FISCAL 2022 THIRD QUARTER KEY FINANCIAL
HIGHLIGHTS
- Revenues in the quarter were $2.49 billion, a record for
third quarter revenue and a 7% increase compared to $2.34 billion
in the prior year
- Net income in the quarter was $104 million, an 8% increase
compared to $96 million in the prior year
- Total Segment EBITDA in the quarter was $358 million, a 20%
increase compared to $298 million in the prior year, and includes
$15 million of one-time transaction costs
- In the quarter, Reported EPS were $0.14 compared to $0.13 in
the prior year – Adjusted EPS were $0.16 compared to $0.09 in the
prior year
- Dow Jones reported its highest third quarter revenue since
its acquisition with 16% growth and saw continued digital
subscription gains as well as strong performance in
advertising
- As of the end of March, Foxtel’s total paid streaming
subscribers grew 62% compared to the prior year with both BINGE and
Kayo at approximately 1.2 million subscribers
- Digital Real Estate Services segment revenues grew 19% in
the quarter and Segment EBITDA expanded 17% despite a difficult
prior year comparison
- News Media 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 March 31, 2022.
Commenting on the results, Chief Executive Robert Thomson
said:
“News Corp revenues and profitability set new records for the
third quarter, building on the momentum of preceding record
quarters. We have now achieved more in profitability through the
first three quarters of fiscal 2022 — at over $1.3 billion and
rising 27 percent compared to the prior year — than in any entire
fiscal year since our rebirth in 2013.
For the third quarter of fiscal 2022, News Corp delivered $2.5
billion of revenues, up 7 percent, despite significant currency
volatility, while profitability improved by 20 percent, including
one-time transaction costs for the OPIS acquisition. That growth
has been underpinned by our continued transformation to a
digital-led company. We benefited from a surge in digital
advertising revenue, including 21 percent growth at Dow Jones, and
more than 15 percent growth in paid digital subscribers across our
key markets.
The acquisition of OPIS, along with Base Chemicals, expected to
close by the end of next month, represent an exciting opportunity
for Dow Jones, extending the depth and reach of our news and
information capabilities in the commodities sector. The appetite
for data, analysis and insight in the energy, renewables, chemicals
and related fields is strong and growing, and we believe Dow Jones
is now well positioned to capitalize on that burgeoning
opportunity.
News Corp is a company transformed, more intensely digital and
global, with strong growth in our core markets and much unrealized
potential. Macroeconomic challenges affect all businesses, whether
it be supply chain pressures or inflation. But our collective
resilience, adaptability and creativity, already stress-tested by
the pandemic, have contributed to record revenues and profits.”
THIRD QUARTER RESULTS
The Company reported fiscal 2022 third quarter total revenues of
$2.49 billion, a 7% increase compared to $2.34 billion in the prior
year period. The increase reflects growth in all revenue lines,
including the impact of recent acquisitions, partially offset by
the $85 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)
increased 6%.
Net income for the quarter was $104 million, an 8% increase
compared to $96 million in the prior year, reflecting higher Total
Segment EBITDA, as discussed below, and lower tax expense,
partially offset by lower Other, net and higher interest
expense.
The Company reported third quarter Total Segment EBITDA of $358
million, a 20% increase compared to $298 million in the prior year,
primarily due to higher revenues, as discussed above, and lower
costs in the Other segment due to lower employee costs driven by
stock price performance. The growth was partially offset by higher
costs at the Dow Jones, Digital Real Estate Services and Book
Publishing segments, which reflects the impact of recent
acquisitions including $15 million of transaction costs related to
the acquisition of OPIS. The growth was also partially offset by
the $16 million, or 6%, negative impact from foreign currency
fluctuations. Adjusted Total Segment EBITDA (as defined in Note 2)
increased 25%.
Net income per share attributable to News Corporation
stockholders was $0.14 as compared to $0.13 in the prior year.
Adjusted EPS (as defined in Note 3) were $0.16 compared to $0.09
in the prior year.
