FISCAL 2022 SECOND QUARTER AND FIRST
HALF KEY FINANCIAL HIGHLIGHTS
- Revenues in the quarter were $2.72 billion, a 13% increase
compared to $2.41 billion in the prior year and the highest
quarterly revenue since separation. Revenues in the first half rose
15% year-over-year
- Net income in the quarter was $262 million, flat compared to
$261 million in the prior year. Net income in the first half rose
72% year-over-year
- Total Segment EBITDA in the quarter was $586 million, an 18%
increase compared to $497 million in the prior year. Total Segment
EBITDA in the first half rose 30% year-over-year
- In the quarter, Reported EPS were $0.40 compared to $0.39 in
the prior year – Adjusted EPS were $0.44 compared to $0.34 in the
prior year. In the first half, Reported diluted EPS were $0.72 and
Adjusted EPS were $0.67
- Digital Real Estate Services segment revenues grew 35% in
the quarter, with continued traffic gains at Move, operator of
realtor.com®, and strong listing volumes at REA Group
- Dow Jones again saw its highest quarterly profitability
since its acquisition and highest revenue since fiscal
2011
- As of the end of December, Foxtel’s total streaming
subscribers grew 66% compared to the prior year with BINGE and Kayo
each reaching more than 1 million total subscribers
- News Media Segment EBITDA in the quarter grew 68% as the
businesses continued to benefit from the rebound in the advertising
market, new content licensing revenues and strong digital
subscriber gains
News Corporation (“News Corp” or the “Company”) (Nasdaq: NWS,
NWSA; ASX: NWS, NWSLV) today reported financial results for the
three months ended December 31, 2021.
Commenting on the results, Chief Executive Robert Thomson
said:
“For the first half of fiscal year 2022, News Corp’s
profitability reached nearly $1 billion, up 30% year-over-year,
with the second quarter delivering record revenues and the highest
profit of any quarter since the company was formed in 2013.
Our businesses are thriving, particularly at the Digital Real
Estate Services, Dow Jones and Book Publishing segments, and there
was a pronounced surge in profitability at our News Media segment.
Meanwhile, Foxtel’s streaming products flourished, with a 66
percent increase in total customers, and Kayo and BINGE both
exceeding one million.
We are delighted with our planned acquisitions of the OPIS and
Base Chemicals businesses, which we expect will close in the first
half of calendar 2022 and bolster the highly profitable Dow Jones
Professional Information Business.
The landmark agreements with Big Tech continued to benefit our
journalism and our bottom line. In addition to the substantial
deals with Google and Facebook, we expanded our multi-year global
agreement with Apple, which is expected to be an important source
of subscriptions and of advertising revenue for our news sites
around the world.
Our increasing momentum has given us the ability to make
opportunistic acquisitions and further our $1 billion share buyback
program. News Corp is clearly going from strength to strength.”
SECOND QUARTER RESULTS
The Company reported fiscal 2022 second quarter total revenues
of $2.72 billion, which was the highest quarterly revenue since
separation and was also 13% higher compared to $2.41 billion in the
prior year period. The increase reflects growth in all revenue
lines, primarily in real estate and advertising, as well as recent
acquisitions. Adjusted Revenues (which exclude the foreign currency
impact, acquisitions and divestitures as defined in Note 2)
increased 8%.
Net income for the quarter was $262 million, flat compared to
$261 million in the prior year, reflecting higher Total Segment
EBITDA, as discussed below, offset by lower Other, net, higher tax
expense and higher interest expense.
The Company reported second quarter Total Segment EBITDA of $586
million, which was also the highest since separation. Total Segment
EBITDA grew 18% compared to $497 million in the prior year,
primarily due to higher revenues, as discussed above, partially
offset by higher costs across all operating segments, including the
impact of recent acquisitions. Adjusted Total Segment EBITDA (as
defined in Note 2) increased 16%.
Net income per share attributable to News Corporation
stockholders was $0.40 as compared to $0.39 in the prior year.
