FISCAL 2021 THIRD QUARTER KEY FINANCIAL
HIGHLIGHTS
- Revenues were $2.34 billion, a 3% increase compared to $2.27
billion in the prior year, driven by the continued strong momentum
across our key growth pillars
- Net income of $96 million compared to a net loss of $(1)
billion in the prior year, which included non-cash impairment
charges of $1.1 billion
- Total Segment EBITDA was $298 million compared to $242
million in the prior year
- Reported EPS were $0.13 compared to $(1.24) in the prior
year – Adjusted EPS were $0.09 compared to $0.03 in the prior
year
- Move, operator of realtor.com®, reported 37% revenue growth,
with traffic reaching a record 108 million unique users in March,
and was again a key driver of Segment EBITDA growth at the Digital
Real Estate Services segment
- Dow Jones Segment EBITDA increased 61%, with another strong
increase in digital advertising revenues, record digital
subscriptions, and continued robust growth at Risk &
Compliance
- Book Publishing Segment EBITDA increased 45%, benefiting
from the success of numerous backlist titles, including the
Bridgerton series
- Reached multi-year partnership agreements with Google and
Facebook for news content
- Recently completed the acquisition of Investor’s Business
Daily and announced the planned acquisitions of Houghton Mifflin
Harcourt’s Books and Media segment and Mortgage Choice
News Corporation (“News Corp” or the “Company”) (Nasdaq: NWS,
NWSA; ASX: NWS, NWSLV) today reported financial results for the
three months ended March 31, 2021. Commenting on the results, Chief
Executive Robert Thomson said:
“The financial year is on a trajectory to be the most profitable
since our reincarnation in 2013. This highlights the transformed
character of the Company, with improved revenue performance and a
23 percent increase in profitability in the third quarter.
The results vindicate the strategy of simplifying the asset mix,
vigorously pursuing digitization, slimming the cost base, and
investing in three growth areas — Digital Real Estate Services, Dow
Jones and Book Publishing — which collectively generated 55 percent
Segment EBITDA growth in the third quarter.
Move, operator of realtor.com®, flourished, with 37 percent
revenue growth, and more than 100 million unique users in March, a
60 percent increase on a year earlier. At Dow Jones, digital
revenues reached 74 percent of the total, with digital advertising
growing by a robust 30 percent and The Wall Street Journal
subscriptions setting record after record. And at Book Publishing,
revenues rose 19 percent, thanks to a valuable backlist and faster
digital growth.
Foxtel’s resurgence during the pandemic reflected the enduring
value of its broadcast offering, the rapid growth of streaming
services, and a relentless focus on costs, all of which contributed
to a 34 percent surge in Segment EBITDA.
We have reached historic deals with Google and Facebook, and
continue our international campaign to reset the terms of trade for
premium journalism. The cooperation in recent weeks with the Google
team has certainly been productive and we look forward to further
engagement with Facebook. These landmark agreements have
meaningfully and materially changed the media landscape.
Finally, we successfully completed our inaugural bond offering,
which was met with extremely high demand, and was a resounding vote
of confidence in the Company’s strategy and its prospects.”
THIRD QUARTER RESULTS
The Company reported fiscal 2021 third quarter total revenues of
$2.34 billion, 3% higher compared to $2.27 billion in the prior
year period. The increase was driven by the $176 million, or 8%,
positive impact from foreign currency fluctuations and continued
growth in the Digital Real Estate Services, Book Publishing and Dow
Jones segments. The growth was partially offset by lower revenues
at the News Media segment, primarily driven by a $199 million, or
9%, negative impact from the divestiture of News America Marketing,
weakness in the print advertising market and a $28 million, or 1%,
negative impact from the closure or transition to digital of
certain regional and community newspapers in Australia. Adjusted
Revenues (which exclude the foreign currency impact, acquisitions
and divestitures as defined in Note 2) increased 4%.
Net income for the quarter was $96 million compared to a net
loss of $(1) billion in the prior year, reflecting the absence of
$1.1 billion of non-cash impairment charges in the prior year,
higher Total Segment EBITDA, as discussed below, and higher Other
net, partially offset by higher tax expense.
The Company reported third quarter Total Segment EBITDA of $298
million, a 23% increase compared to $242 million in the prior year.
The increase was primarily due to higher revenues, as discussed
above, and a $32 million, or 13%, positive impact from foreign
currency fluctuations. The growth was partially offset by higher
costs in the Other segment due to higher employee costs, primarily
related to stock price performance, as well as investment spending
related to the global shared services initiative. The results also
reflect a $24 million negative impact from the divestiture of News
America Marketing in the prior year. Adjusted Total Segment EBITDA
(as defined in Note 2) increased 24%.
Net income (loss) per share attributable to News Corporation
stockholders was $0.13 as compared to $(1.24) in the prior
year.
Adjusted EPS (as defined in Note 3) were $0.09 compared to $0.03
in the prior year.
