News Corp's Real Estate Services and Steadfast Leadership Position It for Long-Term Growth

June 19, 2025

Introduction
News Corporation (NWSA) has emerged as a compelling investment opportunity, driven by its strategic focus on high-growth segments, notably its Digital Real Estate Services division, coupled with leadership continuity and improved liquidity. Amid macroeconomic headwinds, the company's recent performance underscores its ability to navigate challenges while positioning itself for sustained growth. This analysis explores how News Corp's real estate services, leadership stability, and financial resilience create a robust foundation for investors.

1. Digital Real Estate Services: A Key Growth Engine

News Corp's Digital Real Estate Services segment, which includes REA Group (Australia's leading property portal) and Move (operator of Realtor.com®), has delivered strong results despite external pressures. In Q3 FY2025 (ended March 31), revenues rose 5% to $406 million, with adjusted metrics showing an 8% revenue increase and a 25% jump in adjusted EBITDA. The segment's nine-month performance was equally robust, with revenues up 10% to $1.34 billion and EBITDA surging 20% to $449 million.

REA Group's Outperformance:
- Australian residential market dynamics, including rising prices and deeper market penetration, propelled REA's revenues by 6% to $271 million.
- REA India contributed meaningfully to growth, reflecting the division's global expansion strategy.

Move Division's Challenges and Resilience:
- Despite a 17% decline in lead volumes due to high mortgage rates, Move's revenue per lead improved, contributing to a 2% revenue increase to $135 million.
- Strategic partnerships, such as those with Zillow, bolstered seller, new home, and rental services, offsetting broader market softness.

Why This Matters for Investors:
The real estate services division accounts for over 30% of News Corp's total revenue and is a critical driver of EBITDA growth. Its dual focus on high-margin digital platforms and geographic diversification positions it to capitalize on rebounds in residential markets, particularly in Australia and the U.S.

2. Leadership Stability: The Role of Robert Thomson

The extension of CEO Robert Thomson's contract through 2030 signals enduring confidence in his vision and execution. Since taking the helm in 2013, Thomson has transformed News Corp from a traditional media company into a diversified, digitally oriented enterprise. Key achievements include:

• Strategic Portfolio Restructuring:
• Sold non-core assets like Foxtel (April 2025), unlocking liquidity and focusing on core businesses.

• Shifted revenue mix to 50% digital by 2024 (vs. 20% in 2014).

• Financial Discipline:

• Achieved investment-grade credit ratings across agencies.

• Delivered four consecutive years of record profitability (2021–2024).

• Innovation and Partnerships:

• Secured landmark agreements with tech firms like OpenAI to monetize intellectual property.
• Expanded B2B offerings (e.g., OPIS, Base Chemicals at Dow Jones), which now lead segment profitability.

Thomson's $42 million 2024 compensation reflects his critical role, though it also highlights the importance of his continued leadership in executing News Corp's ambitious roadmap.

3. Liquidity and Balance Sheet Strength

News Corp's financial health has improved significantly, supported by disciplined capital allocation and asset sales. As of March 31, 2025:

• Cash Reserves: Increased 12% year-over-year to $2.095 billion, providing a buffer for reinvestment or acquisitions.
• Debt Reduction: Total borrowings fell 7% to $1.943 billion, with Foxtel's sale repaying $592 million in shareholder loans.
• Free Cash Flow: Rose 13% to $539 million over nine months, underpinning financial flexibility.

The Foxtel sale, which secured a 6% stake in DAZN, further de-risked the balance sheet and aligned with Thomson's strategy to prioritize high-margin, recurring revenue streams.

Investment Outlook: NWSA as a Multi-Sector Play

News Corp's performance reflects a well-executed strategy of focusing on digital growth, cost discipline, and portfolio optimization. For investors, the case for NWSA rests on three pillars:

1. Real Estate Services Resilience:
2. The segment's adjusted metrics (8% revenue growth, 25% EBITDA growth) suggest operational efficiency.

3. REA Group's dominance in Australia and Move's partnerships offer long-term scalability.

4. Leadership and Governance:

5. Thomson's extended tenure reduces succession risk and ensures continuity in strategy execution.

6. Liquidity and Leverage:

7. Strong cash reserves and declining debt position the company to weather macroeconomic volatility or pursue accretive acquisitions.

Valuation and Risks:
At current levels, NWSA trades at 14x forward EV/EBITDA, slightly below its five-year average but reasonable given its growth trajectory. Risks include prolonged housing market softness (affecting Move's lead volumes) and currency headwinds, which reduced Q3 revenue by 3%.

Conclusion: A Compelling Multi-Year Opportunity

News Corp's combination of a high-growth real estate services division, proven leadership, and improved liquidity creates a compelling investment case. While macroeconomic challenges remain, the company's strategic focus on recurring revenue streams, digital innovation, and capital discipline positions it to outperform peers over the cycle. For investors seeking exposure to both media and real estate sectors, NWSA offers a diversified, financially stable entry point.

Final Note: Monitor NWSA's Q4 results for further signs of stabilization in Move's lead volumes and REA's market share gains. The stock's resilience in volatile markets underscores its defensive qualities—a rare trait in today's uncertain environment.

Analysis by a seasoned observer of global markets and corporate strategy.