The News Corporation (ASX: NWS) share price hit a new yearly benchmark on Friday morning after the international media company reported its FY21 earnings.
At the time of writing, News Corp shares are selling for $34.52 – up 5.79%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, is flat.
Let’s take a closer look at the results.
News Corp share price increases on first profit in a year
- Revenues increased 4% to $9.4 billion.
- Net profit of $389 million compared to $1.6 billion net loss in prior corresponding period (pcp).
- Earnings before interest, taxes, depreciation, and amortisation (EBITDA) was $1.3 billion. In the pcp it was $1 billion.
- Earnings per share (EPS) of 56 cents as opposed to a $2.16 loss in the prior year.
What happened in FY21 for News Corp?
There have been several major stories that have impacted the News Corp share price in FY21.
One such story was when it reportedly rejected an approach from an unnamed corporation for its Australian subscription television business Foxtel. Foxtel had a 40% growth in paid subscribers in the financial year.
Another story was the deal News Corp, among other ASX media companies, made with tech giants Facebook Inc (NASDAQ: FB) and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG). The two Silicone Valley behemoths agreed to pay News Corp for stories shared on their platform. The deal came after intervention from the Australian government and its legislated Media Bargaining Code.
At first, Facebook and Google were so opposed to the code it initially blocked all Australian news from being shared on its platform for five days. The tech companies only dropped the news ban when the government agreed to make several amendments to the bill.
What did management say
News Corp CEO, Robert Thomson, said of today’s report
Fiscal Year 2021 was the most profitable year since we created the new News Corp in 2013, with revenues rising 4 percent in the full year and surging by 30 percent in the Fourth Quarter. Profitability improved by 26 percent for the year, when we had a record number of digital subscriptions, record revenue and profits at Move and record traffic at realtor.com, record profits at HarperCollins and the largest profit at Dow Jones since its acquisition in 2007.
What’s next for News Corp
In his statement, Robert Thomson said News Corp expects to make “nine figures” annually from its aforementioned deal with Facebook and Google, although the exact sum is confidential.
With COVID cases surging in both the US and Australia, news media still faces an uncertain future.
Over the past 12 months, the News Corp share price has increased an impressive 81.7%. It outperformed the ASX 200 by over 57 percentage points in that time.
News Corp has a market capitalisation of $19.3 billion.