News Corporation Reports Fourth Quarter and Full Year Results for Fiscal 2023

FISCAL 2023 FOURTH QUARTER AND FULL YEAR KEY FINANCIAL HIGHLIGHTS

• Fourth quarter revenues were $2.43 billion, compared to $2.67 billion in the prior year, reflecting the absence of the extra week in the prior year and the negative impact from foreign currency fluctuations
• Net loss in the quarter was $(32) million, inclusive of $166 million related to higher non-cash write- downs and restructuring charges, compared to net income of $127 million in the prior year, which included a $149 million tax benefit
• Fourth quarter Total Segment EBITDA was $341 million, compared to $315 million in the prior year
• Digital revenues accounted for over 50% of total revenues for the full year, marking a key inflection point in the transformation of the Company
• The success of the Professional Information Business has transformed Dow Jones. Segment EBITDA rose 25% for the fourth quarter and 14% for the full year, bolstered by the addition of CMA and OPIS and robust growth in Risk & Compliance revenues
• At the Subscription Video Services Segment, Foxtel Group saw streaming revenue growth more than offset broadcast declines for the fourth quarter and full year, as total paid streaming subscribers reached nearly 3.1 million
• Foxtel Group is nearing completion of its external debt refinancing which is expected to provide a pathway for repayment of News Corp’s shareholder loans

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, 2023 (includes 13 and 52 weeks, respectively, compared to 14 and 53 weeks in the three months and fiscal year ended June 30, 2022, respectively).

Commenting on the results, Chief Executive Robert Thomson said:

“News Corp’s Fiscal 2023 results highlighted the durability and depth of our revenue streams and the impact of stringent cost controls as we navigated challenging macro conditions, supply chain pressures and currency headwinds. We achieved full year Fiscal 2023 revenues of $9.9 billion and profits of over $1.4 billion – the second highest profitability ever recorded by the Company. Our results showed marked improvement in the second half, so with inflation abating, interest rates plateauing and incipient signs of stability in the housing market, we have sound reasons for optimism about the coming quarters.

For the first time, digital accounted for over 50% of News Corp’s revenues for the full year, marking a profound transformation during the past decade. That momentum is surely gathering pace in the age of generative AI, which we believe presents a remarkable opportunity to create a new stream of revenues, while allowing us to reduce costs across the business. We are already in active negotiations to establish a value for our unique content sets and IP that will play a crucial role in the future of AI.

Dow Jones posted its highest profitability for both the quarter and the full year since we acquired the company – helped, in particular, by impressive results in the burgeoning professional information business. Not only has Dow Jones doubled its profitability over the past four years but it is also nearing a landmark moment with our lucrative B2B offerings expected to be the largest contributor to profitability in Fiscal 2024 and a key driver of future growth.

At Subscription Video Services, while revenues and profit were impacted by foreign currency headwinds, we achieved growth for the fourth quarter and full year on an adjusted basis – a remarkable turnaround from the recent past and a tribute to the team in Australia. And that turnaround is underscored by Foxtel’s imminent completion of a refinancing, which is expected to facilitate repayments of our outstanding shareholder loans beginning in fiscal 2024.”

FOURTH QUARTER RESULTS

The Company reported fiscal 2023 fourth quarter total revenues of $2.43 billion, a 9% decrease compared to $2.67 billion in the prior year period, including the absence of the $110 million, or 4%, benefit from the additional week in the prior year quarter and the $72 million, or 3%, negative impact from foreign currency fluctuations. The decline was largely driven by lower revenues at the Book Publishing segment primarily due to lower book sales and lower revenues at the Digital Real Estate Services segment driven by continued challenging housing market conditions in the U.S. and Australia. The decline was partially offset by higher revenues at the Subscription Video Services segment on a constant currency basis. Adjusted Revenues (which excludes the foreign currency impact, acquisitions and divestitures as defined in Note 2) were down 7% compared to the prior year. Adjusted Revenues does not exclude the impact from the additional week in the prior year.

Net loss for the quarter was $(32) million compared to net income of $127 million in the prior year, primarily due to higher income tax expense driven by the absence of a $149 million tax benefit from an adjustment to valuation allowances in the prior year, higher losses from equity affiliates as a result of a non-cash write-down of REA Group’s investment in PropertyGuru of approximately $81 million and higher impairment and restructuring charges, partially offset by higher Other, net and higher Total Segment EBITDA, as discussed below.

The Company reported fourth quarter Total Segment EBITDA of $341 million, an 8% increase compared to $315 million in the prior year primarily due to cost savings across the businesses related to the previously announced headcount and other cost reductions and lower costs at the Other segment due in part to the absence of one-time legal settlement costs of $20 million recognized in the prior year. The increase was partially offset by lower revenues, as discussed above, and higher sports programming rights costs at Foxtel. Adjusted Total Segment EBITDA (as defined in Note 2) increased 2%. Adjusted Total Segment EBITDA does not exclude the impact from the additional week in the prior year.

