News Corporation (NASDAQ:NWSA) Q1 2022 Earnings Conference Call November 4, 2021 5:00 PM ET Company Participants Mike Florin – Senior Vice President & Head of Investor Relations Robert Thomson – Chief Executive Officer Susan Panuccio – Chief Financial Officer Conference Call Participants Entcho Raykovski – Credit Suisse Alexia Quadrani – JP Morgan Craig Huber – Research Partners Brian Han – Morningstar Operator Good day and welcome to the News Corp First Quarter Fiscal 2022 Conference Call. Today's confe ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________ FORM 10-K ________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2021 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35769 Title of each classTrading Symbol(s) Name of each exchange on whi ...

News Corporation (NASDAQ:NWSA) Q4 2021 Results Earnings Conference Call August 5, 2021 5:00 PM ET Company Participants Mike Florin - Senior Vice President & Head of Investor Relations Robert Thomson - Chief Executive Officer Susan Panuccio - Chief Financial Officer Conference Call Participants Kane Hannan - Goldman Sachs. Entcho Raykovski - Credit Suisse Darren Leung - Macquarie Brian Han - Morningstar Kane Hannan - Goldman Sachs Operator Good day, and welcome to the News Corp, 4Q Fiscal 2021 Conference Ca ...

News Corporation (NASDAQ:NWSA) Q3 2021 Earnings Conference Call May 6, 2021 5:00 PM ET Company Participants Mike Florin - Senior Vice President & Head of Investor Relations Robert Thomson - Chief Executive Officer Susan Panuccio - Chief Financial Officer Conference Call Participants Alan Gould - Loop Capital Kane Hannan - Goldman Sachs Alexia Quadrani - JPMorgan Entcho Raykovski - Credit Suisse Craig Huber - Huber Research Partners Darren Leung - Macquarie Brian Han - Morningstar Operator Good day, and welc ...

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) News Corporation reported Q3 FY21 revenue growth and a shift to net income, with improved nine-month net income, increased assets, and doubled operating cash flow [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations (Unaudited, in millions) | Financial Metric | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | Nine Months Ended Mar 31, 2021 | Nine Months Ended Mar 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$2,335** | **$2,266** | **$6,866** | **$7,085** | | Operating Expenses | $(1,186) | $(1,283) | $(3,548) | $(3,972) | | Impairment & Restructuring | $(30) | $(1,125) | $(93) | $(1,451) | | Income (Loss) before Tax | $139 | $(1,046) | $557 | $(1,123) | | **Net Income (Loss)** | **$96** | **$(1,036)** | **$404** | **$(1,144)** | | Net Income (Loss) Attributable to Stockholders | $79 | $(730) | $344 | $(872) | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Consolidated Statements of Comprehensive Income (Loss) (Unaudited, in millions) | Financial Metric | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | Nine Months Ended Mar 31, 2021 | Nine Months Ended Mar 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $96 | $(1,036) | $404 | $(1,144) | | Other Comprehensive Income (Loss) | $29 | $(460) | $450 | $(462) | | **Comprehensive Income (Loss)** | **$125** | **$(1,496)** | **$854** | **$(1,606)** | | Comprehensive Income (Loss) Attributable to Stockholders | $104 | $(1,081) | $710 | $(1,216) | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in millions) | Account | As of March 31, 2021 (Unaudited) | As of June 30, 2020 (Audited) | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $1,974 | $1,517 | | Total current assets | $3,943 | $3,461 | | **Non-Current Assets** | | | | Goodwill | $4,304 | $3,951 | | **Total Assets** | **$15,397** | **$14,261** | | **Liabilities & Equity** | | | | Total current liabilities | $3,169 | $2,682 | | Borrowings (Non-current) | $1,000 | $1,183 | | **Total Equity** | **$9,129** | **$8,389** | | **Total Liabilities and Equity** | **$15,397** | **$14,261** | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (Unaudited, in millions) | Cash Flow Activity | Nine Months Ended Mar 31, 2021 | Nine Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,060 | $462 | | Net cash used in investing activities | $(346) | $(327) | | Net cash used in financing activities | $(329) | $(341) | | **Net change in cash and cash equivalents** | **$385** | **$(206)** | | Cash and cash equivalents, end of period | $1,974 | $1,388 | [Notes to the Unaudited Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies, segment reporting changes, recent acquisitions, restructuring charges, and significant subsequent events - The company disaggregated its Dow Jones operating segment into a separate reportable segment, revising historical disclosures accordingly[18](index=18&type=chunk)[276](index=276&type=chunk) - In December 2020, the company acquired Avail for approximately **$36 million** and a controlling interest in Elara Technologies for **$138 million**[42](index=42&type=chunk)[43](index=43&type=chunk)[300](index=300&type=chunk) - For fiscal 2021, the company recorded **$93 million** in restructuring charges for the nine months ended March 31, primarily for employee termination benefits and plant closure costs[44](index=44&type=chunk)[45](index=45&type=chunk)[302](index=302&type=chunk) - The company is involved in several legal proceedings, including antitrust claims related to News America Marketing and HarperCollins, and U.K. Newspaper Matters civil claims indemnified by FOX[98](index=98&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - Subsequent to quarter end, the company acquired Investor's Business Daily for **$275 million**, issued **$1 billion** in senior notes, and agreed to acquire HMH Books & Media for **$349 million** and Mortgage Choice for approximately **A$244 