SEGMENT REVIEW
For the three months ended March
31,
For the nine months ended March
31,
2021
2020
% Change
2021
2020
% Change
(in millions)
Better/ (Worse)
(in millions)
Better/ (Worse)
Revenues:
Digital Real Estate Services
$
351
$
261
34
%
$
980
$
827
19
%
Subscription Video Services
523
462
13
%
1,530
1,477
4
%
Dow Jones(a)
421
397
6
%
1,253
1,209
4
%
Book Publishing
490
412
19
%
1,492
1,259
19
%
News Media(a)
550
733
(25
)
%
1,610
2,311
(30
)
%
Other
—
1
**
1
2
(50
)
%
Total Revenues
$
2,335
$
2,266
3
%
$
6,866
$
7,085
(3
)
%
Segment EBITDA:
Digital Real Estate Services
$
117
$
74
58
%
$
378
$
274
38
%
Subscription Video Services
91
68
34
%
293
219
34
%
Dow Jones(a)
82
51
61
%
263
176
49
%
Book Publishing
80
55
45
%
255
167
53
%
News Media(a)
8
24
(67
)
%
52
97
(46
)
%
Other
(80
)
(30
)
**
(178
)
(115
)
(55
)
%
Total Segment EBITDA
$
298
$
242
23
%
$
1,063
$
818
30
%
** - Not meaningful
(a)
In the fourth quarter of fiscal
2020, the Company revised the composition of its reportable
segments to present the Dow Jones business as a separate segment.
Previously, the financial information for this segment was
aggregated with the businesses within the News Media segment and,
together, formed the News and Information Services segment. All
prior periods have been revised to reflect the new segment
presentation.
Digital Real Estate Services
Revenues in the quarter increased $90 million, or 34%, compared
to the prior year, driven by strong performance at Move and a $28
million, or 10%, positive impact from foreign currency
fluctuations. Segment EBITDA in the quarter increased $43 million,
or 58%, compared to the prior year, primarily due to $36 million of
higher contribution from Move resulting from higher revenues, as
well as a positive impact of $14 million, or 19%, from foreign
currency fluctuations. The growth was partially offset by higher
employee costs at both Move and REA Group and the increase in
expenses due to the acquisition of Elara. Adjusted Revenues and
Adjusted Segment EBITDA (as defined in Note 2) increased 22% and
52%, respectively.
Move’s revenues in the quarter increased $44 million, or 37%, to
$162 million, primarily as a result of higher real estate revenues.
Real estate revenues, which represented 84% of total Move revenues,
increased $41 million, or 43%, due to very strong growth in the
traditional lead generation product and the referral model, both
benefiting from an over 40% increase in average monthly lead
volume. The traditional lead generation product saw a strong
increase in demand from agents, driving improvements in
sell-through and yield. The referral model also benefited from
higher average home values and transaction volume and generated
approximately 25% of total Move revenues. Based on Move’s internal
data, average monthly unique users of realtor.com®’s web and mobile
sites for the fiscal third quarter grew 44% year-over-year to 98
million, with a record 108 million unique users in March, an
increase of 60% compared to the prior year.
In the quarter, revenues at REA Group increased $46 million, or
32%, to $189 million, primarily driven by a $28 million, or 19%,
positive impact from foreign currency fluctuations, higher
Australian residential depth revenues due to strong national
listings and the acquisition of Elara. Australian national
residential listing volumes in the quarter increased 8% compared to
the prior year, with listings in Melbourne and Sydney up 13% and
5%, respectively.
Subscription Video Services
Revenues in the quarter increased $61 million, or 13%, compared
with the prior year, reflecting a $79 million, or 17%, positive
impact from foreign currency fluctuations and higher revenues from
Kayo and Binge. The revenue increase was partially offset by the
impact from fewer residential broadcast subscribers and a $7
million negative impact from lower commercial subscription revenues
primarily resulting from lower occupancy at hotels due to ongoing
national travel restrictions related to COVID-19. Adjusted Revenues
decreased 4% compared to the prior year.
As of March 31, 2021, Foxtel’s total closing paid subscribers
were 3.541 million, a 21% increase compared to the prior year,
primarily due to the launch of Binge and the growth in Kayo
subscribers, partially offset by lower residential and commercial
broadcast subscribers. 1.946 million of the total closing
subscribers were residential and commercial broadcast subscribers,
and the remaining 1.595 million consisted of Kayo, Binge and Foxtel
Now subscribers. As of March 31, 2021, there were 914,000 Kayo
subscribers (851,000 paying), compared to 444,000 subscribers
(408,000 paying) in the prior year. Binge, which launched in May
2020, had 679,000 subscribers (516,000 paying) as of March 31,
2021. As of March 31, 2021, there were 238,000 Foxtel Now
subscribers (228,000 paying), compared to 338,000 subscribers
(317,000 paying) in the prior year.
