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
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.
Digital revenues represented 24% of News Media segment revenues
in the quarter, compared to 19% in the prior year. For the quarter,
digital revenues at the newspaper mastheads represented 24% of
their combined revenues. Digital subscribers and users across key
properties within the News Media segment are summarized below:
- Closing digital subscribers at News Corp Australia’s mastheads
as of June 30, 2020 were 647,600, compared to 517,300 in the prior
year (Source: Internal data)
- The Times and Sunday Times closing digital subscribers as of
June 30, 2020 were 336,000, compared to 304,000 in the prior year
(Source: Internal data)
- The Sun’s digital offering reached approximately 133 million
global monthly unique users in June 2020, compared to 113 million
in the prior year (Source: Google Analytics)
- New York Post’s digital network reached approximately 150
million average monthly unique users in June 2020, compared to 99
million in the prior year (Source: Google Analytics)
Full Year Segment Results
Fiscal 2020 full year revenues declined $606 million, or 18%,
compared to the prior year, reflecting a $271 million, or 8%,
negative impact related to News America Marketing and Unruly, which
were divested in May and January 2020, respectively, and the $91
million, or 3%, negative impact from foreign currency fluctuations.
Within the segment, revenues at News Corp Australia and News UK
declined 16% and 13%, respectively. Adjusted Revenues for the
segment declined 10% compared to the prior year.
Circulation and subscription revenues declined $52 million, or
5%, compared to the prior year, reflecting lower print volume and a
$37 million, or 4%, negative impact from foreign currency
fluctuations, partially offset by price increases and growth in
digital subscribers. Advertising revenues declined $445 million, or
22%, compared to the prior year, reflecting $246 million, or 12%,
of lower advertising revenues related to News America Marketing,
continued weakness in the print advertising market, the impact of
COVID-19 and a $41 million, or 2%, negative impact from foreign
currency fluctuations, partially offset by growth in digital
advertising, particularly at The Sun. Other revenues decreased $109
million, or 28%, compared to the prior year, primarily due to the
absence of the $48 million benefit related to the exit from the
gaming partnership in the prior year, the sale of Unruly in January
2020 and a $13 million, or 4%, negative impact from foreign
currency fluctuations.
Segment EBITDA for fiscal 2020 decreased $129 million, or 71%,
as compared to the prior year, reflecting a $74 million, or 41%,
negative impact due to the lower contribution from News America
Marketing. The remainder of the decline is primarily due to lower
revenues, as discussed above, and $8 million of one-time operating
costs associated with the decommissioning of print operations at
News Corp Australia, partially offset by a $22 million one-time
benefit from the settlement of certain warranty related claims at
News UK in the second quarter, as well as cost savings. Adjusted
Segment EBITDA declined 98% compared to the prior year.
CASH FLOW
The following table presents a reconciliation of net cash
provided by operating activities to free cash flow available to
News Corporation:
For the fiscal years ended June
30,
2020
2019
(in millions)
Net cash provided by operating
activities
$
780
$
928
Less: Capital expenditures
(438)
(572)
342
356
Less: REA Group free cash flow
(227)
(212)
Plus: Cash dividends received from REA
Group
65
69
Free cash flow available to News
Corporation
$
180
$
213
Net cash provided by operating activities of $780 million for
the fiscal year ended June 30, 2020 was $148 million lower than
$928 million in the prior year, primarily due to lower Total
Segment EBITDA as noted above and lower cash distributions received
from affiliates, partially offset by lower cash taxes paid.
Free cash flow available to News Corporation in the fiscal year
ended June 30, 2020 was $180 million compared to $213 million in
the prior year period. The decline was primarily due to lower cash
provided by operating activities, as mentioned above, partially
offset by lower capital expenditures. Foxtel’s capital expenditures
for fiscal 2020 were $195 million, compared to $302 million in the
prior year. The Company’s capital expenditures for fiscal 2021 are
expected to be approximately $400 million, subject to foreign
currency fluctuations.
Free cash flow available to News Corporation is a non-GAAP
financial measure defined as net cash provided by operating
activities, less capital expenditures (“free cash flow”), less REA
Group free cash flow, plus cash dividends received from REA
Group.
