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NWS

News Corporation Inc FY 2019 Profit Result Broadly Neutral

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

News Corporation Inc (ASX: NWS) is a global diversified media and information services company focussed on creating and distributing content to consumers and businesses. Its businesses comprise news and information services, book publishing, digital real estate services, cable network programming in Australia, and digital education and pay-TV distribution in Australia.

 

What are the results from News Corp Fy19 results? 

Today (Thursday 9 August 2019) News Corp released its FY19 annual results combined with its 4th quarter results. The main points of the results are as follows:

  • Revenues totalled US$10.07 billion in FY19, a 12 per cent increase compared to US$9.02 billion in FY18, reflecting the consolidation of Foxtel for the full year and growth at the Digital Real Estate Services segment.
  • Net income totalled US$228 million in FY19 compared to a net loss of US$1.44 billion in FY18. The improvement is mainly due to the absence of non-cash impairment charges and write-downs which negatively impacted the FY18 result.
  • EBITDA rose to US$1.24 billion in FY19 compared to US$1.07 billion in FY18, or by 31 per cent.
  • Adjusted EPS is US$0.46 in FY19 compared to US$0.44 in FY18. News Corp announced a dividend of US$0.10 per share.

Specific results on company operations are as follows:

  • News and Information Services: In FY19, revenues fell by 3 per cent while EBITDA rose 8 per cent.
  • Subscription Video Services: In FY19, revenues and EBITDA were flat.
  • Book Publishing: In FY19, revenue was flat and EBITDA rose 6 per cent.
  • Digital Real Estate Services: In FY19, revenues rose 2 per cent and EBITDA fell 4 per cent.

The negative impact of foreign currency fluctuations resulting in a US$311million loss of revenue was a significant factor in FY19.

The results for the 4th quarter FY19 were weak, with revenues falling 8 per cent and EBITDA falling 14 per cent relative to 4th quarter FY18. This was driven by adverse movements in exchange rates as well as lower revenues in book publishing and advertising.

 

What is the Outlook for News Corp?

News Corporation is making progress on transitioning to a more digital-centric model. For example, digital revenues from the News and Information Services segment represented 33 per cent of revenue in FY19 compared with 30 per cent in FY18. Another example is that digital subscribers represent 69 per cent of total subscribers for the Wall Street Journal. Further, at Foxtel, paying subscribers for the Kayo sports streaming service more than doubled between the 3rd and 4th quarters to 331,000. As a result,

Kayo is adding significantly to the total number of sports viewers in Australia prepared to pay for premium content.

News Corp did not provide any specific guidance for FY20. However, it noted that the previously announced strategic review of News America Marketing including its sale is “processing well”. The market’s reaction to the result is neutral with little movement in the News Corp share price (which is currently around A$19.60).

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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