SEGMENT REVIEW
For the three months ended March
31,
For the nine months ended March
31,
2022
2021
% Change
2022
2021
% Change
(in millions)
Better/ (Worse)
(in millions)
Better/ (Worse)
Revenues:
Digital Real Estate Services
$
416
$
351
19
%
$
1,298
$
980
32
%
Subscription Video Services
494
523
(6
)%
1,502
1,530
(2
)%
Dow Jones
487
421
16
%
1,439
1,253
15
%
Book Publishing
515
490
5
%
1,678
1,492
12
%
News Media
580
550
5
%
1,794
1,610
11
%
Other
—
—
—
%
—
1
**
Total Revenues
$
2,492
$
2,335
7
%
$
7,711
$
6,866
12
%
Segment EBITDA:
Digital Real Estate Services
$
137
$
117
17
%
$
453
$
378
20
%
Subscription Video Services
79
91
(13
)%
279
293
(5
)%
Dow Jones
88
82
7
%
327
263
24
%
Book Publishing
67
80
(16
)%
259
255
2
%
News Media
39
8
**
184
52
**
Other
(52
)
(80
)
35
%
(148
)
(178
)
17
%
Total Segment EBITDA
$
358
$
298
20
%
$
1,354
$
1,063
27
%
** - Not meaningful
Digital Real Estate Services
Revenues in the quarter increased $65 million, or 19%, compared
to the prior year, driven by continued underlying growth at REA
Group and Move, as well as the acquisition of Mortgage Choice,
partially offset by the $16 million, or 4%, negative impact from
foreign currency fluctuations. Segment EBITDA in the quarter
increased $20 million, or 17%, compared to the prior year,
primarily due to the higher revenues. The growth was partially
offset by the increase in expenses associated with the acquisition
of Mortgage Choice, higher employee costs and higher marketing
expenses at both Move and REA Group. Adjusted Revenues and Adjusted
Segment EBITDA (as defined in Note 2) increased 14% and 18%,
respectively.
In the quarter, revenues at REA Group increased $57 million, or
30%, to $246 million, driven by higher financial services revenues,
primarily due to the $38 million contribution from the acquisition
of Mortgage Choice, and higher Australian residential revenues due
to strong national listings, price increases and favorable depth
penetration and product mix. The growth was partially offset by the
$16 million, or 9%, negative impact from foreign currency
fluctuations. Australian national residential buy listing volumes
in the quarter increased 11% compared to the prior year, with
listings in Sydney up 14% and Melbourne up 8%.
Move’s revenues in the quarter increased $8 million, or 5%, to
$170 million, primarily as a result of higher real estate revenues.
Real estate revenues, which represented 85% of total Move revenues,
increased $9 million, or 7%, due to growth in both the referral
model and the traditional lead generation product. The referral
model benefited from record average home values, partially offset
by lower transaction volume. The referral model generated 28% of
total Move revenues in the quarter compared to approximately 25% in
the prior year. The improvement in the traditional lead generation
product was driven by higher contribution from the Market VIP℠
product and continued improvements in yield from Connections℠ Plus,
partially offset by the impact from lower lead volume. Revenue
growth was also partially offset by a $3 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 third quarter declined 3% year-over-year to 95
million, which includes 100 million unique users in March. Lead
volume declined 22%, reflecting a continued tough comparison to the
prior year when lead volumes increased over 40% year-over-year.
Subscription Video Services
Revenues in the quarter decreased $29 million, or 6%, compared
with the prior year, reflecting a $35 million, or 7%, negative
impact from foreign currency fluctuations. Higher revenues from
BINGE and Kayo and an increase in advertising revenues were
partially offset by the impact from fewer residential broadcast
subscribers. Foxtel Group streaming subscription revenues
represented approximately 20% of total circulation and subscription
revenues in the quarter. Adjusted Revenues increased 1% compared to
the prior year.
