News Corporation Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Revenue and Profitability: Revenue for the period rose 2% versus prior year to $2.14 billion, total segment EBITDA increased by 5% to $340 million. Net income from continuing operations was $150 million, up from $149 million last year. Adjusted EPS rose from $0.20 to $0.22.
• Segments: Dow Jones strong with Risk & Compliance and Energy growth; Digital Real Estate benefiting from lower interest rates and Realtor.com's growth; Book Publishing showed improvement post-write-off; News Media saw growth in subscriptions and advertising.
• AI and IP: Emphasized value of IP, partnerships in AI, positive court trends regarding content protection. Anticipated further AI partnerships to positively impact results.
• Share Buybacks: Robust cash position led to accelerated share buybacks, with intention to maximize shareholder value due to undervalued shares.

Segment Performance

• Dow Jones: Reported revenues of $586 million, up 6% year-over-year. Segment EBITDA grew 10% to $144 million. Digital revenues accounted for 84% of Dow Jones segment revenue. Risk & Compliance revenues grew 16%, Dow Jones Energy revenues were 7% higher. Acquired Eco-Movement.
• Digital Real Estate Services: Segment revenues $479 million, up 5% year-over-year. Segment EBITDA $158 million, up 13% year-over-year. Realtor.com posted revenues of $152 million, up 9% year-over-year, marking fourth consecutive quarter of revenue growth. REA revenues gained 3% year-on-year, up 5% in constant currency.
• Book Publishing: Segment revenue $534 million, down 2% year-over-year. Segment EBITDA $58 million, down 28% year-over-year due to a $13 million receivable write-off related to the expected closure of a book distributor. Showed signs of improvement in recent weeks.
• News Media: Revenues $545 million, up 1% year-over-year. Segment EBITDA grew 67% to $30 million. Advertising revenue at New York Post lapped 19% year-over-year, 90% digital. Digital subscribers at The Times and Sunday Times and News Corp Australia increased.

Guidance

• Fiscal 2026 pacing to benefit from repayment of approximately $380 million of Foxtel shareholder loans.
• Expect strong free cash flow, continued aggressive share buybacks.
• Dow Jones expected strong B2B growth; Digital Real Estate hopes for market improvement with lower mortgage rates; Book Publishing expects Q2 benefit from timing of ordering and stronger front list; News Media focused on cost efficiencies.

Risks

• Macroergic uncertainty impacting Book Publishing's performance.
• Legal risks related to content piracy and AI usage, with ongoing cases like the $1.5 billion award against Anthropic.
• Advertising revenue volatility, though digital advertising is increasing.

Question and Answer

Q: Kane Hannan asks about Digital Real Estate growth potential despite housing market conditions.

A: Robert Thomson discusses Realtor.com's holistic housing experience strategy and potential market momentum.

Q: David Karnovsky inquires about share buybacks and WSJ price increase.

A: Robert Thomson talks about accelerated buyback rate and early stage of WSJ subscription pricing review with planned product improvements.

Q: Entcho Raykovski asks about Dow Jones Factiva dispute impact.

A: Robert Thomson notes Dow Jones' strong performance with Risk & Compliance up 16% and Factiva recovering post-settlement; Lavanya Chandrashekar adds settlement impact was modest but new GenAI search capability is helping.

Q: Craig Huber asks about business simplification post-Foxtel sale.

A: Robert Thomson mentions willingness to consider structural changes for simplification and maximizing shareholder returns.

Q: David Joyce asks about Risk & Compliance growth tailwinds.

A: Robert Thomson highlights regulatory-driven growth from Know Your Client regulations and potential for further growth.

Q: David Fabris asks about News Media's trajectory.

A: Robert Thomson and Lavanya Chandrashekar discuss News Media's revenue growth, cost efficiencies from joint ventures and TV business savings, and focus on further growth.