Broadcast subscriber churn in the quarter increased to 20.1%
from 17.5% in the prior year, due to fewer promotions and the
roll-off of lower value subscribers. Broadcast ARPU for the quarter
increased 2% to A$80 (US$62).
Segment EBITDA in the quarter increased $23 million, or 34%,
compared with the prior year. The improvement was primarily driven
by $22 million of lower sports programming rights and production
costs, which reflects the savings from renegotiated sports rights.
The Segment EBITDA improvement was also due to a $14 million
positive impact from foreign currency fluctuations as well as lower
transmission, marketing and employee costs, partially offset by the
increased investment in OTT products. Adjusted Segment EBITDA
increased 13%.
Dow Jones
Revenues in the quarter increased $24 million, or 6%, compared
to the prior year, primarily due to growth in circulation and
subscription and digital advertising revenues, partially offset by
lower print advertising revenues. Digital revenues at Dow Jones in
the quarter represented 74% of total revenues compared to 68% in
the prior year. Adjusted Revenues increased 5% compared to the
prior year.
Circulation and subscription revenues increased $26 million, or
9%, including a $4 million, or 2%, positive impact from foreign
currency fluctuations. Circulation revenue grew 8%, reflecting the
continued strong growth in digital-only subscriptions, partially
offset by lower single-copy and amenity sales related to COVID-19.
Professional information business revenues grew 9%, driven by 24%
growth in Risk & Compliance products. Digital circulation
revenues accounted for 64% of circulation revenues for the quarter,
compared to 58% in the prior year.
During the third quarter, Dow Jones saw the highest
year-over-year increase in total subscriptions and digital-only
subscriptions for both The Wall Street Journal and total Dow Jones’
consumer products in its history. Total subscriptions to Dow Jones’
consumer products reached a record 4.27 million average
subscriptions for the quarter, a 19% increase compared to the prior
year, of which digital-only subscriptions grew 29%. Total
subscriptions to The Wall Street Journal grew 21% compared to the
prior year, to a record 3.38 million average subscriptions in the
quarter. Digital-only subscriptions to The Wall Street Journal grew
29% to 2.63 million average subscriptions in the quarter, and
represented 78% of total Wall Street Journal subscriptions.
Advertising revenues increased $1 million, or 1%, primarily due
to 30% growth in digital advertising revenues, the fastest
year-over-year growth in a decade, driven by continued strength in
direct display sales and improvement across most categories, most
notably financial services. Digital advertising accounted for 61%
of total advertising revenues in the quarter, compared to 48% in
the prior year. The growth was partially offset by a 25% decline in
print advertising revenues, driven by continued general market
weakness and lower print volume across The Wall Street Journal and
Barron’s due to COVID-19.
Segment EBITDA for the quarter increased $31 million, or 61%,
primarily due to higher revenues, as discussed above, and lower
costs related to lower print volume and other discretionary cost
savings, partially offset by higher compensation costs. Adjusted
Segment EBITDA increased 59%.
Book Publishing
Revenues in the quarter increased $78 million, or 19%, compared
to the prior year, including a $10 million, or 2%, positive impact
from foreign currency fluctuations. The revenue growth was
primarily due to higher backlist sales, including the series of
Bridgerton titles by Julia Quinn and The Boy, the Mole, the Fox and
the Horse by Charlie Mackesy, as well as the success of new titles
such as Just as I Am by Cicely Tyson. Adjusted Revenues increased
15%. Digital sales increased 38% compared to the prior year, driven
by growth in both e-book and downloadable audiobook sales. Digital
sales represented 26% of Consumer revenues for the quarter. Segment
EBITDA for the quarter increased $25 million, or 45%, compared to
the prior year, primarily due to the higher revenues discussed
above, partially offset by higher costs related to increased sales
volume and higher employee costs. Adjusted Segment EBITDA increased
43%.
News Media
Revenues in the quarter decreased $183 million, or 25%, as
compared to the prior year, including a $55 million, or 7%,
positive impact from foreign currency fluctuations. The decline was
primarily driven by a $199 million, or 27%, impact from the
divestiture of News America Marketing in May 2020. The decline also
reflects weakness in the print advertising market and the $28
million, or 4%, impact from the closure or transition to digital of
certain regional and community newspapers in Australia. Within the
segment, revenues at News Corp Australia and News UK both increased
2%. Adjusted Revenues for the segment decreased 7% compared to the
prior year.
Circulation and subscription revenues increased $32 million, or
13%, compared to the prior year, primarily due to a $26 million, or
10%, positive impact from foreign currency fluctuations, digital
subscriber growth and price increases, partially offset by lower
single-copy sales revenue, primarily at News UK.