As of March 31, 2022, Foxtel’s total closing paid subscribers
were over 4.3 million, a 23% increase compared to the prior year,
primarily due to the growth in BINGE and Kayo subscribers,
partially offset by lower residential broadcast subscribers.
Broadcast subscriber churn in the quarter improved to 14.3% from
20.1% in the prior year. Broadcast ARPU for the quarter increased
2% year-over-year to A$82 (US$59).
As of March 31,
2022
2021
(in 000's)
Broadcast Subscribers
Residential
1,522
1,711
Commercial
240
235
Streaming Subscribers (Total (Paid))
Kayo
1,209 (1,151 paid)
914 (851 paid)
BINGE
1,305 (1,212 paid)
679 (516 paid)
Foxtel Now
215 (206 paid)
238 (228 paid)
Total Subscribers, including Flash (Total
(Paid))
4,509 (4,338 paid)
3,777 (3,541 paid)
Segment EBITDA in the quarter decreased $12 million, or 13%,
compared with the prior year. The decline was primarily driven by
higher entertainment and sports programming rights costs, higher
investment spending on streaming products and the $5 million, or
5%, negative impact from foreign currency fluctuations. The Company
continues to expect full year costs to be flat compared to the
prior year on a local currency basis. Adjusted Segment EBITDA
decreased 8%.
Dow Jones
Revenues in the quarter increased $66 million, or 16%, compared
to the prior year, which includes $20 million and $10 million
contributions from the acquisitions of Investor’s Business Daily
(“IBD”) and the Oil Price Information Services business and related
assets (“OPIS”), respectively. The OPIS acquisition closed on
February 28th, 2022. Adjusted Revenues at the Dow Jones segment
increased 9% compared to the prior year, primarily due to the
growth in circulation and subscription revenues from continued
digital subscription gains and higher advertising revenues. Digital
revenues at Dow Jones in the quarter represented 76% of total
revenues compared to 74% in the prior year.
Circulation and subscription revenues increased $48 million, or
15%, which includes $18 million and $10 million contributions from
the acquisitions of IBD and OPIS, respectively. Circulation revenue
grew 16%, reflecting the acquisition of IBD and continued strong
growth in digital-only subscriptions at The Wall Street Journal.
Professional information business revenues grew 13%, primarily
driven by the acquisition of OPIS and 12% growth in Risk &
Compliance products, partially offset by negative foreign currency
fluctuations. Digital circulation revenues accounted for 68% of
circulation revenues for the quarter, compared to 64% in the prior
year.
During the third quarter, total average subscriptions to Dow
Jones’ consumer products reached over 4.8 million, a 14% increase
compared to the prior year, and includes 122,000 IBD subscriptions,
the majority being digital-only. Digital-only subscriptions to Dow
Jones’ consumer products grew 19%. Total subscriptions to The Wall
Street Journal grew 10% compared to the prior year, to over 3.7
million average subscriptions in the quarter. Digital-only
subscriptions to The Wall Street Journal grew 16% to over 3 million
average subscriptions in the quarter, and represented 82% of total
Wall Street Journal subscriptions.
For the three months ended
March 31,
2022
2021
% Change
(in thousands, except %)
Better/(Worse)
The Wall Street Journal
Digital-only subscriptions
3,036
2,625
16%
Total subscriptions
3,718
3,382
10%
Barron’s Group
Digital-only subscriptions
810
674
20%
Total subscriptions
1,008
887
14%
Total Consumer
Digital-only subscriptions
3,941
3,299
19%
Total subscriptions
4,848
4,269
14%
Advertising revenues increased $17 million, or 20%, primarily
due to 21% growth in digital advertising revenues, driven by
improvement in the financial services and technology categories and
benefiting from higher average yield, as well as 18% growth in
print advertising revenues, which continued to recover strongly
from the COVID-19 related weakness in the prior year. Digital
advertising accounted for 62% of total advertising revenues in the
quarter, compared to 61% in the prior year.