million**[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q3 FY21 revenue growth to key segments, offsetting News Media declines, with significant EBITDA growth, strong liquidity, and increased free cash flow [Overview of the Company's Businesses](index=30&type=section&id=Overview%20of%20the%20Company's%20Businesses) - The company operates across six segments: Digital Real Estate Services, Subscription Video Services, Dow Jones, Book Publishing, News Media, and Other[152](index=152&type=chunk)[153](index=153&type=chunk)[410](index=410&type=chunk) - Recent strategic developments include the acquisition of Investor's Business Daily for **$275 million**, a **$1 billion** senior notes offering, and agreements to acquire HMH Books & Media and Mortgage Choice[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - In February 2021, the company entered a multi-year partnership with Google for content provision, subscription platform development, and ad revenue sharing[160](index=160&type=chunk)[418](index=418&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Consolidated Revenue and Expense Changes (Q3 FY21 vs Q3 FY20, in millions) | Item | Q3 FY21 | Q3 FY20 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$2,335** | **$2,266** | **$69** | **3%** | | Operating expenses | $(1,186) | $(1,283) | $97 | 8% | | SG&A | $(851) | $(741) | $(110) | (15)% | | Impairment & restructuring | $(30) | $(1,125) | $1,095 | 97% | | **Net Income (Loss) to Stockholders** | **$79** | **$(730)** | **$809** | **N/M** | - The Q3 revenue increase was driven by growth in Digital Real Estate, Book Publishing, Subscription Video, and Dow Jones segments, partially offset by a **$199 million** negative impact from the sale of News America Marketing[166](index=166&type=chunk) - The significant improvement in Net Income was primarily due to the absence of a **$1.1 billion** non-cash impairment charge recognized in the prior-year quarter[174](index=174&type=chunk)[182](index=182&type=chunk) [Segment Analysis](index=37&type=section&id=Segment%20Analysis) Segment EBITDA (in millions) | Segment | Q3 FY21 | Q3 FY20 | % Change | 9 Months FY21 | 9 Months FY20 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Digital Real Estate Services | $117 | $74 | 58% | $378 | $274 | 38% | | Subscription Video Services | $91 | $68 | 34% | $293 | $219 | 34% | | Dow Jones | $82 | $51 | 61% | $263 | $176 | 49% | | Book Publishing | $80 | $55 | 45% | $255 | $167 | 53% | | News Media | $8 | $24 | (67)% | $52 | $97 | (46)% | | **Total Segment EBITDA** | **$298** | **$242** | **23%** | **$1,063** | **$818** | **30%** | - Digital Real Estate Services revenue grew **34%** in Q3, driven by strong performance at Move (realtor.com) and REA Group[191](index=191&type=chunk) - Subscription Video Services (Foxtel) saw total paid subscribers grow to **3.54 million** from **2.93 million** year-over-year, driven by growth in Kayo and Binge OTT services[199](index=199&type=chunk)[200](index=200&type=chunk) - Dow Jones' Segment EBITDA increased **61%** in Q3, benefiting from strong growth in digital-only subscriptions at The Wall Street Journal, which reached **2.6 million** (up **29%** YoY)[203](index=203&type=chunk)[205](index=205&type=chunk) - Book Publishing revenue increased **19%** in Q3, boosted by strong sales of the Bridgerton series and other backlist titles, with digital sales growing **38%**[213](index=213&type=chunk) - News Media revenues declined **25%** in Q3, primarily due to the sale of News America Marketing, with Segment EBITDA falling **67%** to **$8 million**[218](index=218&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's principal source of liquidity is internally generated funds and cash on hand, which stood at **$2.0 billion** as of March 31, 2021[225](index=225&type=chunk)[483](index=483&type=chunk) Free Cash Flow Available to News Corporation (in millions) | Metric | Nine Months Ended Mar 31, 2021 | Nine Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,060 | $462 | | Less: Capital expenditures | $(253) | $(335) | | **Free cash flow available to News Corporation** | **$762** | **$63** | - As of March 31, 2021, total borrowings were **$1.2 billion**, primarily non-recourse debt at the Foxtel and REA Group subsidiaries[239](index=239&type=chunk)[497](index=497&type=chunk) - In April 2021, the company issued **$1 billion** of 3.875% senior notes due 2029 for general corporate purposes, including potential acquisitions[241](index=241&type=chunk)[499](index=499&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material change in its assessment of market risk sensitivity since its 2020 Form 10-K disclosure - There has been no material change in the Company's assessment of its sensitivity to market risk since its 2020 Form 10-K presentation[247](index=247&type=chunk)[505](index=505&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal controls during Q3 FY21 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of period end[248](index=248&type=chunk)[506](index=506&type=chunk) - No material changes occurred in internal control over financial reporting during Q3 FY21[249](index=249&type=chunk)[507](index=507&type=chunk) [Part II - Other Information](index=50&type=section&id=Part%20II%20-%20Other%20Information) [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 of the Consolidated Financial Statements for details on legal proceedings - For details on legal proceedings, the report refers to Note 10—Commitments and Contingencies in the Consolidated Financial Statements[251](index=251&type=chunk)[509](index=509&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously described in its 2020 Form 10-K and Q1 FY21 Form 10-Q - There have been no material changes to the risk factors described in the Company's 2020 Form 10-K[252](index=252&type=chunk)[510](index=510&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported[252](index=252&type=chunk)[510](index=510&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including debt agreements, incentive plan forms, and required CEO/CFO certifications - Exhibits filed include the Indenture for the April 2021 Senior Notes, amendments to Foxtel facility agreements, and CEO/CFO certifications[255](index=255&type=chunk)[513](index=513&type=chunk)