Advertising revenues decreased $215 million, or 50%, compared to
the prior year, reflecting a $199 million, or 47%, negative impact
from the divestiture of News America Marketing. The remainder of
the decline was driven by continued weakness in the print
advertising market, exacerbated by COVID-19, and a $23 million, or
5%, negative impact related to the closure or transition to digital
of certain regional and community newspapers in Australia,
partially offset by a $22 million, or 6%, positive impact from
foreign currency fluctuations and growth in digital advertising at
the New York Post.
In the quarter, Segment EBITDA decreased $16 million, or 67%,
compared to the prior year, reflecting a $24 million negative
impact from the divestiture of News America Marketing. The decline
was partially offset by higher cost savings at News UK and News
Corp Australia, as well as an improvement at the New York Post.
Adjusted Segment EBITDA increased by $5 million.
Digital revenues represented 30% of News Media segment revenues
in the quarter, compared to 19% in the prior year, and represented
28% 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’s mastheads
as of March 31, 2021 were 760,000, compared to 613,300 in the prior
year (Source: Internal data)
- The Times and Sunday Times closing digital subscribers as of
March 31, 2021 were 354,000, compared to 345,000 in the prior year
(Source: Internal data)
- The Sun’s digital offering reached 119 million global monthly
unique users in March 2021, compared to 164 million in the prior
year (Source: Google Analytics)
- New York Post’s digital network reached 139 million unique
users in March 2021, compared to 199 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,
2021
2020
(in millions)
Net cash provided by operating
activities
$
1,060
$
462
Less: Capital expenditures
(253
)
(335
)
807
127
Less: REA Group free cash flow
(114
)
(129
)
Plus: Cash dividends received from REA
Group
69
65
Free cash flow available to News
Corporation
$
762
$
63
Net cash provided by operating activities of $1,060 million for
the nine months ended March 31, 2021 was $598 million higher than
$462 million in the prior year, primarily due to higher Total
Segment EBITDA as noted above and lower working capital, partially
offset by higher tax payments.
Free cash flow available to News Corporation in the nine months
ended March 31, 2021 was $762 million compared to $63 million in
the prior year period. The improvement was primarily due to higher
cash provided by operating activities, as mentioned above, and
lower capital expenditures. Foxtel’s capital expenditures for the
nine months ended March 31, 2021 were $103 million, compared to
$171 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
Outlook
In the Other segment, the Company expects costs in the fourth
quarter to increase by approximately $20 million compared to the
prior year, primarily as a result of higher employee costs due to
the absence of bonus reductions related to COVID-19 and stock price
performance, as well as ongoing investment spending as the Company
ramps up the global shared services initiative. Except as discussed
above, the expected trends for the remainder of fiscal 2021 remain
consistent with those discussed in the second quarter.
Subsequent Events
Agreement to acquire HMH Books & Media
In March, the Company entered into an agreement to acquire the
Books & Media segment of Houghton Mifflin Harcourt (“HMH Books
& Media”) for $349 million in cash. HMH Books & Media
publishes renowned and awarded children’s, young adult, fiction,
non-fiction, culinary and reference titles. The acquisition will
add an extensive and successful backlist, a strong frontlist in the
lifestyle and children’s segments and a productions business that
will provide new opportunities to expand HarperCollins’s
intellectual property across multiple formats. HMH Books &
Media will be a subsidiary of HarperCollins and its results will be
included in the Book Publishing segment. The acquisition is subject
to customary closing conditions, including regulatory approvals,
and is expected to close in the fourth quarter of fiscal 2021.
REA Group agreement to acquire Mortgage Choice
In March, REA Group entered into an agreement to acquire
Mortgage Choice Limited (“Mortgage Choice”) for approximately A$244
million in cash (approximately $186.5 million based on exchange
rates as of the date of the announcement), to be funded by an
increase in REA Group’s syndicated debt facilities. Mortgage Choice
is a leading Australian mortgage broking business, and the
acquisition is expected to complement REA Group’s existing
Smartline broker footprint and accelerate REA Group’s financial
services strategy to establish a leading mortgage broking business
with national scale. Mortgage Choice will be a subsidiary of REA
Group and its results will be included in the Digital Real Estate
Services segment. The acquisition is subject to customary closing
conditions, including Mortgage Choice shareholder, court and
regulatory approvals and receipt of an independent expert opinion
that the transaction is in the best interests of Mortgage Choice
shareholders, and is expected to close in the fourth quarter of
fiscal 2021.
Foxtel Debt Amendment
In April, the Foxtel Debt Group amended its 2019 Credit Facility
and 2017 Working Capital Facility to, among other things, extend
the debt maturity from November 2022 to May 2024 and reduce the
applicable margin to between 2.00% to 3.25%, depending on the
Foxtel Debt Group’s net leverage ratio.
Debt Offering
In April, the Company issued $1 billion of Senior Notes due 2029
(the “2021 Senior Notes”). The 2021 Senior Notes will bear interest
at a fixed rate of 3.875% per annum, payable in cash semi-annually
on May 15 and November 15 of each year, commencing November 15,
2021. The notes will mature on May 15, 2029. The Company plans to
use the net proceeds from the offering for general corporate
purposes, which may include acquisitions and working capital.