Segment EBITDA for the quarter increased $6 million, or 7%,
including a $5 million contribution from the acquisition of IBD,
primarily due to higher revenues, as discussed above, partially
offset by higher costs related to the OPIS acquisition, including
$15 million of transaction costs, and higher employee costs.
Adjusted Segment EBITDA increased 16%.
Book Publishing
Revenues in the quarter increased $25 million, or 5%, compared
to the prior year, reflecting a $35 million contribution from the
acquisition of Houghton Mifflin Harcourt’s Books and Media segment
(“HMH”) and strong frontlist sales in General books, including Red
Handed by Peter Schweizer, The Paris Apartment by Lucy Foley and
One Damn Thing After Another by William Barr. The growth was
partially offset by the $14 million impact from lower sales of the
series of Bridgerton titles by Julia Quinn, lower sales of
Children’s and foreign language books and the $6 million, or 1%,
negative impact from foreign currency fluctuations. Adjusted
Revenues decreased 1%. Digital sales declined 6% compared to the
prior year, primarily due to lower e-book sales, mostly related to
the Bridgerton series, partially offset by higher sales of
downloadable audiobooks. Digital sales represented 23% of Consumer
revenues for the quarter compared to 26% in the prior year.
Segment EBITDA for the quarter decreased $13 million, or 16%,
compared to the prior year, driven by higher manufacturing and
freight costs due to mix of titles and the impact from ongoing
supply chain and inflationary pressures. Adjusted Segment EBITDA
decreased 19%.
News Media
Revenues in the quarter increased $30 million, or 5%, as
compared to the prior year, driven by the continued recovery of the
post-COVID-19 advertising market and higher circulation and
subscription revenues, partially offset by a $25 million, or 5%,
negative impact from foreign currency fluctuations. Within the
segment, revenues at News UK and News Corp Australia increased 4%
and 2%, respectively. Wireless Group and the New York Post also saw
higher revenues in the quarter. Adjusted Revenues for the segment
increased 10% compared to the prior year.
Circulation and subscription revenues increased $13 million, or
5%, compared to the prior year, primarily due to higher content
licensing revenues, digital subscriber growth and cover price
increases, partially offset by a $12 million, or 4%, negative
impact from foreign currency fluctuations and a decline in print
volumes.
Advertising revenues increased $20 million, or 9%, compared to
the prior year, driven by growth in digital advertising across the
businesses due to higher impressions, primarily at The Sun and the
Australian mastheads, improved yields and the recovery of print
advertising at News UK (primarily at The Times and Sunday Times),
partially offset by a $10 million, or 5%, negative impact from
foreign currency fluctuations.
In the quarter, Segment EBITDA increased $31 million compared to
the prior year, reflecting higher revenues, as discussed above.
News Corp Australia and News UK contributed $25 million and $5
million, respectively, to the Segment EBITDA growth and Wireless
Group and the New York Post were also positive contributors. The
growth was partially offset by costs related to TalkTV, which
launched in April 2022. The Company expects to incur at least $20
million of incremental costs in the fourth quarter of fiscal 2022
compared to the prior year, relating to product investments across
the segment, including TalkTV. Adjusted Segment EBITDA increased
$34 million.
Digital revenues represented 35% of News Media segment revenues
in the quarter, compared to 30% 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 March
31, 2022 were 946,000 (876,000 for news mastheads), compared to
807,000 (760,000 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 March 31, 2022 were
421,000, compared to 360,000 in the prior year (Source: Internal
data)
- The Sun’s digital offering reached 171 million global monthly
unique users in March 2022, compared to 119 million in the prior
year (Source: Google Analytics)
- New York Post’s digital network reached 155 million unique
users in March 2022, compared to 139 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 nine months ended March
31,
2022
2021
(in millions)
Net cash provided by operating
activities
$
1,030
$
1,060
Less: Capital expenditures
(315
)
(253
)
715
807
Less: REA Group free cash flow
(184
)
(114
)
Plus: Cash dividends received from REA
Group
87
69
Free cash flow available to News
Corporation
$
618
$
762
Net cash provided by operating activities of $1,030 million for
the nine months ended March 31, 2022 was $30 million lower than
$1,060 million in the prior year, primarily due to higher working
capital, driven by higher employee bonus and equity-based
compensation payments, payments related to one-time legal
settlement costs and higher inventory purchases, as well as $22
million in higher interest payments, partially offset by higher
Total Segment EBITDA as noted above.
