Why is the News Corp (ASX:NWS) share price rocketing 12%?

The News Corp (ASX: NWS) share price is rocketing 12% in early morning trade. We take a look at what’s driving the gains.

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News Corporation (ASX: NWS) shares are rocketing higher in early morning trade. This comes after the global media and information services company released its financial results for the three months ending 31 December (Q2 FY2021). At the time of writing, the News Corp share price has surged 12.02% to $28.15.

What was announced?

The News Corp share price is on a tear this morning despite the company reporting total revenue for Q2 FY2021 of $2.41 billion — a 3% decline from FY2020 Q2 revenue. News Corp said lower revenue at its News Media segment was mostly responsible for the decline. This included a 1% negative impact in its Australian market after the company closed a number of community newspapers, some of which transitioned to digital.

The rest of the figures released by the company, however, were all up from the previous corresponding period, likely accounting for the positive momentum surrounding the News Corp share price today.

Adjusted revenues increased by 2%.

Net income was $261 million, up from $103 million for the same quarter in the previous year.

Total Segment earnings before income, tax, depreciation and amortisation (EBITDA) of $497 million was up 40% compared to the corresponding quarter, when EBITDA came in at $355 million. The company credited improved operating trends and cost reductions, along with an $18 million positive impact from foreign currency fluctuations for the better results.

Diluted net income per share was 39 cents as compared to 14 cents in Q2 2020.

Adjusted earnings per share (EPS) was 34 cents, up from 18 cents the previous year.

Commenting on the results, News Corp chief executive Robert Thomson said:

The second quarter of fiscal 2021 was the most profitable quarter since the new News Corp was launched more than seven years ago, reflecting the ongoing digital transformation of the business. We reported the largest profits for Dow Jones since the acquisition of the company in 2007, with Segment EBITDA increasing 43 percent and traffic across the Dow Jones digital network surging 48 percent.

There was also a 77 percent rise in Segment EBITDA at the Subscription Video Services segment, where the exponential evolution at Foxtel continued apace…

In the Book Publishing segment, HarperCollins’ revenues rose 23 percent, with double digit growth across every category, and a 65 percent burgeoning of Segment EBITDA. And history was also made at the New York Post, which reported its first profit in modern times.

News Corp share price snapshot

The News Corp share price was not immune to last year’s COVID-fuelled market selloff. From late February through to early April 2020, News Corp shares tumbled more than 41%. But the company proved resilient. The share price is now up around 110% from those lows.

With this morning’s intraday moves taken into account, the News Corp share price is up nearly 35% over the past year and almost 22% so far in 2021.

For comparison the S&P/ASX 200 Index (ASX: XJO) is up 2% in 2021.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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