Acquisition of Investor’s Business Daily
In May, the Company acquired Investor’s Business Daily (“IBD”)
from O’Neil Capital Management for $275 million in cash. IBD is a
digital-first financial news and research business with unique
investor tools, research and analysis products, including the
investors.com website. The acquisition expands Dow Jones’s
offerings with the addition of proprietary data and tools to help
professional and retail investors identify top-performing stocks.
IBD will be operated by Dow Jones, and its results will be included
in the Dow Jones segment.
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 6, 2021. To listen to the call, please visit
http://investors.newscorp.com.
Cautionary Statement Concerning Forward-Looking
Statements
This document contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include, but are not
limited to, statements regarding trends and uncertainties affecting
the Company’s business, results of operations and financial
condition, including expected impacts from the ongoing COVID-19
pandemic and related public health measures, the Company’s strategy
and strategic initiatives, including potential acquisitions,
investments and dispositions, and the outcome of contingencies such
as litigation and investigations. These statements are based on
management’s views and assumptions regarding future events and
business performance as of the time the statements are made. Actual
results may differ materially from these expectations due to the
risks and uncertainties related to COVID-19 and the risks,
uncertainties and other factors described in the Company’s filings
with the Securities and Exchange Commission (many of which may be
amplified by COVID-19). The ultimate impact of the COVID-19
pandemic, including the extent of adverse impacts on the Company’s
business, results of operations, cash flows and financial
condition, will depend on, among other things, the severity,
duration, spread and any reoccurrence of the pandemic, the impact
of governmental actions and business and consumer behavior in
response to the pandemic, the effectiveness of actions taken to
contain or mitigate the outbreak and prevent or limit any
reoccurrence, including the development, availability and public
acceptance of effective treatments and vaccines, the resulting
global economic conditions and how quickly and to what extent
normal economic and operating conditions can resume, all of which
are highly uncertain and cannot be predicted. More detailed
information about this and other factors that could affect future
results is contained in our filings with the Securities and
Exchange Commission. The “forward-looking statements” included in
this document are made only as of the date of this document and we
do not have and do not undertake any obligation to publicly update
any “forward-looking statements” to reflect subsequent events or
circumstances, and we expressly disclaim any such obligation,
except as required by law or regulation.
About News Corporation
News Corp (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) is a global,
diversified media and information services company focused on
creating and distributing authoritative and engaging content and
other products and services. The company comprises businesses
across a range of media, including: digital real estate services,
subscription video services in Australia, news and information
services and book publishing. Headquartered in New York, News Corp
operates primarily in the United States, Australia, and the United
Kingdom, and its content and other products and services are
distributed and consumed worldwide. More information is available
at: www.newscorp.com.
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited; in millions,
except per share amounts)
For the three months ended March
31,
For the nine months ended March
31,
2021
2020
2021
2020
Revenues:
Circulation and subscription
$
1,076
$
966
$
3,108
$
2,951
Advertising
374
576
1,154
1,861
Consumer
472
396
1,436
1,204
Real estate
291
209
807
669
Other
122
119
361
400
Total Revenues
2,335
2,266
6,866
7,085
Operating expenses
(1,186
)
(1,283
)
(3,548
)
(3,972
)
Selling, general and administrative
(851
)
(741
)
(2,255
)
(2,295
)
Depreciation and amortization
(173
)
(160
)
(504
)
(484
)
Impairment and restructuring charges
(30
)
(1,125
)
(93
)
(1,451
)
Equity losses of affiliates
(5
)
(7
)
(9
)
(12
)
Interest expense, net
(12
)
(9
)
(32
)
(13
)
Other, net
61
13
132
19
Income (loss) before income tax (expense)