Adjusted EPS (as defined in Note 3) were $0.44 compared to $0.34
in the prior year.
SEGMENT REVIEW
For the three months ended
December 31,
For the six months ended
December 31,
2021
2020
% Change
2021
2020
% Change
(in millions)
Better/
(Worse)
(in millions)
Better/
(Worse)
Revenues:
Digital Real Estate Services
$
456
$
339
35
%
$
882
$
629
40
%
Subscription Video Services
498
511
(3
)%
1,008
1,007
—
%
Dow Jones
508
446
14
%
952
832
14
%
Book Publishing
617
544
13
%
1,163
1,002
16
%
News Media
638
573
11
%
1,214
1,060
15
%
Other
—
1
**
—
1
**
Total Revenues
$
2,717
$
2,414
13
%
$
5,219
$
4,531
15
%
Segment EBITDA:
Digital Real Estate Services
$
178
$
142
25
%
$
316
$
261
21
%
Subscription Video Services
86
124
(31
)%
200
202
(1
)%
Dow Jones
144
109
32
%
239
181
32
%
Book Publishing
107
104
3
%
192
175
10
%
News Media
111
66
68
%
145
44
**
Other
(40
)
(48
)
17
%
(96
)
(98
)
2
%
Total Segment EBITDA
$
586
$
497
18
%
$
996
$
765
30
%
** - Not meaningful
Digital Real Estate Services
Revenues in the quarter increased $117 million, or 35%, compared
to the prior year, driven by strong underlying performances at REA
Group and Move, as well as the acquisition of Mortgage Choice and
REA India (rebranded from Elara). Segment EBITDA in the quarter
increased $36 million, or 25%, compared to the prior year,
primarily due to the higher revenues. The growth was partially
offset by the increase in expenses associated with the acquisitions
of Mortgage Choice and REA India, higher employee costs at both
Move and REA Group and higher marketing costs at Move. Adjusted
Revenues and Adjusted Segment EBITDA (as defined in Note 2)
increased 22% and 29%, respectively.
In the quarter, revenues at REA Group increased $103 million, or
56%, to $287 million, driven by higher financial services revenues,
primarily due to the $41 million contribution from the acquisition
of Mortgage Choice, and higher Australian residential revenues due
to price increases, strong national listings, and favorable depth
penetration and product mix. The growth was also due in part to the
$10 million contribution from the acquisition of REA India.
Australian national residential buy listing volumes in the quarter
increased 22% compared to the prior year, with listings in Sydney
up 39% and Melbourne up 25%.
Move’s revenues in the quarter increased $14 million, or 9%, to
$169 million, primarily as a result of higher real estate revenues.
Real estate revenues, which represented 86% of total Move revenues,
increased $17 million, or 13%, due to growth in both the
traditional lead generation product and the referral model. The
improvement in the traditional lead generation product was driven
by higher contribution from the Market VIP℠ product, as well as
continued improvements in yield. The referral model benefited from
record average home values and higher referral fees, partially
offset by lower transaction volume. The referral model generated
approximately 32% of total Move revenues in the quarter. Revenue
growth was partially offset by a $4 million negative impact from
the divestiture of Top Producer. Based on Move’s internal data,
average monthly unique users of realtor.com®’s web and mobile sites
for the fiscal second quarter grew 6% year-over-year to 85 million.
Lead volume declined 9%, an improvement from the trends seen in the
first quarter, but reflecting a continued tough comparison to the
prior year.
Subscription Video Services
Revenues in the quarter decreased $13 million, or 3%, compared
with the prior year. Higher revenues from Kayo and BINGE were more
than offset by the impact from fewer residential broadcast
subscribers and lower commercial subscription revenues primarily
resulting from restrictions related to the global COVID-19 pandemic
during the quarter. Foxtel Group streaming subscription revenues
represented approximately 19% of total circulation and subscription
revenues in the quarter. Adjusted Revenues decreased 3% compared to
the prior year.
