News Corporation Reports Fourth Quarter and Full Year Results for Fiscal 2020

FISCAL 2020 FOURTH QUARTER KEY FINANCIAL HIGHLIGHTS

  • Beginning with the fourth quarter, the Company is presenting Dow Jones as a separate reportable segment, which better highlights its growth and value; Dow Jones Segment EBITDA grew 13% in the fourth quarter
  • Revenues were $1.92 billion, a 22% decline compared to $2.47 billion in the prior year, primarily driven by the negative impacts related to COVID-19 and the sale of News America Marketing
  • Net loss of $(401) million, which includes non-cash impairment charges of $292 million and higher restructuring costs due to COVID-19, compared to $(42) million in the prior year
  • Total Segment EBITDA was $195 million compared to $269 million in the prior year; decline reflects the negative impacts related to COVID-19 and the sale of News America Marketing
  • Reported EPS were $(0.67) compared to $(0.09) in the prior year – Adjusted EPS were $(0.03) compared to $0.07 in the prior year
  • In the fourth quarter, Segment EBITDA at Book Publishing grew 9%, partly as a result of the strong performance in digital revenues which increased 26% and represented 29% of its Consumer revenues
  • Move, operator of realtor.com®, increased its profit contribution in the fourth quarter and saw record traffic in June with over 30% growth in unique users
  • In the quarter, Dow Jones achieved record average subscriptions of 3.8 million to its consumer products, led by 28% growth in digital-only subscriptions, including 23% growth in digital-only subscriptions at The Wall Street Journal

NEW YORK–(BUSINESS WIRE)–News Corporation (“News Corp” or the “Company”) (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) today reported financial results for the three months and fiscal year ended June 30, 2020.

Commenting on the results, Chief Executive Robert Thomson said:

“The resegmentation of News Corp is a particularly historic moment and a fulfillment of our pledge to make the Company more transparent and its potential more obvious. The presentation of Dow Jones as a separate segment highlights what we believe are two incontrovertible facts: the substantial and growing value of that business; and its superior profit profile and prospects compared to those of our nearest competitor. In what has been a difficult year for many media companies, Dow Jones reported a 13 percent increase in Segment EBITDA, based on the strength of its Professional Information Business, digital growth and the pre-eminence of The Wall Street Journal.

Across the Company, we have taken stringent action to reduce costs, and the benefits of those cuts will be felt in coming quarters. We have also launched a Shared Services program that we believe will transform the Company, by centralizing many of our functions. We are confident that this program should appreciably cut costs and expect it to have a materially positive impact on our bottom line.

The closure in Australia of many of our storied print editions and the renewed emphasis on digital was evidence of our willingness to be decisive at a historic inflection point. One result of our candid approach on costs was that, despite the COVID-19 impact, our cash position strengthened to $1.5 billion from $1.3 billion as of December 31st. We also saw increased profitability at Foxtel and our campaign to reset sports rights prices was successful. Just this week, we crossed the one million OTT paying subscribers mark, setting a new record thanks to our expanded streaming strategy.

The changed terms of trade with the digital platforms is having a positive impact on our earnings. For News Corp, this favorable outcome would not have been possible without the leadership of Rupert and Lachlan Murdoch, and the support of a Board which backed our advocacy, even when News Corp stood alone in pursuit of the principle of a premium for premium content.”

FOURTH QUARTER RESULTS

The Company reported fiscal 2020 fourth quarter total revenues of $1.92 billion, 22% lower compared to $2.47 billion in the prior year period. The decline primarily reflects an estimated $330 million, or 13%, negative impact related to the novel coronavirus pandemic (“COVID-19”) and a $179 million, or 7%, negative impact from the divestiture of News America Marketing. The decline also reflects a $63 million, or 3%, negative impact from foreign currency fluctuations. Adjusted Revenues (which exclude the foreign currency impact, acquisitions and divestitures as defined in Note 2) declined 13%.

Net loss for the quarter was $(401) million compared to $(42) million in the prior year, reflecting $292 million of non-cash impairment charges, primarily related to fixed assets in the U.K. and Australia, higher restructuring costs due to COVID-19 and lower Total Segment EBITDA, as discussed below.