Free cash flow available to News Corporation in the nine months
ended March 31, 2022 was $618 million compared to $762 million in
the prior year period. The decline was primarily due to higher
capital expenditures and lower cash provided by operating
activities, as mentioned above, partially offset by higher
dividends received from REA Group. Foxtel’s capital expenditures
for the nine months ended March 31, 2022 were $125 million,
compared to $103 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.
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 EDT on May 5, 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 March
31,
For the nine months ended March
31,
2022
2021
2022
2021
Revenues:
Circulation and subscription
$
1,099
$
1,076
$
3,248
$
3,108
Advertising
418
374
1,342
1,154
Consumer
497
472
1,615
1,436
Real estate
316
291
988
807
Other
162
122
518
361
Total Revenues
2,492
2,335
7,711
6,866
Operating expenses
(1,246
)
(1,186
)
(3,769
)
(3,548
)
Selling, general and administrative
(888
)
(851
)
(2,588
)
(2,255
)
Depreciation and amortization
(172
)
(173
)
(505
)
(504
)
Impairment and restructuring charges
(37
)
(30
)
(82
)
(93
)
Equity losses of affiliates
(4
)
(5
)
(10
)
(9
)
Interest expense, net
(25
)
(12
)
(68
)
(32
)
Other, net
13
61
143
132
Income before income tax expense
133
139
832
557
Income tax expense
(29
)
(43
)
(199
)
(153
)
Net income
104
96
633
404
Less: Net income attributable to
noncontrolling interests
(22
)
(17
)
(120
)
(60
)
Net income attributable to News
Corporation stockholders
$
82
$
79
$
513
$
344
Weighted average shares outstanding:
Basic
589
591
591
590
Diluted
592
595
594
593
Net income attributable to News
Corporation stockholders per share:
Basic
$
0.14
$
0.13
$
0.87
$
0.58
Diluted
$
0.14
$
0.13
$
0.86
$
0.58
NEWS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in
millions)
As of March 31, 2022
As of June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
1,865
$
2,236
Receivables, net
1,532
1,498
Inventory, net
308
253
Other current assets
457
469
Total current assets
4,162
4,456
Non-current assets:
Investments
564
351
Property, plant and equipment, net
2,167
2,272
Operating lease right-of-use assets
976
1,035
Intangible assets, net
2,651
2,179
Goodwill
5,174
4,653
Deferred income tax assets
273
378
Other non-current assets
1,452
1,447
Total assets
$
17,419
$
16,771
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
317
$
321
Accrued expenses
1,285
1,339
Deferred revenue
528
473
Current borrowings
306
28
Other current liabilities
1,091
1,073
Total current liabilities
3,527
3,234
Non-current liabilities:
Borrowings
2,496
2,285
Retirement benefit obligations
197
211
Deferred income tax liabilities
230
260
Operating lease liabilities
1,040
1,116
Other non-current liabilities
513
519
Commitments and contingencies
Equity:
Class A common stock
4
4
Class B common stock
2
2
Additional paid-in capital
11,823
12,057
Accumulated deficit
(2,403
)
(2,911
)
Accumulated other comprehensive loss
(1,001
)
(941
)
Total News Corporation stockholders'
equity
8,425
8,211
Noncontrolling interests
991
935
Total equity
9,416
9,146
Total liabilities and equity
$
17,419
$
16,771
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited; in
millions)
For the nine months ended March