As of December 31, 2021, Foxtel’s total closing paid subscribers
were over 3.9 million, a 19% increase compared to the prior year,
primarily due to the growth in BINGE and Kayo subscribers,
partially offset by lower residential broadcast subscribers.
Approximately 1.8 million of the total closing paid subscribers
were residential and commercial broadcast subscribers, and the
remaining 2.1 million consisted largely of Kayo, BINGE and Foxtel
Now subscribers. As of December 31, 2021, there were over 1 million
Kayo subscribers (total and paying), compared to 648,000
subscribers (624,000 paying) in the prior year. BINGE had over 1
million subscribers (928,000 paying) as of December 31, 2021,
compared to 468,000 (431,000 paying) in the prior year. As of
December 31, 2021, there were 219,000 Foxtel Now subscribers
(211,000 paying), compared to 265,000 subscribers (258,000 paying)
in the prior year. Broadcast subscriber churn in the quarter
improved to 13.0%, the lowest since the first quarter of fiscal
2019, from 17.5% in the prior year. Broadcast ARPU for the quarter
increased 3% year-over-year to A$82 (US$60).
Segment EBITDA in the quarter decreased $38 million, or 31%,
compared with the prior year. The decline was primarily driven by
higher investment spending on technology and streaming products, as
well as higher sports programming rights and production costs due
to sporting events such as motorsports and cricket which did not
occur during the prior year period. Adjusted Segment EBITDA
decreased 31%.
Dow Jones
Revenues in the quarter increased $62 million, or 14%, compared
to the prior year, primarily due to higher advertising revenues,
growth in circulation and subscription revenues and an $18 million
contribution from the acquisition of Investor’s Business Daily
(“IBD”). Digital revenues at Dow Jones in the quarter represented
72% of total revenues compared to 70% in the prior year. Adjusted
Revenues increased 10% compared to the prior year.
Circulation and subscription revenues increased $37 million, or
12%. Circulation revenue grew 13%, reflecting the acquisition of
IBD and continued strong growth in digital-only subscriptions.
Professional information business revenues grew 9%, primarily
driven by 17% growth in Risk & Compliance products as well as
modest improvements in the Newswires product. Digital circulation
revenues accounted for 67% of circulation revenues for the quarter,
compared to 63% in the prior year.
During the second quarter, total average subscriptions to Dow
Jones’ consumer products reached over 4.7 million, a 17% increase
compared to the prior year, and includes 126,000 IBD subscriptions,
the majority being digital-only. Digital-only subscriptions to Dow
Jones’ consumer products grew 23%. Total subscriptions to The Wall
Street Journal grew 12% compared to the prior year, to over 3.6
million average subscriptions in the quarter. Digital-only
subscriptions to The Wall Street Journal grew 19% to over 2.9
million average subscriptions in the quarter, and represented 81%
of total Wall Street Journal subscriptions.
Advertising revenues increased $26 million, or 23%, primarily
due to 29% growth in print advertising revenues, which recovered
strongly from the COVID-19 related weakness in the prior year, and
18% growth in digital advertising revenues, driven by improvement
across major categories, most notably in B2C and financial
services, and benefiting from higher yield. Digital advertising
accounted for 56% of total advertising revenues in the quarter,
compared to 58% in the prior year, due to the recovery of print
advertising.
Segment EBITDA for the quarter increased $35 million, or 32%,
including a $4 million contribution from the acquisition of IBD,
primarily due to higher revenues, as discussed above, partially
offset by higher professional services fees. Adjusted Segment
EBITDA increased 29%.