The Company considers free cash flow available to News
Corporation to provide useful information to management and
investors about the amount of cash that is available to be used to
strengthen the Company’s balance sheet and for strategic
opportunities including, among others, investing in the Company’s
business, strategic acquisitions, dividend payouts and repurchasing
stock. The Company believes excluding REA Group’s free cash flow
and including dividends received from REA Group provides users of
its consolidated financial statements with a measure of the amount
of cash flow that is readily available to the Company, as REA Group
is a separately listed public company in Australia and must declare
a dividend in order for the Company to have access to its share of
REA Group’s cash balance. The Company believes free cash flow
available to News Corporation provides a more conservative view of
the Company’s free cash flow because this presentation includes
only that amount of cash the Company actually receives from REA
Group, which has generally been lower than the Company’s unadjusted
free cash flow. A limitation of free cash flow available to News
Corporation is that it does not represent the total increase or
decrease in the cash balance for the period. Management compensates
for the limitation of free cash flow available to News Corporation
by also relying on the net change in cash and cash equivalents as
presented in the Company’s consolidated statements of cash flows
prepared in accordance with GAAP which incorporates all cash
movements during the period.
OTHER ITEMS
COVID-19 Impact
The ongoing impact of the COVID-19 pandemic and measures to
prevent its spread have created significant economic volatility,
uncertainty and disruption and continue to affect the Company’s
businesses in a number of ways. These effects were material to the
Company’s results of operations for the three months and fiscal
year ended June 30, 2020. As of the date of this release, the
Company has observed the following effects on its businesses:
Digital Real Estate Services: The uncertainty regarding a
general economic recovery, particularly with respect to the extent
and pace of such recovery, continues to create volatility within
the housing markets in Australia and the U.S. While Australian
national residential listings in July increased 16% from the prior
year, residential revenue growth at REA Group is expected to be
offset by the reduction in development projects, listing declines
in the commercial and Asia businesses and the recent government
restrictions in Victoria. Lead volume and audience remained strong
at realtor.com®, but Move continues to face weak industry-wide
transaction volumes.
Subscription Video Services: Ongoing disruption in the
operations of pubs and clubs and occupancy at hotels throughout
Australia, which are largely dependent on government restrictions,
continued to adversely impact commercial subscription revenues. As
live sports resumed across Australia and elsewhere around the
globe, Foxtel saw a modest improvement in advertising trends in
July. Assuming no further disruption to live sporting events,
Foxtel will recognize approximately $55 million (A$78 million) of
additional sports rights costs in fiscal 2021, which were deferred
from fiscal 2020 due to the suspension of live sports in the fourth
quarter. However, Foxtel expects overall costs for fiscal 2021, net
of the increase in sports rights costs, to be lower than the prior
year by at least $100 million (A$160 million), benefiting from
various cost saving initiatives. Broadcast churn was modestly
higher in July compared to the prior year and the fourth
quarter.
Dow Jones: We have seen, and expect to continue to see, adverse
effects on advertising and single-copy sales revenues. In July,
advertising trends improved modestly, but digital advertising
showed strong growth compared to the prior year. We have continued
to see strong subscription trends in July with digital-only
subscriptions for The Wall Street Journal up more than 25% compared
to the prior year.
Book Publishing: While brick and mortar stores have been
gradually reopening as business shutdowns ease in many
jurisdictions, the retail market continued to be adversely affected
by capacity and other government restrictions globally that limit
the extent of the retail recovery. In addition, increases in
COVID-19 cases in some jurisdictions have resulted in the
reimposition of more stringent restrictions. However, online sales
have continued to demonstrate resilience, with continued growth in
e-books in July compared to the prior year.
News Media: We have seen, and expect to continue to see, adverse
effects on advertising and single-copy sales revenues. Advertising
revenues in July at the newspaper mastheads declined 25-30% in
total compared to the prior year. As a reminder, advertising
revenues in the prior year included results from News America
Marketing and the suspended community titles in Australia. The
overall decline in circulation volumes moderated in July from the
lows experienced in April and May, particularly for the weekend
papers. We continued to see strong growth in digital subscribers in
July compared to the prior year at the Australian mastheads and at
The Times and Sunday Times.
The Company continues to take various steps intended to offset
the impact of COVID-19, including by reducing variable costs and
implementing cost-savings initiatives across its businesses, with a
particular focus on the News Media segment. For example, the
Company is implementing a shared services program to centralize a
number of functional areas. While it is still evaluating the cost
savings opportunity from this program, the Company expects to
recognize annualized cost savings of at least $100 million
beginning in fiscal 2022.
The ultimate impact of the COVID-19 pandemic, including the
extent of adverse impacts on the Company’s business, results of
operations and financial condition, is highly uncertain and cannot
be predicted.
