News Corp's Intellectual Property Play: Why AI and Dow Jones Are Fueling a Digital Renaissance

The media industry is undergoing a seismic shift, with artificial intelligence (AI) disrupting content creation, distribution, and monetization. Amid this upheaval, News Corporation (NSP) has positioned itself as a paradoxical success story: a traditional media giant leveraging its intellectual property (IP) and strategic tech partnerships to drive growth in an AI-dominated era. Under CEO Robert Thomson's leadership, News Corp is proving that quality journalism and data-driven innovation can coexist—and thrive. Here's why investors should pay close attention.

The 50% Digital Growth Misconception—and What It Really Means

The claim of “50% digital revenue growth” circulating in headlines is likely a misinterpretation of segment-specific metrics rather than a consolidated figure. In Q1 2025, News Corp's total revenues grew 3% to $2.58 billion, but key digital segments outperformed:
- Digital Real Estate Services (REA Group) surged 22% to $318 million, fueled by Australia's housing market and expanded listings in India.
- Book Publishing's digital sales jumped 15%, with audiobooks (up 26%) leading the charge through partnerships like Spotify.
- Dow Jones' digital subscriptions rose 10% to 3.8 million, with professional services (Risk & Compliance, Energy) growing 16% and 11%, respectively.

While the “50%” figure may reflect compounded growth across these segments or specific metrics (e.g., audiobook sales), the broader takeaway is clear: News Corp is accelerating its pivot to subscription-based, IP-centric revenue streams. This shift is underpinned by two strategic pillars: monetizing its IP through tech partnerships and optimizing its portfolio for B2B growth.

The OpenAI Deal: A Masterstroke in IP Monetization

In May 2024, News Corp struck a landmark partnership with OpenAI, granting the AI giant access to its premium journalism—The Wall Street Journal, Barron's, and more—in exchange for ensuring its content is used ethically. This isn't just about licensing; it's about future-proofing IP in an AI world.

• Why It Matters: By collaborating with OpenAI, News Corp ensures its journalism becomes a cornerstone of AI-generated insights, turning its content into a “trusted source” for algorithms. This positions the company as a supplier to the AI economy, not just a casualty of it.
• The Legal Backstop: Simultaneously, News Corp is suing AI firms like Perplexity for misusing its content. This dual strategy—monetizing IP while enforcing rights—creates a moat against competitors.

The financial upside? OpenAI's systems could amplify demand for News Corp's subscriptions (e.g., WSJ+ for institutional users) while reducing reliance on volatile ad revenue.

Dow Jones: The B2B Growth Engine

While headlines focus on AI, News Corp's most overlooked asset is its Dow Jones Professional Information business, which grew 8% in Q1. This segment—serving institutional clients in finance, law, and energy—is a cash cow with recurring revenue and high margins.

• Risk & Compliance: A 16% revenue surge here highlights demand for News Corp's investigative journalism, which is critical for regulatory compliance.
• Energy Sector Growth: 11% revenue growth in energy analytics underscores the firm's ability to monetize data in volatile markets.

These B2B services are recession-resistant and underappreciated by the market, which often focuses on the company's news media divisions.

Why Investors Should Capitalize Now

News Corp's stock trades at a discount to peers, with a P/E of 11.4x compared to the S&P 500's 18.9x. This undervaluation persists despite:
1. Strong cash flow: EBITDA rose 14% to $415 million, driven by REA and Book Publishing.
2. Debt reduction: Net debt fell 17% year-over-year, lowering financial risk.
3. Dividend resilience: The 2.3% yield is backed by consistent free cash flow.

Risks to Consider

• Macroeconomic headwinds: Housing market slowdowns (affecting REA) and ad spending cuts (hitting News Media) could pressure near-term results.
• AI litigation outcomes: If lawsuits against Perplexity fail, it could erode News Corp's IP leverage.

Investment Thesis

News Corp is a contrarian play in a market obsessed with growth at any cost. Its strategy—protecting IP through legal and tech partnerships while expanding B2B services—aligns perfectly with a world where data accuracy and trust matter more than ever.

Action Item: Buy NSP at current levels ($10.50 as of June 2025) if you believe in the long-term value of quality journalism and institutional data. Target price: $14.00 (33% upside), based on EBITDA expansion and B2B growth.

In the AI era, the winners won't just be tech giants—they'll be those who own the data and stories that power them. News Corp is proving it's one of them.