Book Publishing
Revenues in the quarter increased $73 million, or 13%, compared
to the prior year, reflecting a $50 million contribution from the
acquisition of Houghton Mifflin Harcourt’s Books and Media segment
(“HMH”) and continued strong consumption trends, driven by higher
frontlist sales in General books, including Twelve and a Half by
Gary Vaynerchuk, The Pioneer Woman Cooks: Super Easy! by Ree
Drummond and The Storyteller by Dave Grohl. The growth was also
driven by the U.K. division and the Christian books category,
partially offset by lower sales of Childrens books. Adjusted
Revenues increased 4%. Digital sales increased 8% compared to the
prior year, driven by growth in downloadable audiobooks. Digital
sales represented 17% of Consumer revenues for the quarter.
Segment EBITDA for the quarter increased $3 million, or 3%,
compared to the prior year, driven by a $10 million contribution
from the HMH acquisition, partially offset by higher costs related
to increased sales volumes and mix of titles, as well as the
increase in manufacturing and freight costs exacerbated by supply
chain pressures. Adjusted Segment EBITDA decreased 7%.
News Media
Revenues in the quarter increased $65 million, or 11%, as
compared to the prior year, driven by the continued recovery of the
advertising market from COVID-19 related market weakness in the
prior year and higher circulation and subscription revenues. The
results also reflect a $6 million, or 1%, positive impact from
foreign currency fluctuations. Within the segment, revenues at News
Corp Australia and News UK increased 14% and 7%, respectively. The
New York Post and Wireless Group also saw higher revenues in the
quarter. Adjusted Revenues for the segment increased 10% compared
to the prior year.
Circulation and subscription revenues increased $23 million, or
9%, compared to the prior year, primarily due to higher content
licensing revenues, digital subscriber growth, cover price
increases and a $3 million, or 1%, positive impact from foreign
currency fluctuations, partially offset by a decline in print
volumes.
Advertising revenues increased $42 million, or 17%, compared to
the prior year, driven by growth in digital advertising across the
businesses due to improved yields and higher impressions, the
recovery of print advertising at News UK (primarily at The Times
and Sunday Times) and a $2 million, or 1%, positive impact from
foreign currency fluctuations.
In the quarter, Segment EBITDA increased $45 million, or 68%,
compared to the prior year, reflecting higher revenues, as
discussed above. News Corp Australia and News UK contributed $35
million and $6 million, respectively, to the Segment EBITDA growth.
The New York Post and Wireless Group were also positive
contributors to the growth, which was partially offset by costs
related to News UK’s TV project. Adjusted Segment EBITDA increased
65%.
Digital revenues represented 34% of News Media segment revenues
in the quarter, compared to 31% in the prior year, and represented
32% of the combined revenues of the newspaper mastheads. Digital
subscribers and users across key properties within the News Media
segment are summarized below:
- Closing digital subscribers at News Corp Australia as of
December 31, 2021 were 909,000 (861,000 for news mastheads),
compared to 779,000 (738,000 for news mastheads) in the prior year
(Source: Internal data)
- The Times and Sunday Times closing digital subscribers,
including the Times Literary Supplement, as of December 31, 2021
were 399,000, compared to 340,000 in the prior year (Source:
Internal data)
- The Sun’s digital offering reached 163 million global monthly
unique users in December 2021, compared to 130 million in the prior
year (Source: Google Analytics)
- New York Post’s digital network reached 160 million unique
users in December 2021, compared to 141 million in the prior year
(Source: Google Analytics)
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 six months ended
December 31,
2021
2020
(in millions)
Net cash provided by operating
activities
$
430
$
483
Less: Capital expenditures
(208
)
(173
)
222
310
Less: REA Group free cash flow
(121
)
(65
)
Plus: Cash dividends received from REA
Group
43
32
Free cash flow available to News
Corporation
$
144
$
277
Net cash provided by operating activities of $430 million for
the six months ended December 31, 2021 was $53 million lower than
$483 million in the prior year, primarily due to higher working
capital, driven by higher receivables from higher revenues, higher
employee bonus and equity-based compensation payments, payments
related to one-time legal settlement costs and $21 million in
higher interest payments, partially offset by higher Total Segment
EBITDA as noted above.