Financial Data and Key Metrics Changes - Total revenues for the second quarter were over $2.4 billion, a decline of 3% year-on-year, primarily due to the sale of News America Marketing in 2020 [9][28] - Segment EBITDA for the quarter was $497 million, representing a 40% year-over-year increase, marking the highest quarterly segment EBITDA since the company's formation in 2013 [9][28] - Net income for the quarter was $261 million compared to $103 million in the prior year, with diluted earnings per share of $0.39 versus $0.14 in the prior year [29] Business Line Data and Key Metrics Changes - Digital Real Estate Services segment revenues increased by 15% to $339 million, with Move accounting for over 75% of segment revenue growth [29][30] - Subscription Video Services segment revenues were $511 million, up 2% year-over-year, with segment EBITDA improving 77% to $124 million [33][35] - Dow Jones revenues for the quarter were $446 million, up 4% year-over-year, with segment EBITDA rising 43% to $109 million [36][38] - HarperCollins posted a 23% revenue growth to $544 million, with segment EBITDA growth of 65% to $104 million [39] Market Data and Key Metrics Changes - Move's revenue growth was 28%, with real estate revenues rising 30% [30] - Average monthly unique users for realtor.com reached 80 million, reflecting a 37% year-over-year increase [30] - Digital advertising at Dow Jones expanded by 29%, marking the highest quarter in Dow Jones history [38] Company Strategy and Development Direction - The company is focused on a long-term strategic shift towards digitization and cost discipline, which has contributed to increased profitability [7][8] - The acquisition of Elara Technologies is expected to enhance the company's presence in the Indian digital real estate market [15] - The company aims to leverage its digital assets and improve ad tech capabilities to drive revenue growth [54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of the housing market in the U.S. and Australia, despite ongoing challenges from COVID-19 [14][15] - The company anticipates some slowdown in second-half results due to the unpredictable macro environment [44][48] - Management remains cautious about the sustainability of growth in the Move segment, given the historically low listing volumes across the industry [59] Other Important Information - The New York Post reported a significant increase in digital advertising revenues, up 64% year-over-year, achieving its highest digital revenue since 2013 [43] - The company has secured long-term rights to popular sports, enhancing its content offerings for the Foxtel platform [22] Q&A Session Summary Question: What is driving the outperformance in digital advertising at Dow Jones? - Management attributed the success to a strong team and improved ad tech capabilities, leading to growth across various categories [52][54] Question: What trends are being monitored for Foxtel's next steps? - The focus will be on OTT growth and managing broadcast subscriber stability while continuing cost reductions [55][56] Question: What is the outlook for Move's revenue growth? - Management remains confident in Move's growth, expecting continued revenue increases despite low industry listing volumes [59] Question: Are there permanent cost reductions in News Media? - Some cost reductions are permanent, while others may fluctuate based on business performance; further opportunities for cost reductions are being explored [63] Question: How many Live Pass users are expected to transition to Kayo? - Management believes a significant number of Live Pass users will migrate to Kayo, but specific numbers are not yet available [65]

[Part I. Financial Information](index=2&type=section&id=Part%20I.%20Financial%20Information) This section presents News Corporation's unaudited consolidated financial statements and management's financial analysis [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents News Corporation's unaudited consolidated financial statements, including operations, balance sheets, cash flows, and detailed notes [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) This statement details News Corporation's revenues, expenses, and net income (loss), showing significant net income improvement for H1 FY21 Consolidated Statements of Operations (in millions) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :---------------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Total Revenues | $2,414 | $2,479 | $4,531 | $4,819 | | Operating expenses | $(1,198) | $(1,351) | $(2,362) | $(2,689) | | Selling, general and administrative | $(719) | $(773) | $(1,404) | $(1,554) | | Depreciation and amortization | $(167) | $(162) | $(331) | $(324) | | Impairment and restructuring charges | $(23) | $(29) | $(63) | $(326) | | Equity losses of affiliates | $(3) | $(3) | $(4) | $(5) | | Interest expense, net | $(12) | $(8) | $(20) | $(4) | | Other, net | $54 | $2 | $71 | $6 | | Income (loss) before income tax expense | $346 | $155 | $418 | $(77) | | Income tax expense | $(85) | $(52) | $(110) | $(31) | | Net income (loss) | $261 | $103 | $308 | $(108) | | Net income (loss) attributable to News Corporation stockholders | $231 | $85 | $265 | $(142) | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This statement shows a significant