News Corp (NWSA) Q3 Earnings & Revenues Beat Estimates

Rupert Murdoch-controlled, News CorporationNWSA reported second straight quarter of positive earnings surprise, when it posted third-quarter fiscal 2017 results, wherein the top line also came ahead of our expectation, after missing the same in the preceding two quarters. The quarter marked robust performance of digital real-estate and book publishing units. News and Information Services segment also contributed to growth. The company has been concentrating on cost cutting and augmenting digital subscriber base to offset sluggish print advertising demand.

News Corporation registered adjusted earnings of 7 cents a share that outpaced the Zacks Consensus Estimate of 4 cents and surged 75% year over year. Including one-time items, the publisher of The Wall Street Journal reported net loss from continuing operations of 1 cent a share compared with a loss of 26 cents posted in the year-ago period.

News Corporation, which split from Twenty-First Century Fox, Inc. FOXA , stated that its total revenue for the reported quarter was $1,978 million, up 5% from the year-ago quarter and above the Zacks Consensus Estimate of $1,866 million. The company's adjusted revenue (excluding the impact of acquisitions, foreign currency fluctuations and divestitures) came in at $1,925 million, reflecting an increase of 3% from the year-ago quarter.

Total advertising revenue improved 5% to $705 million, while circulation and subscription revenue remained almost flat at $618 million. Consumer revenue increased 5% to $359 million, while revenue from real estate advanced 16% to $168 million. Meanwhile, Other revenue gained 9% to $128 million.

News Corporation, which offers e-books for devices sold by Inc. AMZN and Apple Inc. AAPL , is in a transitional phase, looking to diversify revenue streams, along with expanding digital properties through product launches and accretive acquisitions. These have helped the stock to gain 14.4% so far in the year compared with the Zacks categorized Movie/TV Production/Distribution industry's advance of only 2.5%.

Segmental Performance

Revenue from the News and Information Services segment rose 3% year over year to $1,263 million in the reported quarter. Adjusted revenue inched up 1% from the prior-year period. Advertising revenue climbed 4% primarily benefiting from increased in-store product revenue at News America Marketing and from the buyouts of Wireless Group and Australian Regional Media, gaining $21 million and $20 million, respectively. These were partly offset by sluggishness in the print advertising market.

Circulation and subscription revenue dipped 1%. However, excluding the impact of foreign currency fluctuations, it rose 3% on account of increase in subscription pricing and selected rise in cover prices, partly neutralized by fall in print volume. Digital revenue accounted for 24% of segment revenue in the quarter under review compared with 23% in the year-ago period. Adjusted segment EBITDA soared 32% during the quarter to $124 million.

The Book Publishing segment reported revenues of $374 million, up 4% from the prior-year period owing to the success of Hidden Figures and Hillbilly Elegy , and the release of Carve the Mark , along with sustained expansion of HarperCollins' footprint. Digital sales, which constituted 22% of consumer revenues, increased 7% in the quarter. Adjusted revenue for the segment rose 4%, while adjusted EBITDA remained flat at $36 million.

Revenues at the Digital Real Estate Services segment advanced 13% year over year to $219 million on the back of sustained growth witnessed across REA Group Limited (up 10%) and Move (up 15%). However, the growth was partly offset by the divestiture of REA Group's European business and the sale of Move's TigerLead product. Adjusted revenue grew 15% in the quarter under review, while adjusted EBITDA increased 68% to $74 million.

The Cable Network Programming segment's revenues came in at $122 million, up 14% from the year-ago quarter primarily due to the buyout of Sky News and favorable foreign currency fluctuations. Adjusted revenue inched up 1%, while adjusted EBITDA rose 3% to $35 million.

Other Financial Aspects

News Corporation ended the quarter with cash and cash equivalents of $1,850 million, borrowings of $273 million and shareholders' equity of 11,139 million, excluding non-controlling interest of $278 million.

Capital expenditures of $168 million were incurred during the nine month period of fiscal 2017, while free cash flow available to the company was negative $19 million.

News Corporation carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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