The Company reported fourth quarter Total Segment EBITDA of $195 million, a 28% decline compared to $269 million in the prior year, primarily due to lower revenues, as discussed above, a $43 million, or 16%, negative impact due to the lower contribution from News America Marketing as a result of the sale and the $8 million, or 3%, negative impact from foreign currency fluctuations. The decline was partially offset by cost savings across the businesses and lower sports rights and production costs at Foxtel related to COVID-19. The negative impact from COVID-19 on Total Segment EBITDA for the quarter is estimated to be $40-$55 million and represents the Company’s best estimate based on historical trends in operating performance and known identifiable impacts. Adjusted Total Segment EBITDA (as defined in Note 2) declined 10%.

Net loss per share attributable to News Corporation stockholders was $(0.67) as compared to $(0.09) in the prior year.

Adjusted EPS (as defined in Note 3) were $(0.03) compared to $0.07 in the prior year.

FULL YEAR RESULTS

The Company reported fiscal 2020 full year total revenues of $9.01 billion, an 11% decrease compared to $10.07 billion in the prior year. The decline primarily reflects an estimated $370 million, or 4%, negative impact related to COVID-19 as well as the divestiture of News America Marketing. The decline also reflects a $275 million, or 3%, negative impact from foreign currency fluctuations and lower subscription revenues at Foxtel. The decline was partially offset by growth in circulation and subscription revenues at the Dow Jones segment. Adjusted Revenues decreased 6%.

Net loss for the full year was $(1.55) billion as compared to net income of $228 million in the prior year, reflecting $1.69 billion of non-cash impairment charges, primarily related to Foxtel and News America Marketing.

Total Segment EBITDA for the full year was $1.01 billion, a 19% decrease compared to $1.24 billion in the prior year, reflecting lower revenues, as discussed above, and a $45 million, or 4%, negative impact from foreign currency fluctuations. The decline was partially offset by cost savings, particularly at the News Media segment, lower sports rights and production costs at Foxtel related to the suspension of sporting events due to COVID-19 and Segment EBITDA growth at the Dow Jones segment. The negative impact from COVID-19 on Total Segment EBITDA for the year is estimated to be $55-$70 million and represents the Company’s best estimate based on historical trends in operating performance and known identifiable impacts. Adjusted Total Segment EBITDA decreased 9%.

Diluted net (loss) income per share attributable to News Corporation stockholders was $(2.16) as compared to $0.26 in the prior year.

Adjusted EPS were $0.22 compared to $0.46 in the prior year.

SEGMENT REVIEW

 

For the three months ended June 30,

 

For the fiscal years ended June 30,

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

(in millions)

 

Better/

(Worse)

 

(in millions)

 

Better/

(Worse)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

$

238

 

 

$

283

 

 

(16)

%

 

$

1,065

 

 

$

1,159

 

 

(8)

%

Subscription Video Services

407

 

 

536

 

 

(24)

%

 

1,884

 

 

2,202

 

 

(14)

%

Dow Jones(a)

381

 

 

397

 

 

(4)

%

 

1,590

 

 

1,549

 

 

3

%

Book Publishing

407

 

 

419

 

 

(3)

%

 

1,666

 

 

1,754

 

 

(5)

%

News Media(a)

490

 

 

830

 

 

(41)

%

 

2,801

 

 

3,407

 

 

(18)

%

Other

 

 

1

 

 

(100)

%

 

2

 

 

3

 

 

(33)

%

Total Revenues

$

1,923

 

 

$

2,466

 

 

(22)

%

 

$

9,008

 

 

$

10,074

 

 

(11)

%

 

 

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

 

 

 

Digital Real Estate Services

$

71

 

 

$

79

 

 

(10)

%

 

$

345

 

 

$

378

 

 

(9)

%

Subscription Video Services

104

 

 

84

 

 

24

%

 

323

 

 

379

 

 

(15)

%

Dow Jones

60

 

 

53

 

 

13

%

 

236

 

 

208

 

 

13

%

Book Publishing

47

 

 

43

 

 

9

%

 

214

 

 

252

 

 

(15)

%

News Media

(44)

 

 

51

 

 

**

 

53

 

 

182

 

 

(71)

%

Other

(43)

 

 

(41)

 

 

(5)

%

 

(158)

 

 

(155)

 

 

(2)

%

Total Segment EBITDA

$

195

 

 

$

269

 

 

(28)

%

 

$

1,013

 

 

$

1,244

 

 

(19)

%

** Not meaningful
(a) In the fourth quarter of fiscal 2020, the Company revised the composition of its reportable segments to present the Dow Jones business as a separate segment. Previously, the financial information for this segment was aggregated with the businesses within the News Media segment and, together, formed the News and Information Services segment. All prior periods have been revised to reflect the new segment presentation.