increase in comprehensive income for News Corporation stockholders, driven by foreign currency adjustments Consolidated Statements of Comprehensive Income (Loss) (in millions) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :---------------------------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income (loss) | $261 | $103 | $308 | $(108) | | Foreign currency translation adjustments | $315 | $199 | $422 | $14 | | Net change in the fair value of cash flow hedges | — | — | $(2) | $(14) | | Benefit plan adjustments, net | $(7) | $(13) | $1 | $(2) | | Other comprehensive income (loss) | $308 | $186 | $421 | $(2) | | Comprehensive income (loss) | $569 | $289 | $729 | $(110) | | Comprehensive income (loss) attributable to News Corporation stockholders | $476 | $235 | $606 | $(135) | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets show increased total assets and equity as of December 31, 2020, driven by receivables, investments, and goodwill Consolidated Balance Sheets (in millions) | Asset/Liability/Equity | As of December 31, 2020 (unaudited) | As of June 30, 2020 (audited) | | :------------------------------------ | :---------------------------------- | :---------------------------- | | **Assets:** | | | | Cash and cash equivalents | $1,562 | $1,517 | | Receivables, net | $1,444 | $1,203 | | Inventory, net | $203 | $348 | | Other current assets | $387 | $393 | | Total current assets | $3,596 | $3,461 | | Investments | $353 | $297 | | Property, plant and equipment, net | $2,315 | $2,256 | | Operating lease right-of-use assets | $1,074 | $1,061 | | Intangible assets, net | $1,934 | $1,864 | | Goodwill | $4,292 | $3,951 | | Deferred income tax assets | $337 | $332 | | Other non-current assets | $1,193 | $1,039 | | Total assets | $15,094 | $14,261 | | **Liabilities and Equity:** | | | | Accounts payable | $291 | $351 | | Accrued expenses | $1,094 | $1,019 | | Deferred revenue | $400 | $398 | | Current borrowings | $212 | $76 | | Other current liabilities | $864 | $838 | | Total current liabilities | $2,861 | $2,682 | | Non-current borrowings | $1,044 | $1,183 | | Retirement benefit obligations | $254 | $277 | | Deferred income tax liabilities | $339 | $258 | | Operating lease liabilities | $1,160 | $1,146 | | Other non-current liabilities | $362 | $326 | | Total News Corporation stockholders' equity | $8,131 | $7,582 | | Noncontrolling interests | $943 | $807 | | Total equity | $9,074 | $8,389 | | Total liabilities and equity | $15,094 | $14,261 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement shows a significant increase in net cash from operating activities for H1 FY21, with changes in investing and financing Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :----------------------------------------------------------------- | :---------------------------- | :---------------------------- | | Net cash provided by operating activities | $483 | $192 | | Net cash used in investing activities | $(276) | $(234) | | Net cash used in financing activities | $(219) | $(328) | | Net change in cash and cash equivalents | $(12) | $(370) | | Cash and cash equivalents, end of period | $1,562 | $1,272 | [Notes to the Unaudited Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the unaudited consolidated financial statements, covering key accounting policies and financial details [NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION](index=7&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) News Corporation is a global diversified media and information services company. The company disaggregated its Dow Jones operating segment as a separate reportable segment in fiscal 2020, revising historical disclosures. Financial statements are prepared in accordance with GAAP, with management estimates considering COVID-19 impacts - News Corporation is a global diversified media and information services company, including digital real estate, subscription video, news and information, and book publishing[18](index=18&type=chunk)[266](index=266&type=chunk) - The Dow Jones operating segment was disaggregated as a separate reportable segment in fiscal 2020, leading to revised historical disclosures[18](index=18&type=chunk)[266](index=266&type=chunk) - Financial statements are prepared under GAAP, with estimates and assumptions considering the impact of the COVID-19 pandemic[19](index=19&type=chunk)[267](index=267&type=chunk) [NOTE 2. REVENUES](index=9&type=section&id=NOTE%202.%20REVENUES) This note details News Corporation's total revenues by segment and revenue recognition from deferred balances Total Revenues by Segment (in millions) - Three Months Ended December 31, 2020 | Segment | Revenues | | :-------------------------- | :------- | | Digital Real Estate Services | $339 | | Subscription Video Services | $511 | | Dow Jones | $446 | | Book Publishing | $544 | | News Media | $573 | | Other | $1 | | **Total Revenues** | **$2,414** | Total Revenues by Segment (in millions) - Six Months Ended December 31, 2020 | Segment | Revenues | | :-------------------------- | :------- | | Digital Real Estate Services | $629 | | Subscription Video Services | $1,007 | | Dow Jones | $832 | | Book Publishing | $1,002 | | News Media | $1,060 | | Other | $1 | | **Total Revenues** | **$4,531** | - For the three and six months ended December 31, 2020, the Company recognized **$237 million** and **$331 million**, respectively, of revenue which was included in the opening deferred revenue balance[37](index=37&type=chunk)[285](index=285&type=chunk) [NOTE 3. ACQUISITIONS](index=11&type=section&id=NOTE%203.