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News Corp Q2 revenues down by four per cent

MUMBAI: US media conglomerate News Corp has reported financial results for the three months ended 31 December 2013.

The company reported fiscal 2014 second quarter total revenues of $2.24 billion, a four-per cent decrease compared to the prior year second quarter revenues of $2.32 billion. The majority of the revenue decline reflects lower advertising revenue at the news and information services segment, foreign exchange fluctuations and the sale of the Dow Jones Local Media Group (LMG), partially offset by the inclusion of Fox Sports Australia, which News Corp began consolidating following the Consolidated Media Holdings (CMH) acquisition in November 2012, and strength in the digital real estate services and book publishing segments. Excluding the impact of acquisitions, divestitures and foreign exchange fluctuations, revenues were relatively flat with the prior year.

News Corp CEO Thomson said, “The earnings report demonstrates a measure of progress as we navigate a challenging advertising market. We are continuing to be disciplined on costs while making opportunistic investments that will extend our revenue reach. The digital transformation is certainly underway, as the acquisition of Storyful and the robust growth in digital sales at HarperCollins attest.  Digital subscriptions and website traffic are on the rise at most of our sites, and revenue at REA, the online real estate company, continues to expand encouragingly.”

The company reported second quarter total segment EBITDA of $327 million, a nine-per cent increase compared to previous year’s $300 million. This improvement was mainly due to the consolidation of Fox Sports Australia, stronger performances in the digital real estate and book publishing segments, and lower costs for the claims and investigations related to The News of the World (the ‘UK Newspaper Matters’), partially offset by higher losses at Amplify, declines at the news and information services segment and foreign exchange fluctuations. Excluding all costs related to the UK Newspaper Matters in both years and the impact of acquisitions, divestitures and foreign exchange fluctuations, total segment EBITDA declined one per cent compared to the prior year.

Net income available to News Corp stockholders was $150 million compared to $1,399 million in the preceding year, which included a non-taxable gain of approximately $1.3 billion related to the acquisition of CMH in November 2012.  Adjusted net income available to News Corp stockholders, which excludes costs related to the UK Newspaper Matters, impairment and restructuring charges and ‘other’, was $179 million compared to $178 million in the prior year. Impairment and restructuring charges were $36 million and $62 million in the three months ended 31 December 2013 and 2012 respectively.

Diluted net income per share available to the company’s stockholders was $0.26 compared to $2.42 in the prior year. Adjusted EPS were flat at $0.31 compared to the prior year.

Free cash flow available to News Corp improved by $393 million in the six months ended 31 December 2013 to $217 million, from ($176) million in the previous year.

Cable network programming: In the second quarter of fiscal 2014, revenues were $110 million and segment EBITDA was $53 million. The increases relative to the prior year primarily reflect the consolidation of Fox Sports Australia beginning in November 2012.

On a stand-alone basis, revenues declined three per cent versus the preceding year’s revenues of $113 million, as advertising market share gains, an increase in digital platform subscribers and higher affiliate pricing were more than offset by adverse foreign exchange fluctuations. Segment EBITDA increased 20 per cent on a stand-alone basis, compared to the prior year segment EBITDA of $44 million, primarily driven by lower programming costs, which were impacted by the absence of domestic cricket rights compared to the prior year. Excluding the impact of foreign exchange fluctuations of $13 million and $6 million on revenues and segment EBITDA respectively, revenues increased 9 per cent from last year and segment EBITDA increased 34 per cent.

For the quarter ended 31 December 2012, on a stand-alone basis, Fox Sports Australia had operating income of $42 million and depreciation of $2 million.