News Corporation (ASX: NWS) shares are gaining this morning following the release of the company's third-quarter results. At the time of writing, the News Corp share price is trading 2.57% higher at 31.49.
Let's take a look at the Murdoch-owned media giant's results for the quarter ended 31 March 2021.
News Corp's latest results
Over the quarter just been, News Corp recorded earnings before interest, tax, depreciation and amortisation (EBIDTA) of $298 million – up from the previous year's $242 million.
News Corp's revenue was 3% higher than the third quarter of 2020. Its net income was $96 million, compared to a net loss of $1 billion in the previous comparable period.
The company ended the quarter with $762 million of cash in the bank.
News Corp's net income per share was 13 cents, a much better result than the third quarter of 2020, which posted a $1.24 per share loss.
Its best performing segment was Dow Jones, home to such titles as The Wall Street Journal. Dow Jones' EBITDA was 61% higher than the previous comparable period, driven by increased digital advertising, subscriptions, and continued growth at its Risk & Compliance publication.
The company expects costs in the fourth quarter to increase by around $20 million when compared to the same quarter of last year. It stated this will likely be caused by higher employee costs and ongoing investment spending. News Corp says this is the only change the company expects of its previously announced outlook, posted in its half-year results.
Where did News Corp make its money this quarter?
Income-driving segments
News Corp's digital real estate services revenue was 34% higher than the third quarter of 2020 – bringing in an extra $90 million. The gains were mostly driven by News Corp's subsidiary Move Inc., home of realtor.com. Move raked in $162 million through the quarter.
Kayo, Binge, and Foxtel also recorded increased revenues. Though, according to News Corp, the streaming services lost around $7 million from lower hotel occupancy as a result of COVID-19.
Revenue from News Corp's book publishing segments also performed strongly, bringing in 19% more revenue than the third quarter of 2020. The increase was partially driven by Julia Quinn's Bridgerton series, perhaps due to the popularity of its television series adaptation.
News media's loss
Of the media giant's business segments, all except for news media reported revenue growth.
News Corp's news media segment recorded a 25% reduction in revenue – bringing in $183 million less than it had in the previous comparable quarter.
The company's news media advertising revenue decreased by 50% – or $215 million. The falls were primarily driven by the ongoing impact of News Corp's divestiture of News America Marketing in May 2020.
It was also impacted by a reported drop in print advertising and the closure or digital transition of regional and community titles.
This was despite a 13% increase in subscriptions and circulation of News Corp's news titles and a $55 million gain from foreign currency fluctuations.
Commentary from management
News Corp chief executive Robert Thomson commented on the company's third-quarter results, saying:
The financial year is on a trajectory to be the most profitable since our reincarnation in 2013. This highlights the transformed character of the Company, with improved revenue performance and a 23 percent increase in profitability in the third quarter.
We have reached historic deals with Google and Facebook, and continue our international campaign to reset the terms of trade for premium journalism. The cooperation in recent weeks with the Google team has certainly been productive and we look forward to further engagement with Facebook. These landmark agreements have meaningfully and materially changed the media landscape.
News Corp share price snapshot
Today's boost to the News Corp share price has added to its recent solid performance on the ASX.
Currently, the News Corp share price is trading around 34% higher than it was at the start of 2021. It's also around 100% higher than it was this time last year.
The media company has a market capitalisation of around $1.1 billion, with approximately 590 million shares outstanding.