benefit
139
(1,046
)
557
(1,123
)
Income tax (expense) benefit
(43
)
10
(153
)
(21
)
Net income (loss)
96
(1,036
)
404
(1,144
)
Less: Net (income) loss attributable to
noncontrolling interests
(17
)
306
(60
)
272
Net income (loss) attributable to News
Corporation stockholders
$
79
$
(730
)
$
344
$
(872
)
Weighted average shares outstanding:
Basic
591
588
590
588
Diluted
595
588
593
588
Net income (loss) attributable to News
Corporation stockholders per share:
Basic and diluted
$
0.13
$
(1.24
)
$
0.58
$
(1.48
)
NEWS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in
millions)
As of March 31, 2021
As of June 30, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,974
$
1,517
Receivables, net
1,335
1,203
Inventory, net
246
348
Other current assets
388
393
Total current assets
3,943
3,461
Non-current assets:
Investments
391
297
Property, plant and equipment, net
2,261
2,256
Operating lease right-of-use assets
1,062
1,061
Intangible assets, net
1,915
1,864
Goodwill
4,304
3,951
Deferred income tax assets
302
332
Other non-current assets
1,219
1,039
Total assets
$
15,397
$
14,261
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
336
$
351
Accrued expenses
1,249
1,019
Deferred revenue
449
398
Current borrowings
212
76
Other current liabilities
923
838
Total current liabilities
3,169
2,682
Non-current liabilities:
Borrowings
1,000
1,183
Retirement benefit obligations
251
277
Deferred income tax liabilities
334
258
Operating lease liabilities
1,146
1,146
Other non-current liabilities
368
326
Commitments and contingencies
Equity:
Class A common stock
4
4
Class B common stock
2
2
Additional paid-in capital
12,044
12,148
Accumulated deficit
(2,897
)
(3,241
)
Accumulated other comprehensive loss
(965
)
(1,331
)
Total News Corporation stockholders'
equity
8,188
7,582
Noncontrolling interests
941
807
Total equity
9,129
8,389
Total liabilities and equity
$
15,397
$
14,261
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited; in
millions)
For the nine months ended March
31,
2021
2020
Operating activities:
Net income (loss)
$
404
$
(1,144
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
504
484
Operating lease expense
96
128
Equity losses of affiliates
9
12
Cash distributions received from
affiliates
14
7
Impairment charges
—
1,398
Other, net
(132
)
(19
)
Deferred income taxes and taxes
payable
33
(67
)
Change in operating assets and
liabilities, net of acquisitions:
Receivables and other assets
(67
)
(1,593
)
Inventories, net
(21
)
(47
)
Accounts payable and other liabilities
220
1,303
Net cash provided by operating
activities
1,060
462
Investing activities:
Capital expenditures
(253
)
(335
)
Acquisitions, net of cash acquired
(91
)
(2
)
Investments in equity affiliates and
other
(25
)
4
Proceeds from property, plant and
equipment and other asset dispositions
24
3
Other, net
(1
)
3
Net cash used in investing activities
(346
)
(327
)
Financing activities:
Borrowings
165
925
Repayment of borrowings
(326
)
(1,161
)
Dividends paid
(104
)
(100
)
Other, net
(64
)
(5
)
Net cash used in financing activities
(329
)
(341
)
Net change in cash and cash equivalents,
including cash classified within current assets held for sale
385
(206
)
Less: Net change in cash classified within
current assets held for sale
—
(10
)
Cash and cash equivalents, beginning of
period
1,517
1,643
Exchange movement on opening cash
balance
72
(39
)
Cash and cash equivalents, end of
period
$
1,974
$
1,388
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
(loss) to Total Segment EBITDA for the three and nine months ended
March 31, 2021 and 2020:
For the three months ended March
31,
2021
2020
Change
% Change
(in millions)
Net income (loss)
$
96
$
(1,036
)
$
1,132
**
Add:
Income tax expense (benefit)
43
(10
)
53
**
Other, net
(61
)
(13
)
(48
)
**
Interest expense, net
12
9
3
33
%
Equity losses of affiliates
5
7
(2
)
(29
)
%
Impairment and restructuring charges
30
1,125
(1,095
)
(97
)
%
Depreciation and amortization
173
160
13
8
%
Total Segment EBITDA
$
298
$
242
$
56
23
%
** - Not meaningful
For the nine months ended March
31,
2021
2020
Change
% Change
(in millions)
Net income (loss)
$
404
$
(1,144
)
$
1,548
**
Add:
Income tax expense
153
21
132
**
Other, net
(132
)
(19
)
(113
)
**
Interest expense, net
32
13
19
**
Equity losses of affiliates
9
12
(3
)
(25
)
%
Impairment and restructuring charges
93
1,451
(1,358
)
(94
)
%
Depreciation and amortization
504
484
20
4
%
Total Segment EBITDA
$
1,063
$
818
$
245
