News Corporation Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Robert Thomson highlighted the company's strategic transformation, with net income from continuing operations up 67% to $107 million, revenues $2 billion (+1% y-o-y), total segment EBITDA up 12% with margin expanding to 14.4%.
• Sale of Foxtel to DAZN, transferring $724 million of debt off the balance sheet and repaying AUD 592 million in shareholder loans, receiving a 6% equity interest in DAZN.
• Dow Jones saw 6% revenue growth, with consumer subscriptions over 6 million, Digital ARPU improving, and Professional Information business thriving with acquisitions of Oxford Analytica and DragonFly Intelligence.
• Digital Real Estate Services had profitability surge 19% on 5% revenue increase, REA up 6% (11% constant currency), Realtor.com revenues up 2% despite macro challenges.
• Book Publishing had revenues up 2%, digital revenues up 3%, with Christian Publishing strong and HarperCollins digital revenues up 3%.
• News Media saw segment EBITDA up 22% due to cost savings, with News U.K. and News Australia showing growth.

Segment Performance

• Dow Jones: Reported revenues of $575 million, up 6% year-over-year. Segment EBITDA was $132 million, up 12% with a margin of 23%. Digital revenue accounted for 82% of total Dow Jones segment revenues. Professional information business revenues rose 6%, with Risk & Compliance up 11% and Dow Jones Energy up 10%. Consumer subscriptions surpassed 6 million.
• Digital Real Estate: Segment revenues were $406 million, up 5% year-over-year. Segment EBITDA was $124 million, up 19%. REA revenues rose 6% (11% on constant currency), with Realtor.com revenues up 2% despite tough macro conditions.
• Book Publishing: Segment revenues were $514 million, up 2%. Segment EBITDA was $64 million, up 3%. Digital revenues grew 3%, with Christian Publishing showing strength.
• News Media: Revenue was $514 million, down 8% year-over-year. Segment EBITDA was up 22% due to cost savings initiatives.

Guidance

• Dow Jones team expects B2B growth, including upselling and new products, with circulation revenue growth similar to Q2.
• Digital Real Estate notes Australian residential Dubai listings down 11% in April, Realtor.com to focus on technology improvements and new ad campaign.
• Book Publishing faces tough comps in Q4.
• News Media expects segment to benefit from cost initiatives, with advertising volatile due to macro uncertainty, lapping cost savings from commercial joint venture and facing higher AI/legal costs.

Risks

• Political turbulence affecting business partners.
• Currency headwinds impacting revenues.
• AI blurring lines between actual and anthropomorphic, potential IP theft by AI companies.
• Macro conditions (elevated mortgage rates, economic instability) affecting real estate market.

Question and Answer

Q: On Dow Jones business, any color on Q4 investment and where it's focused?

A: Robert Thomson says no startling increase in investment, but acquisition costs for Dragonfly and Oxford Analytica added to Professional Information Business, focused on consumer business ARPU growth.

Q: Follow-up on Factiva dispute impact in Q4 and Dow Jones margins long-term?

A: Lavanya Chandrashekar says Factiva impact will reduce in Q4, margins expected to expand due to growth in Professional Information Service business and consumer business growth.

Q: Prioritization of capital allocation, internal/external investments, capital returns?

A: Robert Thomson says focus on 3 core pillars, will look for M&A opportunities in those areas, careful with cash to avoid overpaying, returned 70% of free cash flow to investors last fiscal.

Q: Rationalizing/simplifying company further?

A: Robert Thomson says will continue to examine segments, focused on realizing maximum value for shareholders, confident in prime position for growth.

Q: Dow Jones consumer business converting promotional pricing to higher paying, how's that going?

A: Robert Thomson says total subs up 7%, digital subs up 14%, dynamic pricing strategy proceeding well, expecting positive trends in digital numbers.