COMPARISON OF NON-GAAP TO U.S. GAAP INFORMATION
Adjusted Revenues, Total Segment EBITDA, Adjusted Total Segment
EBITDA, Adjusted Segment EBITDA, adjusted net income attributable
to News Corporation stockholders, Adjusted EPS and free cash flow
available to News Corporation are non-GAAP financial measures
contained in this earnings release. The Company believes these
measures are important tools for investors and analysts to use in
assessing the Company’s underlying business performance and to
provide for more meaningful comparisons of the Company’s operating
performance between periods. These measures also allow investors
and analysts to view the Company’s business from the same
perspective as Company management. These non-GAAP measures may be
different than similar measures used by other companies and should
be considered in addition to, not as a substitute for, measures of
financial performance calculated in accordance with GAAP.
Reconciliations for the differences between non-GAAP measures used
in this earnings release and comparable financial measures
calculated in accordance with U.S. GAAP are included in Notes 1, 2
and 3 and the reconciliation of net cash provided by operating
activities to free cash flow available to News Corporation is
included above.
Conference call
News Corporation’s earnings conference call can be heard live at
5:30pm EDT on August 6, 2020. To listen to the call, please visit
http://investors.newscorp.com.
Cautionary Statement Concerning Forward-Looking
Statements
This document contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include, but are not
limited to, statements regarding trends and uncertainties affecting
the Company’s business, results of operations and financial
condition, including expected impacts from the ongoing COVID-19
pandemic and related public health measures, the Company’s strategy
and strategic initiatives, including potential acquisitions,
investments and dispositions, and the outcome of contingencies such
as litigation and investigations. These statements are based on
management’s views and assumptions regarding future events and
business performance as of the time the statements are made. Actual
results may differ materially from these expectations due to the
risks and uncertainties related to COVID-19 and the risks,
uncertainties and other factors described in the Company’s filings
with the Securities and Exchange Commission (many of which may be
amplified by COVID-19). The ultimate impact of the COVID-19
pandemic, including the extent of adverse impacts on the Company’s
business, results of operations, cash flows and financial
condition, will depend on, among other things, the severity,
duration, spread and any reoccurrence of the pandemic, the impact
of governmental actions and business and consumer behavior in
response to the pandemic, the effectiveness of actions taken to
contain or mitigate the outbreak and prevent or limit any
reoccurrence, the resulting global economic conditions and how
quickly and to what extent normal economic and operating conditions
can resume, all of which are highly uncertain and cannot be
predicted. More detailed information about this and other factors
that could affect future results is contained in our filings with
the Securities and Exchange Commission. The “forward-looking
statements” included in this document are made only as of the date
of this document and we do not have and do not undertake any
obligation to publicly update any “forward-looking statements” to
reflect subsequent events or circumstances, and we expressly
disclaim any such obligation, except as required by law or
regulation.
About News Corporation
News Corp (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) is a global,
diversified media and information services company focused on
creating and distributing authoritative and engaging content and
other products and services. The company comprises businesses
across a range of media, including: digital real estate services,
subscription video services in Australia, news and information
services and book publishing. Headquartered in New York, News Corp
operates primarily in the United States, Australia, and the United
Kingdom, and its content and other products and services are
distributed and consumed worldwide. More information is available
at: www.newscorp.com.