Free cash flow available to News Corporation in the six months
ended December 31, 2021 was $144 million compared to $277 million
in the prior year period. The decline was primarily due to lower
cash provided by operating activities, as mentioned above, and
higher capital expenditures, partially offset by higher dividends
received from REA Group. Foxtel’s capital expenditures for the six
months ended December 31, 2021 were $89 million, compared to $79
million in the prior year.
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
Dividends
The Company today declared a semi-annual cash dividend of $0.10
per share for Class A Common Stock and Class B Common Stock. This
dividend is payable on April 13, 2022 to stockholders of record as
of March 16, 2022.
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
5:00pm EST on February 3, 2022. 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, 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, uncertainties and other
factors described in the Company’s filings with the Securities and
Exchange Commission. More detailed information about 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
December 31,
For the six months ended December
31,
2021
2020
2021
2020
Revenues:
Circulation and subscription
$
1,072
$
1,030
$
2,149
$
2,032
Advertising
519
448
924
780
Consumer
594
523
1,118
964
Real estate
352
281
672
516
Other
180
132
356
239
Total Revenues
2,717
2,414
5,219
4,531
Operating expenses
(1,279
)
(1,198
)
(2,523
)
(2,362
)
Selling, general and administrative
(852
)
(719
)
(1,700
)
(1,404
)
Depreciation and amortization
(168
)
(167
)
(333
)
(331
)
Impairment and restructuring charges
(23
)
(23
)
(45
)
(63
)
Equity losses of affiliates
(6
)
(3
)
(6
)
(4
)
Interest expense, net
(21
)
(12
)
(43
)
(20
)
Other, net
(7
)
54
130
71
Income before income tax expense
361
346
699
418
Income tax expense
(99
)
(85
)
(170
)
(110
)
Net income
262
261
529
308
Less: Net income attributable to
noncontrolling interests
(27
)
(30
)
(98
)
(43
)
Net income attributable to News
Corporation stockholders
$
235
$
231
$
431
$
265
Weighted average shares outstanding:
Basic
592
591
592
590
Diluted
595
593
595
592
Net income attributable to News
Corporation stockholders per share:
Basic
$
0.40
$
0.39
$
0.73
$
0.45
Diluted
$
0.40
$
0.39
$
0.72
$
0.45
NEWS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
As of December 31,
2021
As of June 30,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
2,184
$
2,236
Receivables, net
1,665
1,498
Inventory, net
248
253
Other current assets
502
469
Total current assets
4,599
4,456
Non-current assets:
Investments
505
351
Property, plant and equipment, net
2,134
2,272
Operating lease right-of-use assets
963
1,035
Intangible assets, net
2,082
2,179
Goodwill
4,557
4,653
Deferred income tax assets
295
378
Other non-current assets
1,385
1,447
Total assets
$
16,520
$
16,771
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
351
$
321
Accrued expenses
1,118
1,339
Deferred revenue
462
473
Current borrowings
302
28
Other current liabilities
1,000
1,073
Total current liabilities
3,233
3,234
Non-current liabilities:
Borrowings
1,968
2,285
Retirement benefit obligations
202
211
Deferred income tax liabilities
241
260
Operating lease liabilities
1,035
1,116
Other non-current liabilities
494
519
Commitments and contingencies
Equity:
Class A common stock
4
4
Class B common stock
2
2
Additional paid-in capital
11,948
12,057
Accumulated deficit