%20ACQUISITIONS) This note details the December 2020 acquisitions of Avail and Elara Technologies, expanding digital real estate services - Acquired Rentalutions, Inc. ('Avail') in December 2020 for approximately **$36 million** cash (net of **$4 million** cash acquired), with up to **$8 million** in future contingent consideration. Avail enhances realtor.com's rental services and landlord support[42](index=42&type=chunk)[290](index=290&type=chunk) - Acquired a controlling interest in Elara Technologies Pte. Ltd. ('Elara') in December 2020 for a total aggregate purchase price of **$138 million**, including **$69 million** cash. This increased REA Group's shareholding to **59.7%** and News Corporation's to **39.0%**, consolidating Elara's results within the Digital Real Estate Services segment[43](index=43&type=chunk)[291](index=291&type=chunk) - The Avail acquisition resulted in approximately **$32 million** in goodwill, while the Elara acquisition resulted in approximately **$114 million** in goodwill[42](index=42&type=chunk)[43](index=43&type=chunk)[290](index=290&type=chunk) [NOTE 4. RESTRUCTURING PROGRAMS](index=11&type=section&id=NOTE%204.%20RESTRUCTURING%20PROGRAMS) This note details restructuring charges for H1 FY21, primarily for employee termination benefits and exit costs related to the Bronx print plant closure Restructuring Charges (in millions) | Period | 2020 | 2019 | | :------------------------------------ | :--- | :--- | | Three months ended December 31 | $23 | $10 | | Six months ended December 31 | $63 | $34 | - Fiscal 2021 restructuring charges primarily relate to employee termination benefits and exit costs for the anticipated closure of the Bronx print plant in the News Media segment[44](index=44&type=chunk)[292](index=292&type=chunk) - As of December 31, 2020, restructuring liabilities totaled **$66 million**, with **$37 million** classified as current and **$29 million** as non-current[47](index=47&type=chunk)[295](index=295&type=chunk) [NOTE 5. INVESTMENTS](index=12&type=section&id=NOTE%205.%20INVESTMENTS) This note details News Corporation's investments, which increased to **$353 million** as of December 31, 2020, and recognized gains on equity securities Investments (in millions) | Investment Type | As of December 31, 2020 | As of June 30, 2020 | | :------------------------ | :---------------------- | :------------------ | | Equity method investments | $116 | $120 | | Equity securities | $237 | $177 | | **Total Investments** | **$353** | **$297** | Gains (Losses) on Equity Securities (in millions) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :-------------------------------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Total gains (losses) recognized on equity securities | $33 | $(6) | $42 | $(5) | | Unrealized gains (losses) recognized on equity securities held at end of period | $33 | $(6) | $42 | $(5) | - Equity method investments primarily include Foxtel's investment in Nickelodeon Australia Joint Venture and, until December 2020, Elara. Equity securities include investments in China, HT&E Limited, and Tremor International Ltd[48](index=48&type=chunk)[296](index=296&type=chunk) [NOTE 6. BORROWINGS](index=13&type=section&id=NOTE%206.%20BORROWINGS) This note details News Corporation's **$1.3 billion** total borrowings as of December 31, 2020, primarily non-recourse to News Corp, with covenant compliance Total Borrowings (in millions) | Category | As of December 31, 2020 | As of June 30, 2020 | | :---------------------- | :---------------------- | :------------------ | | Total borrowings | $1,256 | $1,259 | | Less: current portion | $(212) | $(76) | | Long-term borrowings | $1,044 | $1,183 | - Borrowings are primarily incurred by Foxtel Debt Group (**$958 million**) and REA Debt Group (**$182 million**) and are non-recourse to News Corp[302](index=302&type=chunk)[478](index=478&type=chunk) - The Company has access to an unsecured **$750 million** revolving credit facility (2019 News Corp Credit Facility) for general corporate purposes, with no funds borrowed as of December 31, 2020[302](index=302&type=chunk)[479](index=479&type=chunk) [NOTE 7. EQUITY](index=15&type=section&id=NOTE%207.%20EQUITY) This note details the increase in News Corporation's total equity to **$9,074 million** as of December 31, 2020, driven by net income and comprehensive income Changes in Equity (in millions) - Three Months Ended December 31, 2020 | Metric | Balance, Sep 30, 2020 | Net Income | Other Comprehensive Income | Dividends | Other | Balance, Dec 31, 2020 | | :------------------------------------ | :-------------------- | :--------- | :------------------------- | :-------- | :---- | :-------------------- | | Total News Corporation stockholders' equity | $7,639 | $231 | $245 | — | $16 | $8,131 | | Noncontrolling Interests | $815 | $30 | $63 | $(1) | $36 | $943 | | **Total Equity** | **$8,454** | **$261** | **$308** | **$(1)** | **$52** | **$9,074** | Changes in Equity (in millions) - Six Months Ended December 31, 2020 | Metric | Balance, Jun 30, 2020 | Net Income | Other Comprehensive Income | Dividends | Other | Balance, Dec 31, 2020 | | :------------------------------------ | :-------------------- | :--------- | :------------------------- | :-------- | :---- | :-------------------- | | Total News Corporation stockholders' equity | $7,582 | $265 | $341 | $(59) | $2 | $8,131 | | Noncontrolling Interests | $807 | $43 | $80 | $(21) | $34 | $943 | | **Total Equity** | **$8,389** | **$308** | **$421** | **$(80)** | **$36** | **$9,074** | - The Board of Directors declared a semi-annual cash dividend of **$0.10 per share** for Class A and Class B Common Stock in August 2020, paid on October 14, 2020[66](index=66&type=chunk)[314](index=314&type=chunk) [NOTE 8. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS](index=16&type=section&id=NOTE%208.