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited; in millions,
except per share amounts)
For the three months ended June
30,
For the fiscal years ended June
30,
2020
2019
2020
2019
Revenues:
Circulation and subscription
$
906
$
1,016
$
3,857
$
4,104
Advertising
332
686
2,193
2,738
Consumer
389
398
1,593
1,679
Real estate
193
215
862
908
Other
103
151
503
645
Total Revenues
1,923
2,466
9,008
10,074
Operating expenses
(1,028)
(1,404)
(5,000)
(5,639)
Selling, general and administrative
(700)
(793)
(2,995)
(3,191)
Depreciation and amortization
(160)
(165)
(644)
(659)
Impairment and restructuring charges
(379)
(117)
(1,830)
(188)
Equity losses of affiliates
(35)
(4)
(47)
(17)
Interest expense, net
(12)
(14)
(25)
(59)
Other, net
(10)
3
9
33
(Loss) income before income tax
expense
(401)
(28)
(1,524)
354
Income tax expense
—
(14)
(21)
(126)
Net (loss) income
(401)
(42)
(1,545)
228
Less: Net loss (income) attributable to
noncontrolling interests
4
(9)
276
(73)
Net (loss) income attributable to News
Corporation stockholders
$
(397)
$
(51)
$
(1,269)
$
155
Weighted average shares outstanding
Basic
Diluted
589
585
588
585
589
585
588
588
Net (loss) income attributable to News
Corporation stockholders per share
Basic
$
(0.67)
$
(0.09)
$
(2.16)
$
0.27
Diluted
$
(0.67)
$
(0.09)
$
(2.16)
$
0.26
NEWS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in
millions)
As of June 30, 2020
As of June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
1,517
$
1,643
Receivables, net
1,203
1,544
Inventory, net
348
348
Other current assets
393
515
Total current assets
3,461
4,050
Non-current assets:
Investments
297
335
Property, plant and equipment, net
2,256
2,554
Operating lease right-of-use assets
1,061
—
Intangible assets, net
1,864
2,426
Goodwill
3,951
5,147
Deferred income tax assets
332
269
Other non-current assets
1,039
930
Total assets
$
14,261
$
15,711
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
351
$
411
Accrued expenses
1,019
1,328
Deferred revenue
398
428
Current borrowings
76
449
Other current liabilities
838
724
Total current liabilities
2,682
3,340
Non-current liabilities:
Borrowings
1,183
1,004
Retirement benefit obligations
277
266
Deferred income tax liabilities
258
295
Operating lease liabilities
1,146
—
Other non-current liabilities
326
495
Commitments and contingencies
—
—
Equity:
Class A common stock
4
4
Class B common stock
2
2
Additional paid-in capital
12,148
12,243
Accumulated deficit
(3,241)
(1,979)
Accumulated other comprehensive loss
(1,331)
(1,126)
Total News Corporation stockholders'
equity
7,582
9,144
Noncontrolling interests
807
1,167
Total equity
8,389
10,311
Total liabilities and equity
$
14,261
$
15,711
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited; in
millions)
For the fiscal years ended June
30,
2020
2019
Operating activities:
Net (loss) income
$
(1,545)
$
228
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
644
659
Operating lease expense
160
—
Equity losses of affiliates
47
17
Cash distributions received from
affiliates
7
32
Impairment charges
1,690
96
Other, net
(9)
(33)
Deferred income taxes and taxes
payable
(51)
—
Change in operating assets and
liabilities, net of acquisitions:
Receivables and other assets
(1,470)
134
Inventories, net
9
(58)
Accounts payable and other liabilities
1,298
(147)
Net cash provided by operating
activities
780
928
Investing activities:
Capital expenditures
(438)
(572)
Acquisitions, net of cash acquired
(32)
(188)
Investments in equity affiliates and
other
(8)
(4)
Other investments
11
(34)
Proceeds from property, plant and
equipment and other asset dispositions
36
103
Other, net
4
18
Net cash used in investing activities
(427)
(677)
Financing activities:
Borrowings
926
681
Repayment of borrowings
(1,226)
(1,116)
Dividends paid
(158)
(161)
Other, net
(14)
(14)
Net cash used in financing activities
(472)
(610)
Net change in cash and cash
equivalents
(119)
(359)
Cash and cash equivalents, beginning of
year
1,643
2,034
Exchange movement on opening cash
balance
(7)
(32)
Cash and cash equivalents, end of year
$
1,517
$
1,643
NOTE 1 – TOTAL SEGMENT EBITDA
Segment EBITDA is defined as revenues less operating expenses
and selling, general and administrative expenses. Segment EBITDA
does not include: depreciation and amortization, impairment and
restructuring charges, equity losses of affiliates, interest
(expense) income, net, other, net and income tax (expense) benefit.
Management believes that Segment EBITDA is an appropriate measure
for evaluating the operating performance of the Company’s business
segments because it is the primary measure used by the Company’s
chief operating decision maker to evaluate the performance of and
allocate resources within the Company’s businesses. Segment EBITDA
provides management, investors and equity analysts with a measure
to analyze the operating performance of each of the Company’s
business segments and its enterprise value against historical data
and competitors’ data, although historical results may not be
indicative of future results (as operating performance is highly
contingent on many factors, including customer tastes and
preferences).