31,
2022
2021
Operating activities:
Net income
$
633
$
404
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
505
504
Operating lease expense
95
96
Equity losses of affiliates
10
9
Cash distributions received from
affiliates
20
14
Impairment charges
15
—
Other, net
(143
)
(132
)
Deferred income taxes and taxes
payable
69
33
Change in operating assets and
liabilities, net of acquisitions:
Receivables and other assets
(62
)
(67
)
Inventories, net
(82
)
(21
)
Accounts payable and other liabilities
(30
)
220
Net cash provided by operating
activities
1,030
1,060
Investing activities:
Capital expenditures
(315
)
(253
)
Acquisitions, net of cash acquired
(1,167
)
(91
)
Investments in equity affiliates and
other
(99
)
(25
)
Proceeds from property, plant and
equipment and other asset dispositions
(2
)
24
Other, net
29
(1
)
Net cash used in investing activities
(1,554
)
(346
)
Financing activities:
Borrowings
1,157
165
Repayment of borrowings
(662
)
(326
)
Repurchase of shares
(125
)
—
Dividends paid
(114
)
(104
)
Other, net
(82
)
(64
)
Net cash provided by (used in) financing
activities
174
(329
)
Net change in cash and cash
equivalents
(350
)
385
Cash and cash equivalents, beginning of
period
2,236
1,517
Exchange movement on opening cash
balance
(21
)
72
Cash and cash equivalents, end of
period
$
1,865
$
1,974
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 nine months ended March
31, 2022 and 2021:
For the three months ended March
31,
2022
2021
Change
% Change
(in millions)
Net income
$
104
$
96
$
8
8
%
Add:
Income tax expense
29
43
(14
)
(33
)%
Other, net
(13
)
(61
)
48
79
%
Interest expense, net
25
12
13
**
Equity losses of affiliates
4
5
(1
)
(20
)%
Impairment and restructuring charges
37
30
7
23
%
Depreciation and amortization
172
173
(1
)
(1
)%
Total Segment EBITDA
$
358
$
298
$
60
20
%
** - Not meaningful
For the nine months ended March
31,
2022
2021
Change
% Change
(in millions)
Net income
$
633
$
404
$
229
57
%
Add:
Income tax expense
199
153
46
30
%
Other, net
(143
)
(132
)
(11
)
(8
)%
Interest expense, net
68
32
36
**
Equity losses of affiliates
10
9
1
11
%
Impairment and restructuring charges
82
93
(11
)
(12
)%
Depreciation and amortization
505
504
1
—
%
Total Segment EBITDA
$
1,354
$
1,063
$
291
27
%
** - 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 nine months ended March 31, 2022
and 2021:
Revenues
Total Segment EBITDA
For the three months ended March
31,
For the three months ended March
31,
2022
2021
Difference
2022
2021
Difference
(in millions)
(in millions)
As reported
$
2,492
$
2,335
$
157
$
358
$
298
$
60
Impact of acquisitions
(107
)
—
(107
)
1
—
1
Impact of divestitures
—
(6
)
6
—
2
(2
)
Impact of foreign currency
fluctuations
85
—
85
16
—
16
Net impact of U.K. Newspaper Matters
—
—
—
3
3
—
As adjusted
$
2,470
$
2,329
$
141
$
378
$
303
$
75
Revenues
Total Segment EBITDA
For the nine months ended March
31,
For the nine months ended March
31,
2022
2021
Difference
2022
2021
Difference
(in millions)
(in millions)
As reported
$
7,711
$
6,866
$
845
$
1,354
$
1,063
$
291
Impact of acquisitions
(354
)
—
(354
)
(11
)
6
(17
)
Impact of divestitures
(1
)
(23
)
22
5
2
3
Impact of foreign currency
fluctuations
22
—
22
4
—
4
Net impact of U.K. Newspaper Matters
—
—
