News Corporation (NWSA/NWS) Q1 2025 Summary
Business Context and Reporting Period
This summary covers News Corporation's unaudited financial results for the first quarter of fiscal year 2025, ended September 30, 2024. News Corp is a global diversified media and information services company operating through six segments: Dow Jones, Digital Real Estate Services, Book Publishing, Subscription Video Services, News Media, and Other. The company reported a significant improvement in profitability compared to the prior year period.
Key Financial Metrics
| Metric | Q1 2025 (Sep 30, 2024) | Q1 2024 (Sep 30, 2023) |
|---|---|---|
| Total Revenues | $2,577 million | $2,499 million |
| Net Income | $144 million | $58 million |
| Net Income Attributable to Stockholders | $119 million | $30 million |
| Diluted EPS | $0.21 | $0.05 |
| Operating Cash Flow | $64 million | $(55) million |
| Free Cash Flow | $(31) million | $(179) million |
| Cash and Equivalents | $1,778 million | $1,529 million |
| Total Borrowings | $2,900 million | $2,909 million |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 3% ($78 million) year-over-year. Growth was driven by the Digital Real Estate Services segment (+13%), Book Publishing (+4%), and Dow Jones (+3%). This was partially offset by a 5% decline in the News Media segment.
- Profitability Surge: Net income attributable to stockholders increased 297% to $119 million. This was primarily due to higher segment EBITDA, lower impairment charges (none in Q1 2025 vs. $21 million in Q1 2024), and a favorable "Other, net" line item ($23 million gain vs. $35 million loss).
- Cash Flow Improvement: Operating cash flow swung from a $55 million outflow to a $64 million inflow, driven by improved working capital management and higher earnings. Free cash flow improved significantly to a $31 million outflow from $179 million.
- Segment Performance:
- Dow Jones: Digital-only subscriptions for The Wall Street Journal grew 10% to 3.8 million.
- Digital Real Estate: REA Group revenues rose 22% due to Australian residential growth; Move revenues declined slightly due to U.S. housing market conditions.
- Book Publishing: Digital sales increased 15%, driven by audiobooks and the Spotify partnership.
- Subscription Video: Streaming revenues increased, but EBITDA dipped slightly due to higher programming rights costs and Hubbl product expenses.
Outlook, Risks, and Unusual Items
- Strategic Review: The company is reviewing strategic and financial options for the Foxtel Group, including its capital structure and assets. No assurance is given regarding the timing or outcome of this review.
- Legal Contingencies: The company faces ongoing litigation regarding the "U.K. Newspaper Matters" (voicemail interception, etc.). An accrual of approximately $62 million exists, with a corresponding receivable of $68 million from FOX Corporation for indemnification. Antitrust class actions against HarperCollins were largely dismissed, though appeals remain possible.
- Investment Activity: REA Group announced an agreement to divest its interest in PropertyGuru Group Ltd., expected to close later in the fiscal year.
- Capital Allocation: The company repurchased $38 million of stock (1.3 million shares) and paid $35 million in dividends to non-controlling interests. Approximately $422 million remains available under the $1 billion share repurchase program.
- Tax Environment: The effective tax rate was higher than the U.S. statutory rate due to foreign operations and valuation allowances. The company is monitoring the impact of OECD global minimum tax rules, currently assessing no material impact.
Investor Verification Checklist
- Non-GAAP Reconciliation: Verify the calculation of Total Segment EBITDA ($415 million) and Free Cash Flow, noting the exclusion of depreciation, amortization, and restructuring charges.
- Foreign Currency Impact: Assess the $35 million positive revenue impact from foreign currency fluctuations, particularly regarding Australian operations (REA Group, Foxtel).
- Debt Structure: Review the breakdown of borrowings, noting that significant debt is held by non-wholly-owned subsidiaries (Foxtel and REA Groups) and is non-recourse to the parent company.
- Legal Accruals: Confirm the status of the $62 million liability and $68 million receivable related to U.K. Newspaper Matters and the potential for additional claims.
- Subscription Metrics: Monitor the growth in digital-only subscriptions for Dow Jones and the churn rates for Foxtel's broadcast vs. streaming services.