Total Segment EBITDA is a non-GAAP measure and should be
considered in addition to, not as a substitute for, net income
(loss), cash flow and other measures of financial performance
reported in accordance with GAAP. In addition, this measure does
not reflect cash available to fund requirements and excludes items,
such as depreciation and amortization and impairment and
restructuring charges, which are significant components in
assessing the Company’s financial performance. The Company believes
that the presentation of Total Segment EBITDA provides useful
information regarding the Company’s operations and other factors
that affect the Company’s reported results. Specifically, the
Company believes that by excluding certain one-time or non-cash
items such as impairment and restructuring charges and depreciation
and amortization, as well as potential distortions between periods
caused by factors such as financing and capital structures and
changes in tax positions or regimes, the Company provides users of
its consolidated financial statements with insight into both its
core operations as well as the factors that affect reported results
between periods but which the Company believes are not
representative of its core business. As a result, users of the
Company’s consolidated financial statements are better able to
evaluate changes in the core operating results of the Company
across different periods. The following tables reconcile net (loss)
income to Total Segment EBITDA for the three months and fiscal
years ended June 30, 2020 and 2019.
For the three months ended June
30,
2020
2019
Change
% Change
(in millions)
Net loss
$
(401)
$
(42)
$
(359)
**
Add:
Income tax expense
—
14
(14)
**
Other, net
10
(3)
13
**
Interest expense, net
12
14
(2)
(14)
%
Equity losses of affiliates
35
4
31
**
Impairment and restructuring charges
379
117
262
**
Depreciation and amortization
160
165
(5)
(3)
%
Total Segment EBITDA
$
195
$
269
$
(74)
(28)
%
** - Not meaningful
For the fiscal years ended June
30,
2020
2019
Change
% Change
(in millions)
Net (loss) income
$
(1,545)
$
228
$
(1,773)
**
Add:
Income tax expense
21
126
(105)
(83)
%
Other, net
(9)
(33)
24
73
%
Interest expense, net
25
59
(34)
(58)
%
Equity losses of affiliates
47
17
30
**
Impairment and restructuring charges
1,830
188
1,642
**
Depreciation and amortization
644
659
(15)
(2)
%
Total Segment EBITDA
$
1,013
$
1,244
$
(231)
(19)
%
** - Not meaningful
NOTE 2 – ADJUSTED REVENUES, ADJUSTED TOTAL SEGMENT EBITDA AND
ADJUSTED SEGMENT EBITDA
The Company uses revenues, Total Segment EBITDA and Segment
EBITDA excluding the impact of acquisitions, divestitures, fees and
costs, net of indemnification, related to the claims and
investigations arising out of certain conduct at The News of the
World (the “U.K. Newspaper Matters”) and foreign currency
fluctuations (“Adjusted Revenues,” “Adjusted Total Segment EBITDA”
and “Adjusted Segment EBITDA,” respectively) to evaluate the
performance of the Company’s core business operations exclusive of
certain items that impact the comparability of results from period
to period such as the unpredictability and volatility of currency
fluctuations. The Company calculates the impact of foreign currency
fluctuations for businesses reporting in currencies other than the
U.S. dollar by multiplying the results for each quarter in the
current period by the difference between the average exchange rate
for that quarter and the average exchange rate in effect during the
corresponding quarter of the prior year and totaling the impact for
all quarters in the current period.
The calculation of Adjusted Revenues, Adjusted Total Segment
EBITDA and Adjusted Segment EBITDA may not be comparable to
similarly titled measures reported by other companies, since
companies and investors may differ as to what type of events
warrant adjustment. Adjusted Revenues, Adjusted Total Segment
EBITDA and Adjusted Segment EBITDA are not measures of performance
under generally accepted accounting principles and should not be
construed as substitutes for amounts determined under GAAP as
measures of performance. However, management uses these measures in
comparing the Company’s historical performance and believes that
they provide meaningful and comparable information to investors to
assist in their analysis of our performance relative to prior
periods and our competitors.
The following tables reconcile reported revenues and reported
Total Segment EBITDA to Adjusted Revenues and Adjusted Total
Segment EBITDA for the three months and fiscal years ended June 30,
2020 and 2019.