—
9
8
1
As adjusted
$
7,378
$
6,843
$
535
$
1,361
$
1,079
$
282
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 nine months ended March 31, 2022 and 2021 are as
follows:
Fiscal Year 2022
Q1
Q2
Q3
U.S. Dollar per Australian Dollar
$0.74
$0.73
$0.72
U.S. Dollar per British Pound Sterling
$1.38
$1.35
$1.34
Fiscal Year 2021
Q1
Q2
Q3
U.S. Dollar per Australian Dollar
$0.71
$0.73
$0.77
U.S. Dollar per British Pound Sterling
$1.29
$1.32
$1.38
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three and nine months ended March 31, 2022 and 2021 are as
follows:
For the three months ended March
31,
2022
2021
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
394
$
345
14
%
Subscription Video Services
529
523
1
%
Dow Jones
460
421
9
%
Book Publishing
484
490
(1
)%
News Media
603
550
10
%
Other
—
—
—
%
Adjusted Total Revenues
$
2,470
$
2,329
6
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
141
$
119
18
%
Subscription Video Services
84
91
(8
)%
Dow Jones
95
82
16
%
Book Publishing
65
80
(19
)%
News Media
42
8
**
Other
(49
)
(77
)
36
%
Adjusted Total Segment EBITDA
$
378
$
303
25
%
** - Not meaningful
For the nine months ended March
31,
2022
2021
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
1,162
$
958
21
%
Subscription Video Services
1,521
1,530
(1
)%
Dow Jones
1,373
1,253
10
%
Book Publishing
1,538
1,492
3
%
News Media
1,784
1,610
11
%
Other
—
—
—
%
Adjusted Total Revenues
$
7,378
$
6,843
8
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
473
$
385
23
%
Subscription Video Services
281
293
(4
)%
Dow Jones
325
263
24
%
Book Publishing
240
255
(6
)%
News Media
181
52
**
Other
(139
)
(169
)
18
%
Adjusted Total Segment EBITDA
$
1,361
$
1,079
26
%
** - 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 nine months ended March 31, 2022 and
2021:
For the three months ended March
31, 2022
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
$
416
$
(38
)
$
—
$
16
$
—
$
394
Subscription Video Services
494
—
—
35
—
529
Dow Jones
487
(30
)
—
3
—
460
Book Publishing
515
(37
)
—
6
—
484
News Media
580
(2
)
—
25
—
603
Other
—
—
—
—
—
—
Total Revenues
$
2,492
$
(107
)
$
—
$
85
$
—
$
2,470
Segment EBITDA:
Digital Real Estate Services
$
137
$
(3
)
$
—
$
7
$
—
$
141
Subscription Video Services
79
—
—
5
—
84
Dow Jones
88
7
—
—
—
95
Book Publishing
67
(3
)
—
1
—
65
News Media
39
—
—
3
—
42
Other
(52
)
—
—
—
3
(49
)
Total Segment EBITDA
$
358
$
1
$
—
$
16
$
3
$
378
For the three months ended March
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
$
351
$
—
$
(6
)
$
—
$
—
$
345
Subscription Video Services
523
—
—
—
—
523
Dow Jones
421
—
—
—
—
421
Book Publishing
490
—
—
—
—
490
News Media
550
—
—
—
—
550
Other
—
—
—
—
—
—
Total Revenues
$
2,335
$
—
$
(6
)
$
—
$
—
$
2,329
Segment EBITDA:
Digital Real Estate Services
$
117
$
—
$
2
$
—
$
—
$
119
Subscription Video Services
91
—
—
—
—
91
Dow Jones
82
—
—
—
—
82
Book Publishing
80
—
—
—
—
80
News Media
8
—
—
—
—
8
Other
(80
)
—
—
—
3
(77
)
Total Segment EBITDA
$
298
$
—
$
2
$
—
$
3
$
303
For the nine months ended March
31, 2022
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
$
1,298
$
(144
)
$
(1
)
$
9
$
—
$
1,162
Subscription Video Services
1,502
—
—
19
—
1,521
Dow Jones
1,439
(68
)
—
2
—
1,373
Book Publishing
1,678
(138
)
—
(2
)
—
1,538
