NEWS CORP CLASS B 2025 Q2
Earnings Overview & AI Insights

Earnings Performance

Summary of Financial Performance:

News Corp reported strong financial results for Q2 FY 2025, with revenue from continuing operations rising 5% year-over-year to $2.24 billion and profitability increasing 20% to $478 million. Net income surged by 58% to $306 million, while EPS grew to $0.40 from $0.28 in the prior year. Margins improved significantly, rising from 18.7% to 21.4%. The core growth pillars—Digital Real Estate, Dow Jones, and Book Publishing—collectively grew revenue by 7% and segment EBITDA by 16%. Digital Real Estate revenue rose 13%, while Dow Jones revenue increased 3%, and Book Publishing grew 8%. News Media segment EBITDA surged 30% despite a modest 2% decline in revenue.

Company Outlook & Strategy:

News Corp remains focused on its three growth pillars and digital evolution. The company expects improved year-over-year growth in the second half of FY 2025, particularly in Dow Jones and Digital Real Estate segments, driven by pricing optimization, new products, and cost efficiencies. The sale of Foxtel to DAZN for AUD 3.4 billion is expected to strengthen the balance sheet, reduce capital intensity, and improve shareholder returns. Management anticipates challenges in advertising within News Media, modest reinvestment in Realtor.com, and potential currency headwinds in the second half.

Key Industry Trends:

• AI Integration: News Corp continues to leverage partnerships with OpenAI while emphasizing the importance of intellectual property in generative AI. The company remains vigilant against misuse of its content by other AI players.
• Real Estate Market: Despite high mortgage rates in the U.S., Realtor.com is seeing growth in rental, seller, and new home revenues. REA Group in Australia achieved record revenue, driven by residential yield increases and listing growth.
• Energy & Compliance: Demand for Dow Jones Energy and Risk & Compliance products remains strong due to regulatory uncertainties and evolving global energy markets.

Operational Highlights:

• Foxtel Sale: News Corp agreed to sell Foxtel to DAZN, with the transaction expected to close in the second half of FY 2025. The deal includes repayment of AUD 574 million in shareholder loans and a 6% equity stake in DAZN.
• Digital Initiatives: Dow Jones reported 81% of revenue from digital channels, benefiting from growth in digital circulation revenue (up 8%) and ARPU improvements. Realtor.com expanded adjacencies, such as rental and seller revenue streams, contributing 20% of its revenue.
• Book Publishing: HarperCollins saw robust growth in digital and audiobook sales, supported by strong performance from backlist titles and releases like "Wicked." Audio sales grew 13%, and margins improved due to operational efficiencies.

Challenges & Risks:

• Advertising Headwinds: News Media faces declining ad revenue, particularly in print, and limited visibility in advertising trends, exacerbated by geopolitical and regulatory uncertainties.
• Currency Impacts: The Australian dollar and pound sterling are expected to negatively impact revenue translation in the second half of FY 2025.
• AI Legal Costs: Increased investment in AI-related initiatives and legal disputes may add pressure to future expenses.

Key Analyst Questions & Responses:

1. Foxtel Sale Structure (David Karnovsky, JPMorgan): Robert Thomson explained the strategic rationale behind the equity stake in DAZN, emphasizing partnership synergies and maximizing shareholder returns. He noted that the deal highlights News Corp’s commitment to portfolio optimization.

2. Dow Jones Growth Outlook (Kane Hannan, Goldman Sachs): Management expressed confidence in accelerating growth in Dow Jones' second half due to improved digital subscription pricing, strong performance in Risk & Compliance and Dow Jones Energy, and seasonal subscriber additions.

This summary encapsulates the critical financial, operational, and strategic insights, along with key industry trends and analyst Q&A highlights from News Corp's Q2 FY 2025 earnings call.