Revenues
Total Segment EBITDA
For the three months ended June
30,
For the three months ended June
30,
2020
2019
Difference
2020
2019
Difference
(in millions)
(in millions)
As reported
$
1,923
$
2,466
$
(543)
$
195
$
269
$
(74)
Impact of acquisitions
(6)
—
(6)
1
—
1
Impact of divestitures
(58)
(249)
191
(8)
(50)
42
Impact of foreign currency
fluctuations
63
—
63
8
—
8
Net impact of U.K. Newspaper Matters
—
—
—
3
2
1
As adjusted
$
1,922
$
2,217
$
(295)
$
199
$
221
$
(22)
Revenues
Total Segment EBITDA
For the fiscal years ended June
30,
For the fiscal years ended June
30,
2020
2019
Difference
2020
2019
Difference
(in millions)
(in millions)
As reported
$
9,008
$
10,074
$
(1,066)
$
1,013
$
1,244
$
(231)
Impact of acquisitions
(30)
—
(30)
14
—
14
Impact of divestitures
(676)
(958)
282
(48)
(114)
66
Impact of foreign currency
fluctuations
275
—
275
45
—
45
Net impact of U.K. Newspaper Matters
—
—
—
8
10
(2)
As adjusted
$
8,577
$
9,116
$
(539)
$
1,032
$
1,140
$
(108)
Foreign Exchange Rates
Average foreign exchange rates used in the calculation of the
impact of foreign currency fluctuations for each of the three month
periods in the fiscal years ended June 30, 2020 and 2019 are as
follows:
Fiscal Year 2020
Q1
Q2
Q3
Q4
U.S. Dollar per Australian Dollar
$0.69
$0.68
$0.66
$0.65
U.S. Dollar per British Pound Sterling
$1.23
$1.29
$1.28
$1.24
Fiscal Year 2019
Q1
Q2
Q3
Q4
U.S. Dollar per Australian Dollar
$0.73
$0.72
$0.71
$0.70
U.S. Dollar per British Pound Sterling
$1.30
$1.29
$1.30
$1.29
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three months and fiscal years ended June 30, 2020 and 2019 are as
follows:
For the three months ended June
30,
2020
2019
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
246
$
283
(13)
%
Subscription Video Services
436
536
(19)
%
Dow Jones
382
397
(4)
%
Book Publishing
407
419
(3)
%
News Media
451
581
(22)
%
Other
—
1
**
Adjusted Total Revenues
$
1,922
$
2,217
(13)
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
76
$
80
(5)
%
Subscription Video Services
112
84
33
%
Dow Jones
60
53
13
%
Book Publishing
47
43
9
%
News Media
(56)
—
**
Other
(40)
(39)
(3)
%
Adjusted Total Segment EBITDA
$
199
$
221
(10)
%
For the fiscal years ended June
30,
2020
2019
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
1,093
$
1,156
(5)
%
Subscription Video Services
2,010
2,202
(9)
%
Dow Jones
1,595
1,549
3
%
Book Publishing
1,676
1,754
(4)
%
News Media
2,201
2,452
(10)
%
Other
2
3
(33)
%
Adjusted Total Revenues
$
8,577
$
9,116
(6)
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
384
$
382
1
%
Subscription Video Services
346
379
(9)
%
Dow Jones
236
208
13
%
Book Publishing
215
252
(15)
%
News Media
1
64
(98)
%
Other
(150)
(145)
(3)
%
Adjusted Total Segment EBITDA
$
1,032
$
1,140
(9)
%
** - Not meaningful
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the three months ended June 30, 2020 and 2019.
For the three months ended June
30, 2020
As Reported
Impact of Acquisitions
Impact of Divestitures
Impact of Foreign Currency
Fluctuations
Net Impact of U.K. Newspaper
Matters
As Adjusted
(in millions)
Revenues:
Digital Real Estate Services
$
238
$
(1)
$
—
$
9
$
—
$
246
Subscription Video Services
407
—
—
29
—
436
Dow Jones
381
—
—
1
—
382
Book Publishing
407
(4)
—
4
—
407
News Media
490
(1)
(58)
20
—
451
Other
—
—
—
—
—
—
Total Revenues
$
1,923
$
(6)
$
(58)
$
63
$
—
$
1,922
Segment EBITDA:
Digital Real Estate Services
$
71
$
—
$
1
$
4
$
—
$
76
Subscription Video Services
104
—
—
8
—
112
Dow Jones
60
—
—
—
—
60
Book Publishing
47
1
—
(1)
—
47
News Media
(44)
—
(9)
(3)
—
(56)
Other
(43)
—
—
—
3
(40)
Total Segment EBITDA
$
195
$
1
$
(8)
$
8
$
3
$
199
For the three months ended June
30, 2019
As Reported
Impact of Acquisitions
Impact of Divestitures
Impact of Foreign Currency
Fluctuations
Net Impact of U.K. Newspaper
Matters
As Adjusted
(in millions)
Revenues:
Digital Real Estate Services
$
283
$
—
$
—
$
—
$
—
$
283
Subscription Video Services
536
—
—
—
—
536
Dow Jones
397
—
—
—
—
397
Book Publishing
419
—
—
—
—
419
News Media
830
—
(249)
—
—
581
Other
1
—
—
—
—
1
Total Revenues
$
2,466
$
—
$
(249)
$
—
$
—
$
2,217
Segment EBITDA:
Digital Real Estate Services
$
79
$
—
$
1
$
—
$
—
$
80
Subscription Video Services
84
—
—
—
—
84
Dow Jones
53
—
—
—
—
53
Book Publishing
43
—
—
—
—
43
News Media
51
—
(51)
—
—
—
Other
(41)
—
—
—
2
(39)
Total Segment EBITDA
$
269
$
—
$
(50)
$
—
$
2
$
221
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the fiscal years ended June 30, 2020 and 2019.