Digital Real Estate Services

Fourth Quarter Segment Results

Revenues in the quarter declined $45 million, or 16%, compared to the prior year, of which foreign currency fluctuations had a negative impact of $9 million, or 3%. The decline was primarily due to the negative impact from COVID-19. Segment EBITDA in the quarter declined $8 million, or 10%, compared to the prior year, primarily due to the lower revenues and a $4 million, or 5%, negative impact from foreign currency fluctuations. The decline was partially offset by higher contribution from Move and cost reductions at REA Group. Adjusted Revenues and Adjusted Segment EBITDA (as defined in Note 2) declined 13% and 5%, respectively.

In the quarter, revenues at REA Group decreased $34 million, or 21%, to $127 million, primarily driven by a $9 million, or 5%, negative impact from foreign currency fluctuations, lower developer revenues due to fewer project launches and continued challenges in residential listing volumes, which declined 14% in the quarter, as well as lower financial services revenues resulting from the revaluation of expected commission estimates.

Move’s revenues in the quarter decreased $12 million, or 10%, to $111 million, primarily as a result of the COVID-19 related customer relief measures, as well as lower advertising revenues. Real estate revenues, which represented 81% of total Move revenues, declined $5 million, or 5%, due to an estimated $13 million negative impact from the customer billing relief measures related to COVID-19, partially offset by higher revenues from new products, such as Local Expert and Market Reach. Based on Move’s internal data, average monthly unique users of realtor.com®’s web and mobile sites for the fiscal fourth quarter grew 11% year-over-year to 80 million. Move has also seen greater than 50% year-over-year growth in lead volume to its lead generation product in June.

Full Year Segment Results

Fiscal 2020 full year revenues declined $94 million, or 8%, compared to the prior year, of which foreign currency fluctuations had a negative impact of $39 million, or 3%. The decline primarily reflects the continued challenges in the housing markets in both Australia and the U.S., including as a result of COVID-19, as discussed below. Segment EBITDA for fiscal 2020 declined $33 million, or 9%, compared to the prior year, primarily due to the lower revenues and a $21 million, or 6%, negative impact from foreign currency fluctuations, partially offset by higher contribution from Move and lower costs at REA Group. Adjusted Revenues decreased 5% and Adjusted Segment EBITDA increased 1% compared to the prior year.

In the fiscal year, revenues at REA Group declined $82 million, or 12%, to $592 million, primarily due to the negative impact from foreign currency fluctuations and lower revenues associated with declines in listing volumes and fewer project launches. Move’s revenues in the fiscal year declined $11 million, or 2%, to $473 million, primarily due to the negative impact from COVID-19, including an estimated $15 million, or 3%, negative impact from the customer billing relief measures, and lower software and services and advertising revenue. Move’s real estate revenues, which represented 81% of total Move revenues, grew 2%, primarily due to growth in the referral model and higher revenues from new products, such as Local Expert and Market Reach, partially offset by lower revenues from its lead generation product resulting from the transfer of leads to the referral model.

Subscription Video Services

Fourth Quarter Segment Results

Revenues in the quarter decreased $129 million, or 24%, compared with the prior year, of which $29 million, or 5%, was due to the negative impact from foreign currency fluctuations. The remainder of the revenue decline was driven by the impact from fewer residential broadcast subscribers and the negative impacts from COVID-19, including an approximately $30 million, or 6%, impact from lower commercial subscription revenues resulting from the closures of pubs, clubs and other commercial venues and a $23 million, or 4%, impact from lower advertising revenues due to market weakness exacerbated by COVID-19. Adjusted Revenues decreased 19% compared to the prior year.

As of June 30, 2020, Foxtel’s total closing paid subscribers were 2.777 million, a decrease of 12% compared to the prior year, primarily due to lower residential and commercial broadcast subscribers and lower Foxtel Now subscribers, partially offset by growth in subscribers at Kayo and the launch of Binge, a new entertainment streaming product. 1.989 million of the total closing subscribers were residential and commercial broadcast subscribers, and the remainder consisted of Kayo, Foxtel Now and Binge subscribers. As of June 30, 2020, there were 465,000 Kayo subscribers (419,000 paying), compared to 382,000 subscribers (331,000 paying) in the prior year. As of August 4th, there were approximately 590,000 (542,000 paying) Kayo subscribers. As of June 30, 2020, there were 336,000 Foxtel Now subscribers (313,000 paying), compared to 460,000 subscribers (446,000 paying) in the prior year, which was impacted by the final season of Game of Thrones. Binge, which launched in May, had 217,000 (185,000 paying) subscribers as of August 4th.