Net (loss) income per share attributable to News Corporation stockholders was $(0.01) as compared to $0.19 in the prior year.

Adjusted EPS (as defined in Note 3) were $0.14 compared to $0.37 in the prior year.

FULL YEAR RESULTS

The Company reported fiscal 2023 full year total revenues of $9.88 billion, a 5% decrease compared to $10.39 billion in the prior year, including a $494 million, or 5%, negative impact from foreign currency fluctuations and the absence of the $110 million, or 1%, benefit from the additional week in the prior year. The decrease was driven by lower revenues at the Book Publishing segment primarily due to lower book sales and lower revenues at the Digital Real Estate Services segment primarily due to continued challenging housing market conditions in the U.S. and Australia. The decline was partially offset by growth at the Dow Jones segment, which includes the acquisitions of OPIS and Chemical Market Analytics (“CMA”), and at the Subscription Video Services and News Media segments on a constant currency basis. Adjusted Revenues decreased 2%.

Net income for the full year was $187 million, a 75% decrease compared to $760 million in the prior year. The decrease reflects lower Total Segment EBITDA, as discussed below, higher equity losses of affiliates mainly as a result of a non-cash write-down of REA Group’s investment in PropertyGuru of approximately $81 million, higher income tax expense driven by the absence of a $149 million tax benefit from an adjustment to valuation allowances in the prior year, lower Other, net and higher impairment and restructuring charges.

Total Segment EBITDA for the full year was $1.42 billion, a 15% decrease compared to $1.67 billion in the prior year primarily driven by lower revenues, as discussed above, an $80 million or 5% negative impact from foreign currency fluctuations, higher costs at the Dow Jones segment, higher sports programming costs and higher newsprint pricing. The results also include one-time costs related to the professional fees incurred by the Special Committee and the Company in connection with evaluating the proposal from the Murdoch Family Trust, as well as the fees related to the potential sale of Move. The decline was partially offset by cost savings across the businesses due to headcount and other cost reductions and lower costs at the Digital Real Estate Services segment due to lower broker commissions at REA Group and lower discretionary and employee costs at Move, as well as the absence of legal settlement costs at the Other segment. Adjusted Total Segment EBITDA decreased 15%.

Diluted net income per share attributable to News Corporation stockholders was $0.26 as compared to $1.05 in the prior year.

Adjusted diluted EPS were $0.49 compared to $1.20 in the prior year.

SEGMENT REVIEW

Digital Real Estate Services

Fourth Quarter Segment Results

Revenues in the quarter decreased $74 million, or 17%, compared to the prior year, reflecting a $15 million, or 4%, negative impact from foreign currency fluctuations and the absence of the $14 million, or 3%, benefit from the additional week in the prior year period. Segment EBITDA in the quarter decreased $13 million, or 11%, compared to the prior year, primarily due to the lower revenues and a $7 million, or 6%, negative impact from foreign currency fluctuations. The decline was partially offset by lower discretionary and employee costs at Move and lower broker commissions at REA Group driven by the valuation adjustment related to expected trail commissions. Adjusted Revenues and Adjusted Segment EBITDA (as defined in Note 2), which do not exclude the impact from the additional week, decreased 14% and 5%, respectively.

In the quarter, revenues at REA Group decreased $27 million, or 11%, to $223 million, driven by a $15 million, or 6%, negative impact from foreign currency fluctuations, lower Australian residential revenues due to the decline in national listings, most notably in Sydney and Melbourne, and lower financial services revenues due to a decrease in settlement activity. The decline was partially offset by price increases, increased penetration of Premiere Plus, favorable depth penetration and higher revenues from REA India. Australian national residential buy listing volumes in the quarter declined 18% compared to the prior year, with listings in Sydney and Melbourne down 17% and 16%, respectively.

Move’s revenues in the quarter decreased $47 million, or 24%, to $146 million, primarily as a result of lower real estate revenues and the absence of the $14 million, or 7%, benefit from the additional week in the prior year period. Real estate revenues, which represented 79% of total Move revenues, decreased $47 million, or 29%, driven by the continued impact of the macroeconomic environment on the housing market, including higher mortgage rates, which has led to lower lead and transaction volumes. Revenues from the referral model, which includes the ReadyConnect Concierge℠ product, and the traditional lead generation product decreased due to these factors, partially offset by improved lead optimization. The referral model generated 25% of total Move revenues in the quarter compared to 31% in the prior year. Based on Move’s internal data, average monthly unique users of Realtor.com^®’s web and mobile sites for the fiscal fourth quarter declined 20% year-over-year to 74 million. Lead volume declined 14%, which was an improvement from the prior quarter.