For the fiscal year ended June
30, 2020
As Reported
Impact of Acquisitions
Impact of Divestitures
Impact of Foreign Currency
Fluctuations
Net Impact of U.K. Newspaper
Matters
As Adjusted
(in millions)
Revenues:
Digital Real Estate Services
$
1,065
$
(10)
$
(1)
$
39
$
—
$
1,093
Subscription Video Services
1,884
—
—
126
—
2,010
Dow Jones
1,590
—
—
5
—
1,595
Book Publishing
1,666
(4)
—
14
—
1,676
News Media
2,801
(16)
(675)
91
—
2,201
Other
2
—
—
—
—
2
Total Revenues
$
9,008
$
(30)
$
(676)
$
275
$
—
$
8,577
Segment EBITDA:
Digital Real Estate Services
$
345
$
16
$
2
$
21
$
—
$
384
Subscription Video Services
323
(1)
—
24
—
346
Dow Jones
236
—
—
—
—
236
Book Publishing
214
1
—
—
—
215
News Media
53
(2)
(50)
—
—
1
Other
(158)
—
—
—
8
(150)
Total Segment EBITDA
$
1,013
$
14
$
(48)
$
45
$
8
$
1,032
For the fiscal year ended June
30, 2019
As Reported
Impact of Acquisitions
Impact of Divestitures
Impact of Foreign Currency
Fluctuations
Net Impact of U.K. Newspaper
Matters
As Adjusted
(in millions)
Revenues:
Digital Real Estate Services
$
1,159
$
—
$
(3)
$
—
$
—
$
1,156
Subscription Video Services
2,202
—
—
—
—
2,202
Dow Jones
1,549
—
—
—
—
1,549
Book Publishing
1,754
—
—
—
—
1,754
News Media
3,407
—
(955)
—
—
2,452
Other
3
—
—
—
—
3
Total Revenues
$
10,074
$
—
$
(958)
$
—
$
—
$
9,116
Segment EBITDA:
Digital Real Estate Services
$
378
$
—
$
4
$
—
$
—
$
382
Subscription Video Services
379
—
—
—
—
379
Dow Jones
208
—
—
—
—
208
Book Publishing
252
—
—
—
—
252
News Media
182
—
(118)
—
—
64
Other
(155)
—
—
—
10
(145)
Total Segment EBITDA
$
1,244
$
—
$
(114)
$
—
$
10
$
1,140
NOTE 3 – ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO NEWS
CORPORATION STOCKHOLDERS AND ADJUSTED EPS
The Company uses net income (loss) attributable to News
Corporation stockholders and diluted earnings per share (“EPS”)
excluding expenses related to U.K. Newspaper Matters, impairment
and restructuring charges and “Other, net”, net of tax, recognized
by the Company or its equity method investees, as well as the
settlement of certain pre-Separation tax matters (“adjusted net
income (loss) attributable to News Corporation stockholders” and
“adjusted EPS,” respectively), to evaluate the performance of the
Company’s operations exclusive of certain items that impact the
comparability of results from period to period, as well as certain
non-operational items. The calculation of adjusted net income
(loss) attributable to News Corporation stockholders and adjusted
EPS may not be comparable to similarly titled measures reported by
other companies, since companies and investors may differ as to
what type of events warrant adjustment. Adjusted net income (loss)
attributable to News Corporation stockholders and adjusted EPS are
not measures of performance under generally accepted accounting
principles and should not be construed as substitutes for
consolidated net income (loss) attributable to News Corporation
stockholders and net income (loss) per share as determined under
GAAP as a measure of performance. However, management uses these
measures in comparing the Company’s historical performance and
believes that they provide meaningful and comparable information to
investors to assist in their analysis of our performance relative
to prior periods and our competitors.