Broadcast subscriber churn in the quarter improved to 13.2% from 14.7% in the prior year, primarily reflecting various measures implemented due to COVID-19. Broadcast ARPU for the quarter declined 1% to A$78 (US$51).

Segment EBITDA in the quarter increased $20 million, or 24%, compared with the prior year, primarily related to $70 million of lower sports programming rights costs, mostly due to the suspension of sporting events as a result of COVID-19, as well as lower sports production costs, lower license fees and other cost savings, partially offset by lower revenues. Adjusted Segment EBITDA increased 33%.

Full Year Segment Results

Fiscal 2020 full year revenues declined $318 million, or 14%, compared with the prior year, of which $126 million, or 5%, was due to the negative impact from foreign currency fluctuations. The remainder of the revenue decline was driven by the impact from fewer residential broadcast subscribers, changes in the subscriber package mix, lower commercial subscription revenues resulting from the closures of pubs, clubs and other commercial venues due to COVID-19 and lower advertising revenues due to market weakness exacerbated by COVID-19, partially offset by higher revenues from Kayo. Adjusted Revenues declined 9%.

Segment EBITDA for fiscal 2020 decreased $56 million, or 15%, compared to the prior year, of which $24 million, or 7%, was due to the negative impact from foreign currency fluctuations. The remainder of the decline was primarily due to the lower revenues discussed above and a $16 million, or 4%, negative impact due to higher non-cash expense related to the acceleration of entertainment programming cost amortization, partially offset by $65 million of lower sports programming rights costs, mostly related to the suspension of sporting events due to COVID-19, lower sports production costs, lower entertainment license fees and other cost savings. Adjusted Segment EBITDA declined 9%.

Dow Jones

Fourth Quarter Segment Results

Revenues in the quarter declined $16 million, or 4%, compared to the prior year, primarily due to a decline in advertising revenues, which were impacted by COVID-19, partially offset by growth in circulation and subscription revenues. Digital revenues at Dow Jones in the quarter represented 71% of total revenues compared to 63% in the prior year.

Circulation and subscription revenues increased $16 million, or 6%, driven by a 2% increase in circulation revenues, reflecting the continued strong growth in digital-only subscriptions for Dow Jones’ consumer products, partially offset by lower amenity and single-copy sales related to COVID-19. The growth was also due to a 6% increase in professional information business revenues, which was driven by 14% growth in Risk & Compliance products, as well as higher revenues from content licensing partnerships. Digital circulation revenues accounted for 61% of circulation revenues for the quarter. During the quarter, total subscriptions to Dow Jones’ consumer products reached approximately 3.8 million, a 15% increase compared to the prior year, of which digital-only subscriptions grew 28%. Subscriptions to The Wall Street Journal grew 15% compared to the prior year, to nearly 3 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 23% to more than 2.2 million average subscriptions in the quarter, and represented 75% of its total subscriptions.

Advertising revenue declined $28 million, or 28%, primarily due to a 43% decline in print advertising revenues, driven by general market weakness and lower volume across The Wall Street Journal and Barron’s due to COVID-19, and a 7% decline in digital advertising revenues. Digital advertising accounted for 54% of total advertising revenues in the quarter.

Segment EBITDA for the quarter increased $7 million, or 13%, as the decline in revenues was more than offset by lower costs related to cancelled or postponed conferences due to COVID-19, lower print volume and other discretionary cost savings.

Full Year Segment Results

Fiscal 2020 full year revenues increased $41 million, or 3%, compared to the prior year, due to growth in circulation and subscription revenues, partially offset by a decline in advertising revenues. Digital revenues at Dow Jones represented 67% of total revenues compared to 63% in the prior year and exceeded $1 billion for the first time in history.