(2,482
)
(2,911
)
Accumulated other comprehensive loss
(1,089
)
(941
)
Total News Corporation stockholders'
equity
8,383
8,211
Noncontrolling interests
964
935
Total equity
9,347
9,146
Total liabilities and equity
$
16,520
$
16,771
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
For the six months ended December
31,
2021
2020
Operating activities:
Net income
$
529
$
308
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
333
331
Operating lease expense
64
64
Equity losses of affiliates
6
4
Cash distributions received from
affiliates
7
7
Other, net
(130
)
(71
)
Deferred income taxes and taxes
payable
79
21
Change in operating assets and
liabilities, net of acquisitions:
Receivables and other assets
(222
)
(172
)
Inventories, net
6
27
Accounts payable and other liabilities
(242
)
(36
)
Net cash provided by operating
activities
430
483
Investing activities:
Capital expenditures
(208
)
(173
)
Acquisitions, net of cash acquired
(21
)
(90
)
Investments in equity affiliates and
other
(46
)
(11
)
Proceeds from property, plant and
equipment and other asset dispositions
(2
)
3
Other, net
28
(5
)
Net cash used in investing activities
(249
)
(276
)
Financing activities:
Borrowings
495
146
Repayment of borrowings
(500
)
(248
)
Repurchase of shares
(43
)
—
Dividends paid
(86
)
(80
)
Other, net
(64
)
(37
)
Net cash used in financing activities
(198
)
(219
)
Net change in cash and cash
equivalents
(17
)
(12
)
Cash and cash equivalents, beginning of
period
2,236
1,517
Exchange movement on opening cash
balance
(35
)
57
Cash and cash equivalents, end of
period
$
2,184
$
1,562
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 income
to Total Segment EBITDA for the three and six months ended December
31, 2021 and 2020:
For the three months ended
December 31,
2021
2020
Change
% Change
(in millions)
Net income
$
262
$
261
$
1
—
%
Add:
Income tax expense
99
85
14
16
%
Other, net
7
(54
)
61
**
Interest expense, net
21
12
9
75
%
Equity losses of affiliates
6
3
3
100
%
Impairment and restructuring charges
23
23
—
—
%
Depreciation and amortization
168
167
1
1
%
Total Segment EBITDA
$
586
$
497
$
89
18
%
** - Not meaningful
For the six months ended December
31,
2021
2020
Change
% Change
(in millions)
Net income
$
529
$
308
$
221
72
%
Add:
Income tax expense
170
110
60
55
%
Other, net
(130
)
(71
)
(59
)
(83
)%
Interest expense, net
43
20
23
**
Equity losses of affiliates
6
4
2
50
%
Impairment and restructuring charges
45
63
(18
)
(29
)%
Depreciation and amortization
333
331
2
1
%
Total Segment EBITDA
$
996
$
765
$
231
30
%
** - 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”), charges for other
significant, non-ordinary course legal or regulatory matters
(“litigation charges”) 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 and six months ended December 31, 2021
and 2020:
Revenues
Total Segment EBITDA
For the three months ended
December 31,
For the three months ended
December 31,
2021
2020
Difference
2021
2020
Difference
(in millions)
(in millions)
As reported
$
2,717
$
2,414
$
303
$
586
$
497
$
89
Impact of acquisitions
(124
)
—
(124
)
(5
)
6
(11
)
Impact of divestitures
—
(9
)
9
3
—
3
Impact of foreign currency
fluctuations
(6
)
—
(6
)
(1
)
—
(1
)
Net impact of U.K. Newspaper Matters
—
—
—
4
3
1
As adjusted
$
2,587
$
2,405
$
182
$
587
$
506
$
81
Revenues
Total Segment EBITDA
For the six months ended December
31,
For the six months ended December
31,
2021
2020
Difference
2021
2020
Difference