The following tables reconcile reported net (loss) income
attributable to News Corporation stockholders and reported diluted
EPS to adjusted net (loss) income attributable to News Corporation
stockholders and adjusted EPS for the three months and fiscal years
ended June 30, 2020 and 2019.
For the three months ended June
30, 2020
For the three months ended June
30, 2019
(in millions, except per share data)
Net loss attributable to
stockholders
EPS
Net (loss) income attributable to
stockholders
EPS
Net loss
$
(401)
$
(42)
Less: Net loss (income) attributable to
noncontrolling interests
4
(9)
Net loss attributable to News
Corporation stockholders
$
(397)
$
(0.67)
$
(51)
$
(0.09)
U.K. Newspaper Matters
3
0.01
2
0.01
Impairment and restructuring
charges(a)
379
0.64
117
0.20
Equity losses of affiliates(b)
32
0.05
—
—
Other, net
10
0.02
(3)
(0.01)
Tax impact on items above
(27)
(0.05)
(12)
(0.02)
Impact of noncontrolling interest on items
above
(17)
(0.03)
(9)
(0.02)
As adjusted
$
(17)
$
(0.03)
$
44
$
0.07
(a)
During the three months ended June 30, 2020, the Company
recognized non-cash impairment charges of $292 million, primarily
related to fixed assets in the U.K and Australia, as well as
goodwill and indefinite-lived intangible assets at its News Media
segment. During the three months ended June 30, 2019, the Company
recognized non-cash impairment charges of $87 million.
(b)
During the three months ended June 30, 2020, the Company
recognized non-cash write-downs on certain equity method
investments.
For the fiscal year ended June
30, 2020
For the fiscal year ended June
30, 2019
(in millions, except per share data)
Net (loss) income available to
stockholders
EPS
Net income available to
stockholders
EPS
Net (loss) income
$
(1,545)
$
228
Less: Net loss (income) attributable to
noncontrolling interests
276
(73)
Net (loss) income attributable to News
Corporation stockholders
$
(1,269)
$
(2.16)
$
155
$
0.26
U.K. Newspaper Matters
8
0.02
10
0.02
Impairment and restructuring
charges(a)
1,830
3.10
188
0.32
Equity losses of affiliates(b)
32
0.05
—
—
Other, net
(9)
(0.02)
(33)
(0.06)
Tax impact on items above
(125)
(0.21)
(37)
(0.06)
Impact of noncontrolling interest on items
above
(338)
(0.56)
(13)
(0.02)
As adjusted
$
129
$
0.22
$
270
$
0.46
(a)
During the fiscal year ended June 30, 2020, the Company
recognized non-cash impairment charges of $1,098 million related to
goodwill, $203 million related to fixed assets, $194 million
related to intangible assets and $195 million primarily related to
the reclassification of its News America Marketing reporting unit
to held for sale. During the fiscal year ended June 30, 2019, the
Company recognized non-cash impairment charges of approximately $96
million related to the impairment of goodwill and intangible
assets.
(b)
During the fiscal year ended June 30, 2020, the Company
recognized non-cash write-downs on certain equity method
investments.
NOTE 4 – DOW JONES
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. The following table
provides the results of Dow Jones segment for the three months and
fiscal years ended June 30, 2020 and 2019.
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:
Circulation and subscription
$
303
$
287
6
%
$
1,191
$
1,120
6
%
Advertising
71
99
(28)
%
359
393
(9)
%
Other
7
11
(36)
%
40
36
11
%
Total Revenues
381
397
(4)
%
1,590
1,549
3
%
Operating expenses
(187)
(194)
4
%
(765)
(755)
(1)
%
Selling, general and administrative
(134)
(150)
11
%
(589)
(586)
(1)
%
Segment EBITDA
$
60
$
53
13
%
$
236
$
208
13
%
Circulation and subscription
revenues:
Circulation and other
$
191
$
181
6
%
$
740
$
697
6
%
Professional information business
112
106
6
%
451
423
7
%
Total circulation and subscription
revenues
$
303
$
287
6
%
$
1,191
$
1,120
6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806006065/en/
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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