News Media
1,794
(4
)
—
(6
)
—
1,784
Other
—
—
—
—
—
—
Total Revenues
$
7,711
$
(354
)
$
(1
)
$
22
$
—
$
7,378
Segment EBITDA:
Digital Real Estate Services
$
453
$
11
$
5
$
4
$
—
$
473
Subscription Video Services
279
—
—
2
—
281
Dow Jones
327
(3
)
—
1
—
325
Book Publishing
259
(19
)
—
—
—
240
News Media
184
—
—
(3
)
—
181
Other
(148
)
—
—
—
9
(139
)
Total Segment EBITDA
$
1,354
$
(11
)
$
5
$
4
$
9
$
1,361
For the nine months ended March
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
$
980
$
—
$
(22
)
$
—
$
—
$
958
Subscription Video Services
1,530
—
—
—
—
1,530
Dow Jones
1,253
—
—
—
—
1,253
Book Publishing
1,492
—
—
—
—
1,492
News Media
1,610
—
—
—
—
1,610
Other
1
—
(1
)
—
—
—
Total Revenues
$
6,866
$
—
$
(23
)
$
—
$
—
$
6,843
Segment EBITDA:
Digital Real Estate Services
$
378
$
6
$
1
$
—
$
—
$
385
Subscription Video Services
293
—
—
—
—
293
Dow Jones
263
—
—
—
—
263
Book Publishing
255
—
—
—
—
255
News Media
52
—
—
—
—
52
Other
(178
)
—
1
—
8
(169
)
Total Segment EBITDA
$
1,063
$
6
$
2
$
—
$
8
$
1,079
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 nine months ended March 31, 2022
and 2021:
For the three months ended March
31, 2022
For the three months ended March
31, 2021
(in millions, except per share data)
Net income attributable to
stockholders
EPS
Net income attributable to
stockholders
EPS
Net income
$
104
$
96
Less: Net income attributable to
noncontrolling interests
(22
)
(17
)
Net income attributable to News
Corporation stockholders
$
82
$
0.14
$
79
$
0.13
U.K. Newspaper Matters
3
0.01
3
—
Impairment and restructuring
charges(a)
37
0.05
30
0.05
Other, net
(13
)
(0.02
)
(61
)
(0.10
)
Tax impact on items above
(17
)
(0.03
)
4
0.01
Impact of noncontrolling interest on items
above
4
0.01
—
—
As adjusted
$
96
$
0.16
$
55
$
0.09
(a)
During the three months ended March 31,
2022, the Company recognized a non-cash impairment charge of $15
million related to the write-down of fixed assets associated with
the shutdown and anticipated sale of certain U.S. printing
facilities at the Dow Jones segment.
For the nine months ended March
31, 2022
For the nine months ended March
31, 2021
(in millions, except per share data)
Net income attributable to
stockholders
EPS
Net income attributable to
stockholders
EPS
Net income
$
633
$
404
Less: Net income attributable to
noncontrolling interests
(120
)
(60
)
Net income attributable to News
Corporation stockholders
$
513
$
0.86
$
344
$
0.58
U.K. Newspaper Matters
9
0.02
8
0.01
Impairment and restructuring
charges(a)
82
0.14
93
0.15
Equity losses of affiliates(b)
3
0.01
—
—
Other, net
(143
)
(0.24
)
(132
)
(0.22
)
Tax impact on items above
(15
)
(0.03
)
(8
)
(0.01
)
Impact of noncontrolling interest on items
above
45
0.07
(2
)
—
As adjusted
$
494
$
0.83
$
303
$
0.51
(a)
During the nine months ended March 31,
2022, the Company recognized a non-cash impairment charge of $15
million related to the write-down of fixed assets associated with
the shutdown and anticipated sale of certain U.S. printing
facilities at the Dow Jones segment.
(b)
During the nine months ended March 31,
2022, 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/20220505005963/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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