%20FINANCIAL%20INSTRUMENTS%20AND%20FAIR%20VALUE%20MEASUREMENTS) This note details News Corporation's use of derivative instruments for risk management and fair value measurements - The Company uses derivative instruments to mitigate foreign currency exchange rate risk and interest rate risk, primarily through cross-currency interest rate derivatives and interest rate swaps[77](index=77&type=chunk)[325](index=325&type=chunk) Assets and Liabilities Measured at Fair Value on a Recurring Basis (in millions) | Category | As of December 31, 2020 | As of June 30, 2020 | | :------------------------------------------------------- | :---------------------- | :------------------ | | **Assets:** | | | | Cross-currency interest rate derivatives - fair value hedges | $17 | $24 | | Cross-currency interest rate derivatives - cash flow hedges | — | $98 | | Cross-currency interest rate derivatives (non-hedge) | $69 | — | | Equity securities | $237 | $177 | | **Total Assets** | **$323** | **$299** | | **Liabilities:** | | | | Foreign currency derivatives - cash flow hedges | $3 | $3 | | Interest rate derivatives - cash flow hedges | $14 | $16 | | Cross-currency interest rate derivatives - cash flow hedges | — | $18 | | Cross-currency interest rate derivatives (non-hedge) | $18 | — | | **Total Liabilities** | **$35** | **$37** | - Cross-currency interest rate derivatives were no longer considered highly effective cash flow hedges as of December 31, 2020, due to changes in foreign exchange and interest rates, with changes in fair value recognized in Other, net[319](index=319&type=chunk)[333](index=333&type=chunk) [NOTE 9. EARNINGS (LOSS) PER SHARE](index=20&type=section&id=NOTE%209.%20EARNINGS%20%28LOSS%29%20PER%20SHARE) This note details News Corporation's basic and diluted earnings per share, showing significant improvement for H1 FY21 Earnings (Loss) Per Share (in millions, except per share amounts) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :-------------------------------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income (loss) attributable to News Corporation stockholders | $231 | $85 | $265 | $(142) | | Weighted-average number of shares of common stock outstanding - basic | 590.7 | 588.2 | 590.1 | 587.4 | | Weighted-average number of shares of common stock outstanding - diluted | 592.6 | 590.3 | 591.7 | 587.4 | | Net income (loss) attributable to News Corporation stockholders per share - basic | $0.39 | $0.15 | $0.45 | $(0.24) | | Net income (loss) attributable to News Corporation stockholders per share - diluted | $0.39 | $0.14 | $0.45 | $(0.24) | [NOTE 10. COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=NOTE%2010.%20COMMITMENTS%20AND%20CONTINGENCIES) This note details News Corporation's significant firm commitments and ongoing legal proceedings and contingencies Sports Programming Rights Commitments (in millions) as of December 31, 2020 | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :---- | :--------------- | :-------- | :-------- | :---------------- | | $2,258 | $223 | $896 | $737 | $402 | - The Company is involved in antitrust lawsuits with Insignia Systems, Inc. and Valassis Communications, Inc. related to its former News America Marketing business, with ongoing legal proceedings and motions for summary judgment[103](index=103&type=chunk)[104](index=104&type=chunk)[351](index=351&type=chunk) - For U.K. Newspaper Matters, the Company has accrued approximately **$47 million** in liabilities as of December 31, 2020, with a corresponding receivable of **$54 million** from FOX Corporation for indemnification[109](index=109&type=chunk)[357](index=357&type=chunk) [NOTE 11. INCOME TAXES](index=24&type=section&id=NOTE%2011.%20INCOME%20TAXES) This note details News Corporation's income tax expense for H1 FY21, with an effective tax rate impacted by foreign operations and valuation allowances - Income tax expense for the three months ended December 31, 2020, was **$85 million** on pre-tax income of **$346 million**, with a higher effective tax rate due to valuation allowances and foreign operations, offset by U.K. deferred tax remeasurement[113](index=113&type=chunk)[361](index=361&type=chunk) - Income tax expense for the six months ended December 31, 2020, was **$110 million** on pre-tax income of **$418 million**, similarly impacted by valuation allowances and foreign tax rates[114](index=114&type=chunk)[362](index=362&type=chunk) - The Company paid gross income taxes of **$98 million** and received tax refunds of **$9 million** during the six months ended December 31, 2020[118](index=118&type=chunk)[366](index=366&type=chunk) [NOTE 12. SEGMENT INFORMATION](index=25&type=section&id=NOTE%2012.%20SEGMENT%20INFORMATION) This note details News Corporation's six operating segments, highlighting strong growth in Digital Real Estate and Book Publishing, and declines in News Media - News Corporation's six reportable segments are Digital Real Estate Services, Subscription Video Services, Dow Jones, Book Publishing, News Media, and Other[119](index=119&type=chunk)[367](index=367&type=chunk) Revenues by Segment (in millions) | Segment | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Digital Real Estate Services | $339 | $294 | $629 | $566 | | Subscription Video Services | $511 | $501 | $1,007 | $1,015 | | Dow Jones | $446 | $430 | $832 | $812 | | Book Publishing | $544 | $442 | $1,002 | $847 | | News Media | $573 | $811 | $1,060 | $1,578 | | Other | $1 | $1 | $1 | $1 | | **Total Revenues** | **$2,414** | **$2,479** | **$4,531** | **$4,819** | Segment EBITDA (in millions) | Segment | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Digital Real Estate Services | $142 | $118 | $261 | $200 | | Subscription Video Services | $124 | $70 | $202 | $151 | | Dow Jones | $109 | $76 | $181 | $125 | | Book Publishing | $104 | $63 | $175 | $112 | | News Media | $66 | $66 | $44 | $73 | | Other | $(48) | $(38) | $(98) | $(85) | | **Total Segment EBITDA** | **$497** | **$355** | **$765** | **$576** | [NOTE 13. ADDITIONAL FINANCIAL INFORMATION](index=28&type=section&id=NOTE%2013.