Full Year Segment Results

Fiscal 2023 full year revenues decreased $202 million, or 12%, compared to the prior year, reflecting a $74 million, or 5%, negative impact from foreign currency fluctuations. Segment EBITDA for fiscal 2023 decreased $117 million, or 20%, compared to the prior year, primarily due to the lower revenues, a $34 million, or 6%, negative impact from foreign currency fluctuations and higher costs at REA India, partially offset by lower broker commissions at REA Group due to the valuation adjustment related to expected trail commissions and lower settlements and lower discretionary and employee costs at Move. Adjusted Revenues and Adjusted Segment EBITDA decreased 8% and 15%, respectively.

In the fiscal year, REA Group’s revenues decreased $92 million, or 9%, to $937 million, primarily driven by a $74 million, or 7%, negative impact from foreign currency fluctuations. Lower Australian residential revenues due to the decline in national listings, most notably in Sydney and Melbourne, and lower financial services revenues due to declines in settlement activity and the adverse impact from a valuation adjustment related to expected trail commissions, were partially offset by price increases, increased depth penetration in the Australian residential products due to the contribution of Premiere Plus, increased depth penetration for commercial products and higher revenues from REA India. Move’s revenues in the fiscal year decreased $110 million, or 15%, to $602 million, primarily due to lower real estate revenues and the absence of the $14 million, or 2%, benefit from the additional week in the prior year, partially offset by 11% growth in advertising revenues. Move’s real estate revenues, which represented 82% of total Move revenues, declined 20%, primarily due to declines in both the traditional lead generation product and the referral model. Lead volumes declined 29%.

Subscription Video Services

Fourth Quarter Segment Results

Revenues of $501 million in the quarter decreased $23 million, or 4%, compared with the prior year, due to a $37 million, or 7%, negative impact from foreign currency fluctuations. Adjusted Revenues of $538 million increased 3% compared to the prior year. Higher revenues from Kayo and BINGE, driven by increases in both volume and pricing, were partially offset by the impact from fewer residential broadcast subscribers. Foxtel Group streaming subscription revenues represented approximately 29% of total circulation and subscription revenues in the quarter, as compared to 23% in the prior year.

As of June 30, 2023, Foxtel’s total closing paid subscribers were over 4.6 million, a 5% increase compared to the prior year, primarily due to the growth in streaming subscribers driven by BINGE and Kayo, partially offset by lower residential broadcast subscribers. Broadcast subscriber churn in the quarter improved to 11.1%, the lowest level since Fiscal 2016, compared to 13.8% in the prior year. Broadcast ARPU for the quarter increased 2% year- over-year to A$84 (US$56).

Segment EBITDA of $78 million in the quarter decreased $3 million, or 4%, compared with the prior year, due to the $6 million, or 8%, negative impact from foreign currency fluctuations. Adjusted Segment EBITDA of $84 million increased 4% compared to the prior year, primarily due to higher revenues in constant currency and lower marketing, employee and transmission costs, partially offset by higher sports programming rights costs, driven mainly by contractual increases across AFL and NRL.

Full Year Segment Results

Fiscal 2023 full year revenues declined $84 million, or 4%, compared with the prior year, due to a $157 million, or 8%, negative impact from foreign currency fluctuations. Adjusted Revenues increased 4% compared to the prior year. Higher streaming revenues, primarily from Kayo and BINGE, higher commercial revenues and higher advertising revenues in constant currency more than offset the revenue declines from lower residential broadcast subscribers. Foxtel Group streaming subscription revenues represented approximately 27% of total circulation and subscription revenues in the fiscal year compared to 20% in the prior year.

Segment EBITDA for fiscal 2023 decreased $13 million, or 4%, compared to the prior year, due to the $29 million, or 8%, negative impact from foreign currency fluctuations. Adjusted Segment EBITDA increased 4%. Higher sports programming costs due to contractual increases across AFL, NRL and Cricket Australia and higher entertainment programming costs were more than offset by the revenue drivers discussed above, as well as lower transmission and marketing costs.

Dow Jones

Fourth Quarter Segment Results

Revenues in the quarter decreased $19 million, or 3%, compared to the prior year, including the absence of $40 million, or 7%, from the additional week in the prior year period and a $13 million contribution from CMA, which was acquired in June 2022. Digital revenues at Dow Jones in the quarter represented 79% of total revenues compared to 76% in the prior year. Adjusted Revenues decreased 6%, which does not exclude the impact from the additional week in the prior year.

