1.69 billion in non-cash impairment charges relating mainly to its Foxtel and North America Marketing segments.

Total EBITDA fell by 19% to $1.01 billion for the full year. News Corp estimated that the total negative impact from the coronavirus pandemic on total EBITDA amounted to between $55 million and $70 million.

Big impact on fourth quarter profits 

The coronavirus hit News Corp’s fourth quarter revenues particularly hard, dropping them by a very high 22%. Total Segment EBITDA fell even more sharply by 28%. The worst hit segment was News Media, which saw a 41% decline in revenue for the fourth quarter and an 18% drop for the full year.

Subscription Video Services also took a significant hit during the fourth quarter, due mainly to falling residential broadcast subscribers. Foxtel had subscribers totalling 2.777 million at the end of the financial year. This was a very sharp 12% decline on 12 months prior.

Digital Real Estate Services Revenues – attributable to News Corp’s part ownership in REA Group Limited (ASX: REA) –declined by 8% during the final quarter.

News Corp share price trends

The News Corp share price was hit during the early phase of the pandemic recording a 52-week low of $13.10 in early April. Since then the News Corp share price has made a partial recovery and is trading at $19.42 at the time of writing.

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Motley Fool contributor Phil Harpur owns shares of REA Group Limited. The Motley Fool Australia has recommended REA Group Limited. 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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