News Corp

NWS Details

Subdued results due to lower print advertising revenues: During FY17, News Corporation (NASDAQ: NWS, ASX: NWS) reported total revenues of $8.14 billion, a 2% decline as compared to the prior year revenues of $8.29 billion. The decline reflects lower print advertising revenues at the News and Information Services segment, a $147 million negative impact from foreign currency fluctuations and the absence of $112 million from the additional week in the prior year, partially offset by strong growth in the Digital Real Estate Services segment and the acquisitions of Wireless Group plc (Wireless Group) and Australian Regional Media (ARM).


Segment review; (Source:  Company reports)

However, the Company reported full year Total Segment EBITDA of $885 million, a 29% increase as compared to $684 million in the prior year. Total Segment EBITDA in the prior year included a one-time charge of $280 million for the settlement of litigation and related claims at News America Marketing (the “NAM Group settlement charge”) and a one-time gain of $122 million for the settlement of the Zillow litigation. Excluding these items, full year Total Segment EBITDA for fiscal 2016 would have been $842 million. Adjusted Total Segment EBITDA increased 5% compared to the prior year, as strong growth at the Digital Real Estate Services segment and improvement in the Book Publishing segment were partially offset by the declines at the News and Information Services segment. Loss from continuing operations stood at $643 million for fiscal 2017 as compared to profit of $235 million in the prior year. The decline was driven by pre-tax non-cash impairment charges of approximately $785 million, primarily related to the write-down of fixed assets at the U.K. and Australian newspapers. The decline was also due to lower equity earnings of affiliates, primarily from a $227 million pre-tax non-cash write-down of the Company’s investment in Foxtel, and higher tax expense, due in large part to the release of U.S. tax asset valuation allowances associated with the divestiture of Amplify in the prior year. However, these charges were partially offset by a gain of $107 million ($91 million, net of tax) from the sale of REA Group’s European businesses and higher Total Segment EBITDA. Given the challenging business environment,we maintain an “Expensive” recommendation at the current price of $17.40


NWS daily chart; (Source: Thomson Reuters)

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