Circulation and subscription revenues increased $71 million, or 6%, due to 4% growth in circulation revenues, reflecting higher digital-only subscriptions at The Wall Street Journal and Barron’s, 7% growth in professional information business revenues, which was driven by 20% growth in Risk & Compliance products, and higher revenues from content licensing partnerships. Risk & Compliance reached approximately $160 million in revenues in fiscal 2020. Digital circulation revenues accounted for 58% of circulation revenues for the year. Advertising revenue declined $34 million, or 9%, primarily due to a 17% decline in print advertising, partially offset by 4% growth in digital advertising. Digital advertising revenues accounted for 46% of total advertising revenues for the year.

Segment EBITDA for fiscal 2020 increased $28 million, or 13%, compared to the prior year, primarily due to higher revenues, as noted above, and lower newsprint and distribution costs, partially offset by increased employee costs.

Book Publishing

Fourth Quarter Segment Results

Revenues in the quarter declined $12 million, or 3%, compared to the prior year, reflecting a $4 million, or 1%, negative impact from foreign currency fluctuations. The revenue decline was primarily due to lower retail sales of foreign language titles and in Christian Publishing due to store closures caused by COVID-19, partially offset by the success of Magnolia Table, Volume 2 by Joanna Gaines. Digital sales increased 26% compared to the prior year, primarily driven by growth in e-book sales, particularly in General and Children’s Books, which was impacted by the shelter-in-place orders related to COVID-19. Digital sales represented 29% of Consumer revenues for the quarter. Segment EBITDA for the quarter increased $4 million, or 9%, compared to the prior year, primarily due to cost savings and the mix of titles.

Full Year Segment Results

Fiscal 2020 full year revenues decreased $88 million, or 5%, compared to the prior year, reflecting a $14 million, or 1%, negative impact from foreign currency fluctuations. The revenue decline was primarily due to the difficult comparisons to the prior year, which had higher sales of Rachel Hollis’ titles, Homebody: A Guide to Creating Spaces You Never Want to Leave by Joanna Gaines and The Subtle Art of Not Giving a F*ck by Mark Manson. The decline was partially offset by successful frontlist titles such as Magnolia Table, Volume 2 by Joanna Gaines, The Dutch House by Ann Patchett and The Pioneer Woman Cooks: The New Frontier by Ree Drummond. Digital sales increased 7% compared to the prior year, primarily driven by the continued growth in downloadable audiobook sales and higher e-book sales as a result of COVID-19, and represented 23% of Consumer revenues for the year. Segment EBITDA for fiscal 2020 decreased $38 million, or 15%, from the prior year primarily due to lower revenues, partially offset by lower costs from lower sales volumes and cost savings.

News Media

Fourth Quarter Segment Results

Revenues in the quarter decreased $340 million, or 41%, as compared to the prior year, reflecting a $20 million, or 2%, negative impact from foreign currency fluctuations. The decline was primarily driven by a $179 million, or 22%, negative impact from the divestiture of News America Marketing in May 2020 and a $14 million, or 2%, negative impact from the divestiture of Unruly in January 2020. Within the segment, revenues at News Corp Australia and News UK declined 31% and 22%, respectively. Adjusted Revenues for the segment decreased 22% compared to the prior year.

Circulation and subscription revenues decreased $22 million, or 9%, compared to the prior year, which includes a $10 million, or 4%, negative impact from foreign currency fluctuations. The remainder of the decrease was driven by lower single-copy sales revenue, primarily at News UK, as a result of COVID-19, partially offset by digital subscriber growth and price increases.

Advertising revenues declined $290 million, or 58%, compared to the prior year, reflecting a $179 million, or 36%, negative impact related to the divestiture of News America Marketing. The remainder of the decline was driven by a decline of approximately $100 million, or 17%, primarily from COVID-19 and to a lesser extent the continued weakness in the print advertising market, a $20 million, or 4%, negative impact related to the suspension of certain community titles in Australia, and a $7 million, or 1%, negative impact from foreign currency fluctuations.

In the quarter, Segment EBITDA decreased $95 million compared to the prior year, reflecting lower revenues, as discussed above, a $43 million negative impact due to the lower contribution from News America Marketing and $8 million of one-time operating costs associated with the decommissioning of News Corp Australia’s regional and community print operations, partially offset by higher cost savings across the businesses.

Contacts

Investor Relations
Michael Florin

212-416-3363

mflorin@newscorp.com

Leslie Kim

212-416-4529

lkim@newscorp.com

Corporate Communications
Jim Kennedy

212-416-4064

jkennedy@newscorp.com

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