News Corp Navigates Challenges with Strategic Focus in Q3 Earnings

News Corp’s fiscal third-quarter results reveal a company navigating headwinds in traditional media while capitalizing on growth drivers in digital and professional services. Despite a modest 1% revenue rise to $2.01 billion, the firm’s adjusted earnings surged 31%, underscoring operational discipline and strategic shifts that could position it for stronger returns in the coming year.

Segment Spotlight: Dow Jones and Digital Real Estate Lead the Charge
Dow Jones emerged as a standout performer, with revenue up 6% to $575 million. The segment’s 12% EBITDA growth to $132 million was fueled by its Risk & Compliance division, which expanded 11%, and a growing digital subscription base. The Wall Street Journal added 3% more subscribers, with digital-only subscriptions now accounting for 90% of its total. This digital pivot aligns with CEO Robert Thomson’s emphasis on “quality journalism amid AI-driven challenges,” as competition from generative AI tools intensifies.

Meanwhile, Digital Real Estate Services (DRES) grew 5% to $406 million, driven by REA Group’s 6% rise in Australia and India. Move’s lead volume decline (-17%) due to high mortgage rates was offset by premium pricing strategies, boosting revenue per lead. The segment’s 19% EBITDA jump to $124 million highlights operational efficiency, a theme CEO Thomson has prioritized.

News Media Struggles, But Margins Improve
The News Media segment faced an 8% revenue drop to $514 million, with advertising revenue plummeting 9% as printing contracts shifted to joint ventures. However, EBITDA improved 22% to $33 million through cost-cutting—most notably reducing expenses tied to the Talk magazine—and synergies from the DMG Media partnership. Circulation declines were partially mitigated by price hikes and content licensing.

Strategic Moves: Foxtel Sale and Acquisitions Signal Focus
The sale of Foxtel to DAZN Group marked a pivotal shift, removing underperforming assets and strengthening liquidity. The $592 million debt repayment and DAZN equity stake improved News Corp’s balance sheet, with cash reserves rising to $2.095 billion. Acquisitions like Oxford Analytica and Dragonfly Intelligence by Dow Jones signal a focus on high-margin professional services, a trend that could insulate the company from economic volatility.

Headwinds and Tailwinds
Foreign currency headwinds shaved 1% off revenues and 6% off EBITDA, a persistent challenge for a global firm. Yet digital trends remain encouraging: 82% of Dow Jones revenue now comes from digital, while News Media’s digital subscribers grew despite declines in unique users for The Sun and New York Post.

Conclusion: A Resilient Foundation for Growth
News Corp’s Q3 results reflect a company balancing short-term pressures with long-term bets. While News Media’s ad declines and currency impacts are concerning, the 31% adjusted EPS growth and 12% EBITDA expansion demonstrate resilience. The Foxtel sale and focus on high-margin segments like Dow Jones and DRES suggest a path to sustained profitability.

With free cash flow up 13% year-to-date to $539 million and a robust balance sheet, the company is well-positioned to invest in content innovation and acquisitions. Investors should monitor Dow Jones’ subscription momentum and DRES’s ability to offset macroeconomic headwinds. For now, the mix of disciplined cost management and strategic asset reallocation offers a compelling case for News Corp’s potential to outperform in a fragmented media landscape.