News Corporation Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Performance: Full year revenues rose 2% to nearly $8.5 billion, total segment EBITDA improved 14% to over $1.4 billion, net income from continuing operations increased 71% to $648 million. Fourth quarter revenues rose 1% to $2.1 billion, profitability grew 5% to $322 million, net income from continuing operations rose 28% to $86 million.
• Capital Return: Board authorized a new $1 billion stock repurchase program in addition to remaining funds from prior program, expecting accelerated repurchases soon.
• Segment Focus: Dow Jones had strong year with revenue and EBITDA growth; Digital Real Estate showed growth despite market conditions; Book Publishing had second best revenue year on record.
• Acquisitions: Savvy acquisitions made across core businesses, including Dragonfly Intelligence, Oxford Analytica, and Zenlist; agreed acquisition of Crunchyroll's Manga publishing operations in France and Germany.
• IP Protection: Emphasis on protecting intellectual property of authors and journalists, fighting to sue companies violating property rights, and negotiating with AI companies to secure IP deals.

Segment Performance

• Dow Jones: Full year revenue rose 4% to nearly $8.5 billion's portion, EBITDA improved 14% to over $1.4 billion. Fourth quarter revenue rose 7% to $604 million, EBITDA up 10% to $151 million. Professional Information Business saw 10% Q4 revenue growth, with Risk & Compliance up 21% and Dow Jones Energy up 12%. Digital revenue accounted for 83% of Dow Jones segment revenues in Q4.
• Digital Real Estate: Full year revenue up 9%, EBITDA up 18%. Realtor.com had 3% Q4 revenue growth despite sluggish U.S. housing market, with growth areas like rentals, new homes, and seller accounting for 24% of revenues. REA had 12% revenue growth (13% constant currency) to $1.25 billion.
• Book Publishing: Full year revenue up 3% to $2.1 billion, EBITDA up 10% to $296 million. Q4 affected by soft book market but some divisions like Elegies and children's books performed well. Global reach enhanced by acquisition of Crunchyroll's Manga publishing operations in France and Germany.

Guidance

• Board authorized a new $1 billion stock repurchase program with approximately $300 million remaining from prior program, expecting accelerated repurchases soon.
• Fiscal 2026 pacing to benefit from proceeds of Foxtel sale.
• Dow Jones expected to continue margin expansion as it shifts to B2B.
• Realtor to focus on growth adjacencies and integration of Zenlist acquisition.
• Book Publishing to see positive outlook from key titles scheduled for fiscal 2026.

Risks

• Competition and market dynamics could impact performance.
• Soft book market conditions in recent months affecting some divisions.
• AI impact on content ecosystem and potential violations of intellectual property rights pose risks to content businesses.

Q: Expand on the decision to accelerate the buyback, what drove it, expected quarterly repurchase activity, and target leverage?

A: Robert J. Thomson stated the scale and pace of the buyback increased due to improved free cash flow and return on investment, belief in significant discount between share price and net asset value, and benefit from Foxtel sale. Lavanya Chandrashekar added fiscal 2026 pacing to benefit from Foxtel sale proceeds and no target leverage ratio stated yet.

Q: Talk about strategy at Move/Realtor, adjacencies and 2026 outlook?

A: Robert J. Thomson mentioned Realtor has had revenue growth despite sluggish property market, with growth areas like rentals, new homes, and seller at 24% of revenues. Lavanya Chandrashekar added continued investment in Realtor, including acquisition of Zenlist for enhanced capabilities.

Q: Expectation for Dow Jones second half trajectory into fiscal '26 and OpEx growth?

A: Robert J. Thomson noted strong progress at Dow Jones with growth in Professional Information Business and consumer business, no reason to expect growth decline. Lavanya Chandrashekar mentioned cost growth in second half was mid-single digits with continued margin expansion due to Professional Information Services' higher margin profile.

Q: Update on simplifying the company and U.S. housing market impact on Realtor?

A: Robert J. Thomson stated sale of Foxtel was a simplification move, Realtor poised to surge when property market improves with interest rate decline.

Q: Impact of AI on publishing business, Dow Jones ad revenue, and New York Times Amazon licensing deal?

A: Robert J. Thomson stated no negative trends from search at Dow Jones, in advanced negotiations with AI companies, and protecting IP rights. Mentioned mix of wooing and suing AI companies for IP.

Q: Attribute to The Wall Street Journal subscription growth and continuation?

A: Robert J. Thomson attributed to unique excellence of The Wall Street Journal as a trusted news source. Lavanya Chandrashekar added benefit from partnership with LSEG providing custom dashboard with lower acquisition, churn, and retention costs.

Q: CapEx step up in fourth quarter and FY '26 outlook?

A: Lavanya Chandrashekar said CapEx in Q4 was due to pull forward in spend at Dow Jones for growth initiatives, will continue to invest in Dow Jones, Realtor, and Harper, but Q4 rate not a run rate for FY '26.

Q: Acquisition opportunities in Professional Information or data subscription space?

A: Robert J. Thomson stated they survey the landscape from a position of strength but didn't specify specific targets.