Circulation and subscription revenues decreased $2 million, which reflects the absence of a $31 million, or 7%, benefit from the additional week in the prior year and the contribution from the acquisition of CMA. Circulation revenue declined 6%, primarily due to the absence of a $17 million, or 7%, benefit from the additional week in the prior year period, lower print volume and lower revenues from IBD, partially offset by the continued growth in digital-only subscriptions, primarily at The Wall Street Journal. Excluding the absence of the benefit from the additional week in prior year, circulation revenues would have improved 1% compared to the prior year. Professional information business revenues grew 10%, primarily driven by the acquisition of CMA and growth in Risk & Compliance products, partially offset by the absence of a $14 million, or 8%, benefit from the additional week in the prior year. Revenues from the Risk & Compliance products grew 10%, despite being impacted by the absence of the additional week in the prior year. Digital circulation revenues accounted for 70% of circulation revenues for the quarter, compared to 68% in the prior year.

During the fourth quarter, total average subscriptions to Dow Jones’ consumer products reached over 5.2 million, a 7% increase compared to the prior year. Digital-only subscriptions to Dow Jones’ consumer products grew 12%. Total subscriptions to The Wall Street Journal grew 6% compared to the prior year, to over 3.9 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 10% to 3.4 million average subscriptions in the quarter, and represented 86% of total Wall Street Journal subscriptions.

Advertising revenues decreased $16 million, or 14%, primarily due to 18% and 10% declines in print and digital advertising revenues, respectively, driven primarily by the absence of a $9 million, or 8%, benefit from the additional week in the prior year period and continued weakness in print advertising, primarily driven by lower technology spending. Excluding the absence of the benefit from the additional week in the prior year, advertising would have decreased 6% compared to the prior year. Digital advertising accounted for 60% of total advertising revenues in the quarter, compared to 58% in the prior year.

Segment EBITDA for the quarter increased $27 million, or 25%, which includes a $5 million contribution from the acquisition of CMA. The growth reflects lower employee and marketing costs and the absence of $2 million in transaction costs related to the acquisition of CMA in the prior year, partially offset by the lower revenues discussed above. Adjusted Segment EBITDA increased 17%.

Full Year Segment Results

Fiscal 2023 full year revenues increased $149 million, or 7%, compared to the prior year, which includes the $97 million and $68 million impacts from the acquisitions of OPIS and CMA, respectively, as well as growth in Risk & Compliance products and digital circulation revenues. The revenue growth was partially offset by the absence of a $40 million, or 2%, benefit from the additional week in the prior year, lower advertising revenues and an $18 million, or 1%, negative impact from foreign currency fluctuations. Adjusted Revenues were flat compared to the prior year. Digital revenues at Dow Jones represented 78% of total revenues compared to 75% in the prior year.

Circulation and subscription revenues increased $173 million, or 11%, which includes higher contributions from the acquisitions of OPIS and CMA. The results also reflect the negative impact from the absence of a $31 million, or 2%, benefit from the additional week in the prior year and an $18 million, or 2%, negative impact from foreign currency fluctuations. Circulation revenues were flat compared to the prior year, reflecting continued strong growth in digital-only subscriptions at The Wall Street Journal, offset by lower print volumes and the absence of an additional week in the prior year. Professional information business revenues grew 31%, driven by the acquisitions of OPIS and CMA as well as 11% growth in Risk & Compliance products, which reached over $250 million in revenues in fiscal 2023, despite the negative impact of foreign exchange fluctuations and the absence of an additional week from the prior year. Digital circulation revenues accounted for 69% of circulation revenues for the year, compared to 67% in the prior year.

Advertising revenue decreased $36 million, or 8%, primarily due to a 12% decrease in print advertising and a 5% decrease in digital advertising, which include the absence of the benefit from the additional week in the prior year. Digital advertising revenues accounted for 61% of total advertising revenues for the year, compared to 59% in the prior year.

Segment EBITDA for fiscal 2023 increased $61 million, or 14%, compared to the prior year, primarily due to higher revenues, as noted above, and the absence of $25 million of OPIS and CMA-related transaction costs incurred in fiscal 2022, partially offset by higher employee costs primarily related to the OPIS and CMA acquisitions. Adjusted Segment EBITDA decreased 4%.

Book Publishing

Fourth Quarter Segment Results

Revenues in the quarter decreased $67 million, or 13%, compared to the prior year, primarily driven by lower book sales due to lower consumer demand industry-wide, weak frontlist performance, which contributed to higher returns, and the absence of a $20 million, or 4%, benefit from the additional week in the prior year period.

Contacts

Investor Relations
Michael Florin

212-416-3363

[email protected]

Anthony Rudolf

212-416-3040

[email protected]

Corporate Communications
Jim Kennedy

212-416-4064

[email protected]

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