News Corporation (NWSA/NWS) - Q2 Fiscal 2025 Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended December 31, 2024 (Q2 Fiscal 2025) and the six months ended December 31, 2024. News Corporation is a global diversified media and information services company operating through five segments: Dow Jones, Digital Real Estate Services, Book Publishing, News Media, and Other. A significant strategic development in this period was the classification of the Foxtel Group as held for sale, with its results reclassified as discontinued operations following an agreement to sell the business to DAZN Group Limited.
Key Financial Metrics
| Metric (in millions) | Q2 2024 (3 Months) | Q2 2023 (3 Months) | YTD 2024 (6 Months) | YTD 2023 (6 Months) |
|---|---|---|---|---|
| Total Revenues | $2,238 | $2,135 | $4,334 | $4,166 |
| Net Income (Continuing Ops) | $306 | $194 | $455 | $248 |
| Net Income Attributable to News Corp | $215 | $156 | $334 | $186 |
| Diluted EPS (Continuing Ops) | $0.40 | $0.28 | $0.61 | $0.32 |
| Operating Cash Flow (Continuing) | N/A | N/A | $278 | $251 |
| Free Cash Flow (Continuing) | N/A | N/A | $121 | $97 |
| Cash and Equivalents | $1,751 | N/A | $1,751 | N/A |
| Total Borrowings | $1,967 | N/A | $1,967 | N/A |
Note: Q2 Operating Cash Flow is not explicitly broken out in the text; YTD figures are provided.
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 5% ($103 million) in Q2 and 4% ($168 million) YTD compared to the prior year. Growth was driven by the Digital Real Estate Services segment (REA Group), Book Publishing (HarperCollins), and Dow Jones (subscription growth).
- Profitability: Net income attributable to News Corporation stockholders surged 38% in Q2 and 80% YTD. This was significantly aided by a one-time gain of approximately $87 million from the sale of REA Group's interest in PropertyGuru, recorded in "Other, net."
- Segment Performance:
- Dow Jones: Revenues up 3% Q2; driven by digital-only subscription growth (Wall Street Journal digital subs up 7%).
- Digital Real Estate: Revenues up 13% Q2; REA Group saw strong growth in Australian residential revenues.
- Book Publishing: Revenues up 8% Q2; driven by physical and digital book sales.
- News Media: Revenues down 2% Q2 due to lower advertising and the transfer of printing contracts to a joint venture, though EBITDA improved 30% due to cost savings.
- Discontinued Operations: Foxtel results are now excluded from continuing operations. Net loss from discontinued operations was $23 million in Q2.
Guidance, Outlook, and Risks
- Strategic Divestiture: The sale of Foxtel to DAZN is expected to close in the second half of fiscal 2025. News Corp will receive a ~6% minority equity interest in DAZN and one board seat. Upon closing, Foxtel's shareholder loans (A$574 million) will be repaid in cash.
- Capital Allocation: The company continues its share repurchase program ($1 billion authorized; ~$382 million remaining as of Dec 31, 2024). A semi-annual dividend of $0.10 per share was declared in February 2025.
- Legal Contingencies:
- OPIS Antitrust: Class action complaints and a DOJ grand jury subpoena regarding PVC pipe pricing.
- HarperCollins Antitrust: Ongoing litigation regarding e-book pricing with Amazon; recent dismissals in some cases but appeals pending.
- U.K. Newspaper Matters: Ongoing civil claims regarding historical practices; an accrual of $55 million exists, with a corresponding $64 million receivable from FOX for indemnification.
- Taxation: The effective tax rate was higher than the U.S. statutory rate due to foreign operations and valuation allowances, partially offset by tax benefits from the PropertyGuru sale. The company is monitoring the impact of global minimum tax rules (OECD).
Investor Verification Checklist
- Foxtel Transaction Timing: Verify the expected closing date in H2 Fiscal 2025 and the final consideration received (cash + DAZN equity).
- PropertyGuru Gain Sustainability: Confirm that the $87 million gain is a one-time item and not indicative of recurring "Other, net" income.
- News Media Ad Trends: Monitor the impact of platform algorithm changes on News UK digital advertising revenues, which declined in this period.
- Legal Exposure: Review updates on the OPIS antitrust investigation and the HarperCollins appeal status to assess potential future liabilities.
- REA Group Cash Access: Note that ~$210 million of cash held by REA Group is not readily accessible to News Corp without a dividend declaration.