Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- News Corp (NWS, Financial) reported a 6% increase in fourth-quarter revenues to almost $2.6 billion.
- Profitability improved by 11% to $380 million, marking a fourth-quarter record for the company.
- Digital real estate services saw a strong quarter with revenues rising 21% and segment EBITDA surging 25%.
- Dow Jones experienced a 4% revenue growth, with digital revenue accounting for 80% of fiscal 2024 segment revenue.
- HarperCollins reported a significant 250% increase in segment EBITDA to $57 million, driven by strong sales in various formats.
Negative Points
- High interest rates negatively impacted some of News Corp (NWS)'s businesses.
- News Media segment faced challenges with a 5% decline in revenues and a 38% drop in segment EBITDA.
- Move's revenues for the quarter were down 2% compared to the prior year, reflecting broader macro trends and lower transaction volumes.
- Subscription video services saw a 10% year-over-year decline in residential broadcast subscribers.
- Print advertising at Dow Jones continued to decline, down 13% year-over-year.
Q & A Highlights
Q: Robert, on the Foxtel third-party interest, can you say anything about the nature of the transaction that's being contemplated? And are you engaged with one or multiple parties? How does the potential interest here complicate the thinking or maybe even the timeline behind the broader process of the strategic review?
A: We have had a significant overture, which we're naturally assessing. We have full faith in the potential of Foxtel and our talented team. Strategically, we have been undertaking a broad review of our portfolio and its potential in the quest to increase shareholder value. That review continues apace.
Q: Just to deal with OpenAI. Is there any more color or things you can talk about around that deal that would help us? Particularly, how much of that value in the deal was around the back catalog versus the ongoing content production?
A: We can't go into precise details, but the impact in our news businesses is tangible and meaningful. The OpenAI agreement includes a guaranteed amount, and both companies will work to create products that generate more value. The OpenAI team has a sophisticated sense of how to productize profitably and with principle.
Q: Assuming some Foxtel transaction goes ahead, do you still expect to be able to recoup all of the Foxtel shareholder loans? And if you can remind us how much is still outstanding?
A: There is just shy of $600 million outstanding in shareholder loans. Any transaction would contemplate what we do with those loans. The process is full and fair, and the external interest should be seen as a vote of confidence in what has been achieved at Foxtel.
Q: You guys have been investing in Move for some time now, yet the traffic numbers for Realtor.com continued to be pretty stagnant. Will there be any changes in the kind of investments you'll be making in Move?
A: Our unique users in Q4 were 3% higher sequentially at $74 million. The team has been improving the tech and experience, and they are poised for a market revival. We will keep investing in the business because we believe in it, with cost increases expected to be modest for the full year.
Q: My question was just in relation to Foxtel, maybe just on the operational side. When I think about the Investor Day in 2021, there were three major aspirational targets. We hit 2024, and we're just a little bit shy of those targets. Any update in terms of how you're thinking about those new targets?
A: Our ambitions for Foxtel are undaunted. We are seeing growth in the streaming business combined with a 6% increase in ARPU in the broadcast segment. The landscape has changed materially, but we feel good about the targets we put out there.
Q: How should we be thinking about the cost momentum into FY25?
A: We feel good about our cost cadence. News Corp Australia has restructured, and News UK has done their transition from linear of talkTV and the commercial joint venture printing venture. Dow Jones costs are expected to increase mid-single digits, supporting growth, particularly on the B2B side. HarperCollins costs have started to stabilize.
Q: How does signing the OpenAI deal impact your negotiations with other Gen AI companies? And both you and Susan discussed the three divisions that are the pillars of growth. Would it be simpler and the company grow quicker without the other two divisions?
A: We prefer to negotiate rather than litigate, but for some, the process of suing has started. We are constantly reviewing our structure and are proud of all divisions. The news media businesses provide valuable audience and support across the portfolio.
Q: Why was the regulatory side of simplifying the company not anticipated? Why did you go public with your thoughts nine months ago as opposed to waiting longer?
A: We have completed a significant amount of regulatory work to make possible that kind of introspection. The process will not continue indefinitely. The effort coincides with interest in Foxtel, and that process has to play out in a full and fair manner.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