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”) 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, 2021
and 2020:
Revenues
Total Segment EBITDA
For the three months ended March
31,
For the three months ended March
31,
2021
2020
Difference
2021
2020
Difference
(in millions)
(in millions)
As reported
$
2,335
$
2,266
$
69
$
298
$
242
$
56
Impact of acquisitions
(16
)
—
(16
)
7
—
7
Impact of divestitures
(3
)
(207
)
204
(2
)
(25
)
23
Impact of foreign currency
fluctuations
(176
)
—
(176
)
(32
)
—
(32
)
Net impact of U.K. Newspaper Matters
—
—
—
3
4
(1
)
As adjusted
$
2,140
$
2,059
$
81
$
274
$
221
$
53
Revenues
Total Segment EBITDA
For the nine months ended March
31,
For the nine months ended March
31,
2021
2020
Difference
2021
2020
Difference
(in millions)
(in millions)
As reported
$
6,866
$
7,085
$
(219
)
$
1,063
$
818
$
245
Impact of acquisitions
(40
)
—
(40
)
9
—
9
Impact of divestitures
(13
)
(640
)
627
(6
)
(49
)
43
Impact of foreign currency
fluctuations
(301
)
—
(301
)
(58
)
—
(58
)
Net impact of U.K. Newspaper Matters
—
—
—
8
5
3
As adjusted
$
6,512
$
6,445
$
67
$
1,016
$
774
$
242
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, 2021 and 2020 are as
follows:
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
Fiscal Year 2020
Q1
Q2
Q3
U.S. Dollar per Australian Dollar
$0.69
$0.68
$0.66
U.S. Dollar per British Pound Sterling
$1.23
$1.29
$1.28
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three and nine months ended March 31, 2021 and 2020 are as
follows:
For the three months ended March
31,
2021
2020
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
312
$
255
22
%
Subscription Video Services
444
462
(4
)
%
Dow Jones
417
397
5
%
Book Publishing
472
412
15
%
News Media
495
533
(7
)
%
Other
—
—
—
%
Adjusted Total Revenues
$
2,140
$
2,059
4
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
108
$
71
52
%
Subscription Video Services
77
68
13
%
Dow Jones
81
51
59
%
Book Publishing
80
56
43
%
News Media
5
—
**
Other
(77
)
(25
)
**
Adjusted Total Segment EBITDA
$
274
$
221
24
%
** - Not meaningful
For the nine months ended March
31,
2021
2020
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
Digital Real Estate Services
$
914
$
808
13
%
Subscription Video Services
1,398
1,477
(5
)
%
Dow Jones
1,245
1,208
3
%
Book Publishing
1,443
1,258
15
%
News Media
1,512
1,694
(11
)
%
Other
—
—
—
%
Adjusted Total Revenues
$
6,512
$
6,445
1
%
Adjusted Segment EBITDA:
Digital Real Estate Services
$
360
$
263
37
%
Subscription Video Services
267
219
22
%
Dow Jones
261
176
48
%
Book Publishing
250
168
49
%
News Media
47
56
(16
)
%
Other
(169
)
(108
)
(56
)
%
Adjusted Total Segment EBITDA
$
1,016
$
774
31
%
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, 2021 and
2020:
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
$
(8
)
$
(3
)
$
(28
)
$
—
$
312
Subscription Video Services
523
—
—
(79
)
—
444
Dow Jones
421
—
—
(4
)
—
417
Book Publishing
490
(8
)
—
(10
)
—
472
News Media
550
—
—
(55
)
—
495
Other
—
—
—
—
—
—
Total Revenues
$
2,335
$
(16
)
$
(3
)
$
(176
)
$
—
$
2,140
Segment EBITDA:
Digital Real Estate Services
$
117
$
7
$
(2
)
$
(14
)
$
—
$
108
Subscription Video Services
91
—
—
(14
)
—
77
Dow Jones
82
—
—
(1
)
—
81
Book Publishing
80
—
—
—
—
80
News Media
8
—
—
(3
)
—
5
Other
(80
)
—
—
—
3
(77
)
Total Segment EBITDA
$
298
$
7
$
(2
)
$
(32
)
$
3
$
274
For the three months ended March
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
$
261
$
—
$
(6
)
$
—
$
—
$
255
Subscription Video Services
462
—
—
—
—
462
Dow Jones
397
—
—
—
—
397
Book Publishing
412
—
—
—
—
412
News Media
733
—
(200
)
—
—
533
Other
1
—
(1
)
—
—
—
Total Revenues
$
2,266
$
—
$
(207
)
$
—
$
—
$
2,059
Segment EBITDA:
Digital Real Estate Services
$
74
$
—
$
(3
)
$
—
$
—
$
71
Subscription Video Services
68
—
—
—
—
68
Dow Jones
51
—
—
—
—
51
Book Publishing
55
—
1
—
—
56
News Media
24
—
(24
)
—
—
—
Other
(30
)
—
1
—
4
(25
)
Total Segment EBITDA
$
242
$
—
$
(25
)
$
—
$
4
$
221
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
$
(8
)
$
(12
)
$
(46
)
$
—
$
914
Subscription Video Services
1,530
—
—
(132
)
—
1,398
Dow Jones
1,253
—
—
(8
)
—
1,245
Book Publishing
1,492
(30
)
—
(19
)
—
1,443
News Media
1,610
(2
)
—
(96
)
—
1,512
Other
1
—
(1
)
—
—
—
Total Revenues
$
6,866
$
(40
)
$
(13
)
$
(301
)
$
—
$
6,512
Segment EBITDA:
Digital Real Estate Services
$
378
$
13
$
(7
)
$
(24
)
$
—
$
360
Subscription Video Services
293
—
—
(26
)
—
267
Dow Jones
263
—
—
(2
)
—
261
Book Publishing
255
(4
)
—
(1
)
—
250
News Media
52
—
—
(5
)
—
47
Other
(178
)
—
1
—
8
(169
)
Total Segment EBITDA
