News Corp's Digital Pivot Powers Earnings Surge, But Traditional Media Struggles Linger

The latest earnings report from News Corp (NWSA) reveals a company at a crossroads. While its digital and professional services segments delivered robust growth, traditional media continues to face headwinds. Let’s dissect the numbers to uncover whether this media giant’s strategic pivot is paying off—or if it’s merely masking deeper structural challenges.

The Good: Digital Dominance and Profitable Shifts

News Corp’s Q3 results underscore a clear focus on high-margin digital businesses. Dow Jones, the crown jewel, reported 6% revenue growth to $575 million, driven by soaring subscriptions and professional services. Its consumer subscriptions hit a record 6.1 million average subscriptions, with 90% of The Wall Street Journal’s subscribers now digital-only. This aligns with CEO Robert Thomson’s vision of prioritizing quality journalism in an AI-dominated content landscape. The segment’s EBITDA jumped 12% to $132 million, proving its resilience.

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Digital Real Estate Services also thrived, growing 5% to $406 million, led by REA Group’s 6% rise in Australia and India. Even Move, which faces U.S. housing market headwinds, managed 2% growth. Notably, Segment EBITDA here surged 19% to $124 million, reflecting cost efficiencies.

Book Publishing added a modest 2% revenue growth to $514 million, fueled by audiobooks and enduring bestsellers like Wicked. Digital sales now account for 25% of consumer revenue, signaling a steady transition to modern formats.

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The sale of Foxtel to DAZN in April 2025 was a masterstroke. Repaying $592 million in shareholder loans and acquiring a 6% stake in DAZN not only strengthened News Corp’s balance sheet but also positioned it to benefit from streaming’s growth. The transaction is already reflected in improved cash flow metrics: year-to-date free cash flow rose 14% to $539 million, a critical indicator for sustaining investments in high-growth areas.

The Bad: Traditional Media’s Slow Decline

While digital segments shine, News Media remains a drag, posting an 8% revenue drop to $514 million. Advertising and circulation declines, compounded by foreign currency headwinds, hit hard. Even as News Corp Australia’s digital subscribers grew to 1.15 million, legacy titles like The Sun and New York Post saw monthly unique users plummet—74 million vs. 126 million for The Sun, and 85 million vs. 125 million for The Post.

Yet, there’s a silver lining: cost-cutting and operational synergies from its joint venture with DMG Media boosted News Media EBITDA by 22% to $33 million. This suggests management isn’t just cutting costs but reconfiguring assets for sustainability.

The Ugly: Macroeconomic and Structural Risks

Despite the positives, News Corp isn’t immune to broader trends. Realtor.com’s monthly users fell 8% to 66 million due to high mortgage rates, highlighting reliance on cyclical markets. Meanwhile, currency headwinds—notably in Australia and the UK—compressed top-line growth.

The company’s forward-looking caution is warranted. Litigation risks, such as ongoing disputes over its Australian paywalls, and rising AI competition for both news and real estate content pose long-term threats. Investors should monitor whether Dow Jones’ premium content model can outpace cheaper AI-generated alternatives.

Data-Driven Takeaways

Despite Q3’s solid results, News Corp’s stock has underperformed the S&P 500 by 12% year-to-date, reflecting lingering skepticism about its traditional media exposure. However, its adjusted EPS growth of 31% (to $0.17) and free cash flow expansion suggest the company is on track to deliver shareholder value through strategic asset sales and margin improvements.

Conclusion: A Story of Strategic Resilience

News Corp’s Q3 results paint a company successfully navigating a fragmented media landscape. Its focus on premium digital subscriptions, high-margin professional services, and strategic asset divestitures has created a stronger, more agile business. With total segment EBITDA up 12% and free cash flow growth, the financials validate this pivot.

However, the 8% revenue decline in News Media and ongoing subscriber losses for its legacy titles highlight unresolved risks. Investors must weigh whether the digital tail can continue wagging the traditional media dog. For now, the numbers suggest it can—if News Corp’s bets on AI-resistant journalism and global real estate services pay off.

Final Verdict:
News Corp’s stock could be a buy for investors who believe in the power of premium content and cost discipline in a fragmented media world. Yet, the path to sustained growth hinges on executing its digital-first strategy while navigating macroeconomic and technological headwinds. The jury is still out, but the latest results are a promising start.

Data as of Q3 2025. Past performance is not indicative of future results. Always consult a financial advisor before making investment decisions.