(in millions)
(in millions)
As reported
$
5,219
$
4,531
$
688
$
996
$
765
$
231
Impact of acquisitions
(247
)
—
(247
)
(12
)
6
(18
)
Impact of divestitures
(1
)
(17
)
16
5
—
5
Impact of foreign currency
fluctuations
(63
)
—
(63
)
(12
)
—
(12
)
Net impact of U.K. Newspaper Matters
—
—
—
6
5
1
As adjusted
$
4,908
$
4,514
$
394
$
983
$
776
$
207
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 six months ended December 31, 2021 and 2020 are as
follows:
Fiscal Year 2022
Q1
Q2
U.S. Dollar per Australian Dollar
$
0.74
$
0.73
U.S. Dollar per British Pound Sterling
$
1.38
$
1.35
Fiscal Year 2021
Q1
Q2
U.S. Dollar per Australian Dollar
$
0.71
$
0.73
U.S. Dollar per British Pound Sterling
$
1.29
$
1.32
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three and six months ended December 31, 2021 and 2020 are as
follows:
For the three months ended
December 31,
2021
2020
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
403
$
331
22
%
Subscription Video Services
498
511
(3
)%
Dow Jones
491
446
10
%
Book Publishing
565
544
4
%
News Media
630
573
10
%
Other
—
—
—
%
Adjusted Total Revenues
$
2,587
$
2,405
8
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
190
$
147
29
%
Subscription Video Services
86
124
(31
)%
Dow Jones
141
109
29
%
Book Publishing
97
104
(7
)%
News Media
109
66
65
%
Other
(36
)
(44
)
18
%
Adjusted Total Segment EBITDA
$
587
$
506
16
%
** - Not meaningful
For the six months ended December
31,
2021
2020
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
768
$
613
25
%
Subscription Video Services
992
1,007
(1
)%
Dow Jones
913
832
10
%
Book Publishing
1,054
1,002
5
%
News Media
1,181
1,060
11
%
Other
—
—
—
%
Adjusted Total Revenues
$
4,908
$
4,514
9
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
332
$
266
25
%
Subscription Video Services
197
202
(2
)%
Dow Jones
230
181
27
%
Book Publishing
175
175
—
%
News Media
139
44
**
Other
(90
)
(92
)
2
%
Adjusted Total Segment EBITDA
$
983
$
776
27
%
** - 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 and six months ended December 31, 2021 and
2020:
For the three months ended
December 31, 2021
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
$
456
$
(53
)
$
—
$
—
$
—
$
403
Subscription Video Services
498
—
—
—
—
498
Dow Jones
508
(18
)
—
1
—
491
Book Publishing
617
(51
)
—
(1
)
—
565
News Media
638
(2
)
—
(6
)
—
630
Other
—
—
—
—
—
—
Total Revenues
$
2,717
$
(124
)
$
—
$
(6
)
$
—
$
2,587
Segment EBITDA:
Digital Real Estate Services
$
178
$
9
$
3
$
—
$
—
$
190
Subscription Video Services
86
—
—
—
—
86
Dow Jones
144
(4
)
—
1
—
141
Book Publishing
107
(10
)
—
—
—
97
News Media
111
—
—
(2
)
—
109
Other
(40
)
—
—
—
4
(36
)
Total Segment EBITDA
$
586
$
(5
)
$
3
$
(1
)
$
4
$
587
For the three months ended
December 31, 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
$
339
$
—
$
(8
)
$
—
$
—
$
331
Subscription Video Services
511
—
—
—
—
511
Dow Jones
446
—
—
—
—
446
Book Publishing
544
—
—
—
—
544
News Media
573
—
—
—
—
573
Other
1
—
(1
)
—
—
—
Total Revenues
$
2,414
$
—
$
(9
)
$
—
$
—
$
2,405
Segment EBITDA:
Digital Real Estate Services
$
142
$
6
$
(1
)
$
—
$
—
$
147
Subscription Video Services
124
—
—
—
—
124
Dow Jones
109
—
—
—
—
109
Book Publishing
104
—
—
—
—
104
News Media
66
—
—
—
—
66
Other
(48
)
—
1
—
3
(44
)
Total Segment EBITDA
$
497
$
6
$
—
$
—
$
3
$
506
For the six months ended December
31, 2021
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
$
882
$
(106
)
$
(1
)
$
(7
)
$
—
$
768
Subscription Video Services