%20ADDITIONAL%20FINANCIAL%20INFORMATION) This note provides further details on receivables, other non-current assets, and the components of 'Other, net' Receivables, net (in millions) | Metric | As of December 31, 2020 | As of June 30, 2020 | | :----------------- | :---------------------- | :------------------ | | Receivables | $1,526 | $1,276 | | Less: allowances | $(82) | $(73) | | **Receivables, net** | **$1,444** | **$1,203** | Other Non-Current Assets (in millions) | Component | As of December 31, 2020 | As of June 30, 2020 | | :------------------------------------ | :---------------------- | :------------------ | | Royalty advances to authors | $354 | $348 | | Retirement benefit assets | $121 | $94 | | Inventory (programming rights) | $285 | $133 | | News America Marketing deferred consideration | $120 | $111 | | Other | $313 | $353 | | **Total Other non-current assets** | **$1,193** | **$1,039** | Other, net (in millions) | Component | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :---------------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Remeasurement of equity securities | $37 | $(6) | $46 | $(5) | | Dividends received from equity security investments | $1 | — | $3 | $1 | | Gain on remeasurement of previously-held interest in Elara | $7 | — | $7 | — | | Other | $9 | $8 | $15 | $10 | | **Total Other, net** | **$54** | **$2** | **$71** | **$6** | [NOTE 14. SUBSEQUENT EVENTS](index=29&type=section&id=NOTE%2014.%20SUBSEQUENT%20EVENTS) In February 2021, News Corporation's Board of Directors declared a semi-annual cash dividend of $0.10 per share for Class A and Class B Common Stock, payable on April 14, 2021 - In February 2021, the Board of Directors declared a semi-annual cash dividend of **$0.10 per share** for Class A and Class B Common Stock, payable on April 14, 2021[142](index=142&type=chunk)[390](index=390&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of News Corporation's financial condition and operating results, including segment performance and liquidity [INTRODUCTION](index=30&type=section&id=INTRODUCTION) The introduction outlines News Corporation's identity as a global diversified media and information services company. It highlights the disaggregation of the Dow Jones segment in fiscal 2020 and reclassifications made to prior period financial statements for comparability. The section also serves as a cautionary note regarding forward-looking statements and the impact of COVID-19 - News Corporation is a global diversified media and information services company, encompassing digital real estate, subscription video, news and information, and book publishing[146](index=146&type=chunk)[394](index=394&type=chunk) - The Dow Jones operating segment was disaggregated as a separate reportable segment in fiscal 2020, with historical disclosures revised for comparability[146](index=146&type=chunk)[394](index=394&type=chunk) - The discussion includes forward-looking statements and cautions readers about risks and uncertainties, particularly those related to the COVID-19 pandemic[145](index=145&type=chunk)[393](index=393&type=chunk) [OVERVIEW OF THE COMPANY'S BUSINESSES](index=31&type=section&id=OVERVIEW%20OF%20THE%20COMPANY%27S%20BUSINESSES) This section details News Corporation's six business segments and recent developments, including COVID-19 impacts and key acquisitions - News Corporation operates in six segments: Digital Real Estate Services, Subscription Video Services, Dow Jones, Book Publishing, News Media, and Other, each with distinct offerings and market positions[151](index=151&type=chunk)[399](index=399&type=chunk) - The COVID-19 pandemic continues to create economic volatility, impacting various segments differently, with digital services generally seeing growth while print advertising and commercial subscriptions face challenges[153](index=153&type=chunk)[401](index=401&type=chunk) - In December 2020, the Company acquired Avail to expand realtor.com's rental services and a controlling interest in Elara Technologies to enhance REA Group's presence in India[157](index=157&type=chunk)[158](index=158&type=chunk)[405](index=405&type=chunk) [Other Business Developments](index=32&type=section&id=Other%20Business%20Developments) This sub-section highlights key business developments, including the ongoing effects of the COVID-19 pandemic on various segments, the strategic shift from print to digital for regional and community newspapers in Australia, and the acquisitions of Avail and Elara to bolster digital real estate services - The COVID-19 pandemic continues to cause economic volatility, affecting the Company's businesses through social distancing, business closures, and economic uncertainty[153](index=153&type=chunk)[401](index=401&type=chunk) - The Company decommissioned print operations for regional and community newspapers in Australia in fiscal 2020, expecting a **$111 million** revenue decrease in fiscal 2021 with an immaterial impact on Segment EBITDA[156](index=156&type=chunk)[404](index=404&type=chunk) - Acquired Avail for approximately **$36 million** to expand realtor.com's rental offerings and a controlling interest in Elara Technologies for **$138 million** to grow REA Group's footprint in India[157](index=157&type=chunk)[158](index=158&type=chunk)[405](index=405&type=chunk) [COVID-19 Impact and Second Half Trends](index=32&type=section&id=COVID-19%20Impact%20and%20Second%20Half%20Trends) COVID-19 continues to impact segments, with Digital Real Estate benefiting, Subscription Video facing churn, and News Media seeing digital