News Corporation share price crashes despite posting record quarterly result

Let's take a closer look at its quarterly results.

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Key points

  • News Corp shares have crashed more than 10% to a 16-month low today despite posting quarterly growth 
  • 3QFY22 revenue hit a record high of $2.49 billion but it was bolstered by recent acquisitions 
  • The best performing division was Digital Real Estate Services and the worst was Subscription Video Services 

The News Corporation (ASX: NWS) share price is tumbling on Friday despite posting its highest March quarter revenue numbers in its history.

The company's revenue hit $2.49 billion in 3QFY22, which is 7% ahead of the previous corresponding period. This takes its year-to-date FY22 revenue to $7.7 billion, or 12% ahead of the same period last year.

But the news could not save the News Corp share price from diving over 10% this morning to $25.80. That is its lowest point in 16-months. At the time of writing, News Corp shares are trading at $25.92.

News Corp shares caught up in market sell-off

The market is in a dramatic sell-off with all sectors trading in the red following big falls in the US last night.

Perhaps investors were also not too impressed by the headline growth rates as they have been bolstered by one-off items. If you excluded these, like acquisitions, the normalised revenue growth rate would be a more modest 6%.

Most divisions reporting quarterly growth

At least shareholders can take some comfort that just about every division under the group delivered growth. The only outlier was Subscription Video Services, which declined 6% in the quarter to $494 million.

This is despite higher revenues from its video streaming services BINGE and Kayo. The gains were offset by fewer residential broadcast subscribers.

Leveraged to the residential boom

The segment that did the best was Digital Real Estate Services. Its quarterly revenue jumped 19% to $65 million. The division includes News Corp's holding in REA Group Limited (ASX: REA) and home loan brokering network, Mortgage Choice.

The next best division was Dow Jones with its 16% uplift in quarterly revenue to $487 million. Acquisitions contributed to the gain. These include Investor's Business Daily and the Oil Price Information Services business and related assets.

The group's Book Publishing and News Media segments also grew quarterly revenue by 5% each to $515 million and $580 million, respectively.

How the News Corp share price compares to its peers

Net income and total earnings before interest, tax, depreciation and amortisation (EBITDA) also improved with the higher revenue. Net income in the quarter increased 8% to $104 million and EBITDA jumped 20% to $358 million.

"News Corp revenues and profitability set new records for the third quarter, building on the momentum of preceding record quarters," said its chief executive Robert Thomson.

"We have now achieved more in profitability through the first three quarters of fiscal 2022 — at over $1.3 billion and rising 27 percent compared to the prior year — than in any entire fiscal year since our rebirth in 2013."

The New Corp share price has fallen 19% since January. Its rivals are faring better with the Nine Entertainment Co Holdings Ltd (ASX: NEC) share price down 15% and Seven West Media Ltd (ASX: SVM) gaining 3% in 2022.

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. 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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