1,008
—
—
(16
)
—
992
Dow Jones
952
(38
)
—
(1
)
—
913
Book Publishing
1,163
(101
)
—
(8
)
—
1,054
News Media
1,214
(2
)
—
(31
)
—
1,181
Other
—
—
—
—
—
—
Total Revenues
$
5,219
$
(247
)
$
(1
)
$
(63
)
$
—
$
4,908
Segment EBITDA:
Digital Real Estate Services
$
316
$
14
$
5
$
(3
)
$
—
$
332
Subscription Video Services
200
—
—
(3
)
—
197
Dow Jones
239
(10
)
—
1
—
230
Book Publishing
192
(16
)
—
(1
)
—
175
News Media
145
—
—
(6
)
—
139
Other
(96
)
—
—
—
6
(90
)
Total Segment EBITDA
$
996
$
(12
)
$
5
$
(12
)
$
6
$
983
For the six months ended December
31, 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
$
629
$
—
$
(16
)
$
—
$
—
$
613
Subscription Video Services
1,007
—
—
—
—
1,007
Dow Jones
832
—
—
—
—
832
Book Publishing
1,002
—
—
—
—
1,002
News Media
1,060
—
—
—
—
1,060
Other
1
—
(1
)
—
—
—
Total Revenues
$
4,531
$
—
$
(17
)
$
—
$
—
$
4,514
Segment EBITDA:
Digital Real Estate Services
$
261
$
6
$
(1
)
$
—
$
—
$
266
Subscription Video Services
202
—
—
—
—
202
Dow Jones
181
—
—
—
—
181
Book Publishing
175
—
—
—
—
175
News Media
44
—
—
—
—
44
Other
(98
)
—
1
—
5
(92
)
Total Segment EBITDA
$
765
$
6
$
—
$
—
$
5
$
776
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, charges for
other significant, non-ordinary course legal or regulatory matters
(“litigation charges”), 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 income attributable
to News Corporation stockholders and reported diluted EPS to
adjusted net income attributable to News Corporation stockholders
and adjusted EPS for the three and six months ended December 31,
2021 and 2020:
For the three months ended
December 31, 2021
For the three months ended
December 31, 2020
(in millions, except per share data)
Net income
attributable to
stockholders
EPS
Net income
attributable to
stockholders
EPS
Net income
$
262
$
261
Less: Net income attributable to
noncontrolling interests
(27
)
(30
)
Net income attributable to News
Corporation stockholders
$
235
$
0.40
$
231
$
0.39
U.K. Newspaper Matters
4
0.01
3
0.01
Impairment and restructuring charges
23
0.04
23
0.04
Equity losses of affiliates (a)
3
0.01
—
—
Other, net
7
0.01
(54
)
(0.10
)
Tax impact on items above
(10
)
(0.02
)
(2
)
—
Impact of noncontrolling interest on items
above
(2
)
(0.01
)
(1
)
—
As adjusted
$
260
$
0.44
$
200
$
0.34
(a)
During the three months ended December 31, 2021, the Company
recognized a non-cash impairment charge related to an equity method
investment.
For the six months ended
December 31, 2021
For the six months ended
December 31, 2020
(in millions, except per share data)
Net income
attributable to
stockholders
EPS
Net income
attributable to
stockholders
EPS
Net income
$
529
$
308
Less: Net income attributable to
noncontrolling interests
(98
)
(43
)
Net income attributable to News
Corporation stockholders
$
431
$
0.72
$
265
$
0.45
U.K. Newspaper Matters
6
0.01
5
0.01
Impairment and restructuring charges
45
0.08
63
0.10
Equity losses of affiliates (a)
3
0.01
—
—
Other, net
(130
)
(0.22
)
(71
)
(0.12
)
Tax impact on items above
2
—
(12
)
(0.02
)
Impact of noncontrolling interest on items
above
41
0.07
(2
)
—
As adjusted
$
398
$
0.67
$
248
$
0.42
(a)
During the six months ended December 31, 2021, the Company
recognized a non-cash impairment charge related to an equity method
investment.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220203005728/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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