$
1,063
$
9
$
(6
)
$
(58
)
$
8
$
1,016
For the nine months ended March
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
$
827
$
—
$
(19
)
$
—
$
—
$
808
Subscription Video Services
1,477
—
—
—
—
1,477
Dow Jones
1,209
—
(1
)
—
—
1,208
Book Publishing
1,259
—
(1
)
—
—
1,258
News Media
2,311
—
(617
)
—
—
1,694
Other
2
—
(2
)
—
—
—
Total Revenues
$
7,085
$
—
$
(640
)
$
—
$
—
$
6,445
Segment EBITDA:
Digital Real Estate Services
$
274
$
—
$
(11
)
$
—
$
—
$
263
Subscription Video Services
219
—
—
—
—
219
Dow Jones
176
—
—
—
—
176
Book Publishing
167
—
1
—
—
168
News Media
97
—
(41
)
—
—
56
Other
(115
)
—
2
—
5
(108
)
Total Segment EBITDA
$
818
$
—
$
(49
)
$
—
$
5
$
774
NOTE 3 – ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO NEWS
CORPORATION STOCKHOLDERS AND ADJUSTED EPS
The Company uses net income (loss) attributable to News
Corporation stockholders and diluted earnings per share (“EPS”)
excluding expenses related to U.K. Newspaper Matters, impairment
and restructuring charges and “Other, net”, net of tax, recognized
by the Company or its equity method investees, as well as the
settlement of certain pre-Separation tax matters (“adjusted net
income (loss) attributable to News Corporation stockholders” and
“adjusted EPS,” respectively), to evaluate the performance of the
Company’s operations exclusive of certain items that impact the
comparability of results from period to period, as well as certain
non-operational items. The calculation of adjusted net income
(loss) attributable to News Corporation stockholders and adjusted
EPS may not be comparable to similarly titled measures reported by
other companies, since companies and investors may differ as to
what type of events warrant adjustment. Adjusted net income (loss)
attributable to News Corporation stockholders and adjusted EPS are
not measures of performance under generally accepted accounting
principles and should not be construed as substitutes for
consolidated net income (loss) attributable to News Corporation
stockholders and net income (loss) per share as determined under
GAAP as a measure of performance. However, management uses these
measures in comparing the Company’s historical performance and
believes that they provide meaningful and comparable information to
investors to assist in their analysis of our performance relative
to prior periods and our competitors.
The following tables reconcile reported net income (loss)
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, 2021 and 2020:
For the three months ended March
31, 2021
For the three months ended March
31, 2020
(in millions, except per share data)
Net income attributable to
stockholders
EPS
Net (loss) income attributable to
stockholders
EPS
Net income (loss)
$
96
$
(1,036
)
Less: Net (income) loss attributable to
noncontrolling interests
(17
)
306
Net income (loss) attributable to News
Corporation stockholders
$
79
$
0.13
$
(730
)
$
(1.24
)
U.K. Newspaper Matters
3
—
4
0.01
Impairment and restructuring
charges(a)
30
0.05
1,125
1.90
Other, net
(61
)
(0.10
)
(13
)
(0.02
)
Tax impact on items above
4
0.01
(52
)
(0.09
)
Impact of noncontrolling interest on items
above
—
—
(319
)
(0.53
)
As adjusted
$
55
$
0.09
$
15
$
0.03
(a)
During the three months ended
March 31, 2020, the Company recognized $1.1 billion of non-cash
impairment charges, primarily at Foxtel and News America
Marketing.
For the nine months ended March
31, 2021
For the nine months ended March
31, 2020
(in millions, except per share data)
Net income attributable to
stockholders
EPS
Net (loss) income attributable to
stockholders
EPS
Net income (loss)
$
404
$
(1,144
)
Less: Net (income) loss attributable to
noncontrolling interests
(60
)
272
Net income (loss) attributable to News
Corporation stockholders
$
344
$
0.58
$
(872
)
$
(1.48
)
U.K. Newspaper Matters
8
0.01
5
0.01
Impairment and restructuring
charges(a)
93
0.15
1,451
2.46
Other, net
(132
)
(0.22
)
(19
)
(0.03
)
Tax impact on items above
(8
)
(0.01
)
(98
)
(0.17
)
Impact of noncontrolling interest on items
above
(2
)
—
(321
)
(0.54
)
As adjusted
$
303
$
0.51
$
146
$
0.25
(a)
During the nine months ended
March 31, 2020, the Company recognized $1.4 billion of non-cash
impairment charges, primarily at Foxtel and News America
Marketing.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506006202/en/
Investor Relations Michael Florin
212-416-3363 mflorin@newscorp.com
Leslie Kim 212-416-4529 lkim@newscorp.com
Corporate Communications Jim
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