NEWS CORP Q1 FY2025 earnings call

• Robert Thomson highlighted record first quarter revenue and profitability, noting transformation over the past decade. Discussed partnership with OpenAI, litigation against AI companies misusing journalism, and active discussions over Foxtel's future. Emphasized REA's value discrepancy in the market.
• Susan Panuccio spoke about six consecutive quarters of profitability growth, detailed segment results, and the transition of the CFO, stating her commitment to supporting the new CFO during the transition.

Dow Jones

• Revenues: $552 million, up 3% year-over-year; largest segment contributor to company revenue. Digital revenue accounted for 82% of total Dow Jones segment revenues, up 1 percentage point from the prior year. B2B products grew 8% year-over-year despite customer dispute at Factiva. Risk & Compliance saw 16% growth to $81 million, Dow Jones Energy 11% growth to $68 million. Circulation revenues up 1%, digital-only subscriptions up 15%. Advertising revenues down 7%.

Digital Real Estate

• Segment revenues: $457 million, up 13% year-over-year. REA Group had revenues up 22% year-on-year to $318 million, its highest-ever quarterly revenues. Realtor's revenues down 1% but adjacency growth observed.

Book Publishing

• Revenues: $546 million, up 4%. Segment EBITDA improved by 25% to $81 million, margins expanded by over 200 basis points to 14.8%. Digital revenues up 15%, audio books up 26%, e-books up 7%.

Subscription Video Services

• Revenues: $501 million, up 3% year-over-year. Streaming revenues accounted for 34% of circulation and subscription revenues, outpacing broadcast declines. Foxtel's streaming accounts for nearly 70% of paid subscribers, ARPU rising.

News Media

• Profitability up 14% despite challenging macro environment. Digital subscribers in Australia rose to 1.13 million, New York Post digital network recorded 103 million monthly unique users in September.

• Dow Jones expects circulation revenue growth to improve as digital subscription pricing phases in, and anticipates an increase in digital advertising revenue.
• Digital Real Estate anticipates revenue improvements due to expected interest rate cuts and continued growth from adjacency.
• Book Publishing expects modest profit improvements in 2025, though at a more modest rate due to normalized prior year comparisons.
• Subscription Video Services expects lower investment at Hubbl during the remainder of fiscal 2025.
• News Media expects benefits from lower TalkTV costs, savings from the new commercial printing joint venture in the UK, and ongoing operational efficiencies.

• AI companies misusing journalism, with potential litigation to defend intellectual property rights.
• Ad agency biases boycotting media properties based on political prejudices, detrimental to audience reach optimization.
• Macro conditions impacting advertising markets and property sales, affecting revenue in relevant segments.

Q: Alan Gould asked about AI revenue split between Dow Jones and news media segments and HarperCollins' AI revenue possibilities.

A: Robert Thomson stated they can't be more specific on AI revenue distribution due to confidentiality, but it impacts news media and Dow Jones. Susan Panuccio added collectively across agreements, positive year-on-year revenue movement is expected.

Q: David Karnovsky inquired about Dow Jones consumer circulation growth.

A: Robert Thomson mentioned digital-only subscriptions up 15%, and Susan Panuccio stated expectation of stepped-up digital revenue growth in the second half as customers phase up from promotional pricing.

Q: Kane Hannan asked about book margin sustainability.

A: Robert Thomson noted HarperCollins had a strong quarter with momentum continuing, digital sales up 15%, audio books up 26%, e-books up 7%, with no indication of trends waning.

Q: Entcho Raykovski asked about advertising recovery at Dow Jones and Foxtel shareholder loans.

A: Robert Thomson mentioned softness in finance and tech advertising during election periods, expecting digital advertising increase across news media properties. Susan Panuccio stated Foxtel loan balance sits at AUD545 million post-repayment.

Q: Craig Huber asked about optimization of company structures.

A: Robert Thomson stated active discussions over Foxtel's future and presence of value discrepancy in share price vs. asset values, with multiple moving parts affecting the process.

Q: Lucy Huang asked about professional information services growth.

A: Robert Thomson mentioned Factiva dispute impacted growth, but Risk & Compliance and Energy have healthy growth. Susan Panuccio added the dispute dragged down numbers, and expected resolution and enhanced user experience with Google deal to boost growth.