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Results: News Corp share price on watch as net income drops 919%

Shares in Aussie media group News Corporation (ASX: NWS) are worth watching today after the company filed its latest regulatory filing. The News Corp share price could be on the move after the company announced a 919% fall in net income to a total US$1,269 million loss.

What did News Corp report?

The huge drop in income is largely due to impairment charges against the company’s Foxtel and North America Marketing segments.

It’s also worth noting that last week’s fourth-quarter earnings announcement provided a fair bit of detail to investors.

The media group reported that loss on weaker FY20 revenues which fell 11% to US$9,008 million. News Corp did not announce a final dividend, leaving the total dividend for Class B Common Stock at US 20 cents per share from the interim payment.

Net tangible asset backing per share totalled US$4.37 in FY20 which is down 6.6% from last year.

News Corp’s operations are divided into six reporting segments comprising Digital Real Estate Services, Subscription Video Services, Dow Jones, Book Publishing, News Media and Other.

News Media remains the company’s largest contributor by revenue, contributing 31.1% of total earnings. Subscription Video Services, including Kayo, comprised 20.9% while Book Publishing contributed a further 18.5%.

The company’s Digital Real Estate Services line consists of News Corp’s 61.6% interest in REA Group Limited (ASX: REA). Segment revenue edged 8% lower while earnings before interest, tax, depreciation and amortisation (EBITDA) fell 9% to $345 million.

I think the News Corp share price is one to watch this morning as investors take in the latest numbers.

Free cash flow for the group fell 15.5% to US$180 million in FY20 with higher capital expenditure and lower operating cash flow weighing on the earnings figure.

Net assets fell 9.2% to US$14,261 million in FY20 as goodwill and receivables fell from FY19 levels.

COVID-19 impact

The News Corp share price has been hit hard by the coronavirus pandemic with management providing an update on COVID-19 impacts. Management noted economic volatility, uncertainty and disruption as key factors affecting its various business lines.

Some of the other COVID-19 risks highlighted by management included:

  • Lower revenue and profitability as advertising revenues continue to fall
  • Supply chain disruptions, particularly in printing and manufacturing
  • Company efforts to manage COVID-19 impacts may not be successful, resulting in additional costs
  • Adverse workforce impacts arising from the pandemic

Foolish takeaway

The News Corp share price is up 13.3% since the company’s fourth-quarter earnings release last Friday.

I think it’s worth watching the Aussie media share to see how investors react to this morning’s update.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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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