growth - Digital Real Estate Services (Move) is benefiting from strong consumer demand, with unique users and leads at all-time highs, leading to planned additional investment of **$40 million** in brand marketing and product development in H2 FY21[153](index=153&type=chunk)[401](index=401&type=chunk) - Foxtel (Subscription Video Services) expects higher OTT revenue for the full year, but broadcast churn is anticipated to remain elevated, and net cost reductions are now expected to be less than **$73 million** (A$100 million) due to higher sports costs[153](index=153&type=chunk)[401](index=401&type=chunk) - Dow Jones and News Media segments continue to face print advertising weakness exacerbated by COVID-19, but are seeing increases in digital paid subscriptions and audience gains. Dow Jones plans modest expense increases for digital asset reinvestment[153](index=153&type=chunk)[401](index=401&type=chunk) [Regional and community newspapers in Australia](index=33&type=section&id=Regional%20and%20community%20newspapers%20in%20Australia) In the fourth quarter of fiscal 2020, News Corporation decommissioned the print operations for its regional and community newspapers in Australia. This strategic shift is projected to result in a revenue decrease of approximately $111 million for News Corp Australia in fiscal 2021, with an immaterial impact on Segment EBITDA - The Company decommissioned print operations for regional and community newspapers in Australia during Q4 FY20[156](index=156&type=chunk)[404](index=404&type=chunk) - This initiative is expected to decrease News Corp Australia's revenue by approximately **$111 million** in FY21, with an immaterial impact on Segment EBITDA[156](index=156&type=chunk)[404](index=404&type=chunk) [Avail Acquisition](index=33&type=section&id=Avail%20Acquisition) In December 2020, News Corporation acquired Rentalutions, Inc. ('Avail') for an initial cash consideration of approximately $36 million. This acquisition aims to expand realtor.com's rental services, support landlords, and grow its audience, with Avail's results integrated into the Digital Real Estate Services segment - Acquired Rentalutions, Inc. ('Avail') in December 2020 for approximately **$36 million** cash, net of **$4 million** cash acquired[157](index=157&type=chunk)[405](index=405&type=chunk) - Avail is a platform that improves the renting experience for do-it-yourself landlords and tenants[157](index=157&type=chunk)[405](index=405&type=chunk) - The acquisition helps realtor.com expand into the rental space, support landlords, augment content, and build long-term relationships with renters[157](index=157&type=chunk)[405](index=405&type=chunk) [Elara Acquisition](index=33&type=section&id=Elara%20Acquisition) In December 2020, News Corporation acquired a controlling interest in Elara Technologies Pte. Ltd. ('Elara') for a total aggregate purchase price of $138 million. This transaction increased REA Group's shareholding to 59.7% and News Corporation's to 39.0%, leading to the consolidation of Elara's results within the Digital Real Estate Services segment and positioning REA Group for growth in the Indian real estate sector - Acquired a controlling interest in Elara Technologies Pte. Ltd. ('Elara') in December 2020 for a total aggregate purchase price of **$138 million**[158](index=158&type=chunk)[406](index=406&type=chunk) - REA Group's shareholding in Elara increased from **13.5%** to **59.7%**, and News Corporation's from **22.1%** to **39.0%**, leading to consolidation of Elara's results[158](index=158&type=chunk)[406](index=406&type=chunk) - The acquisition allows REA Group to capitalize on long-term growth opportunities in India and the digitization of the real estate sector[158](index=158&type=chunk)[406](index=406&type=chunk) [RESULTS OF OPERATIONS](index=34&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes News Corporation's operating results, detailing consolidated revenue and expense changes and segment performance [Consolidated Results](index=34&type=section&id=Consolidated%20Results) Consolidated revenues decreased for H1 FY21, primarily due to the News America Marketing sale, while net income significantly improved Consolidated Revenue Changes (in millions, except %) | Metric | Three Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | Six Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | | :------------------------- | :------------------------------ | :-------------------- | :------- | :---------------------------- | :-------------------- | :------- | | Total Revenues | $2,414 | $(65) | (3)% | $4,531 | $(288) | (6)% | | Operating expenses | $(1,198) | $153 | 11% | $(2,362) | $327 | 12% | | Selling, general and administrative | $(719) | $54 | 7% | $(1,404) | $150 | 10% | | Net income (loss) | $261 | $158 | ** | $308 | $416 | ** | - Revenue decrease for both periods was primarily driven by the sale of News America Marketing (**$191 million** for three months, **$391 million** for six months) and lower print advertising in News Media, partially offset by growth in Book Publishing, Digital Real Estate Services, and Dow Jones[409](index=409&type=chunk) - Net income for the six months ended December 31, 2020, improved by **$416 million**, primarily due to the absence of **$292 million** in non-cash impairment charges from the prior year, higher Total Segment EBITDA, and higher Other, net[415](index=415&type=chunk)[421](index=421&type=chunk) [Segment Analysis](index=36&type=section&id=Segment%20Analysis) This section analyzes performance across all six segments, highlighting increased Segment EBITDA in digital and publishing, and declines in News Media Segment EBITDA (in millions) | Segment | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Digital Real Estate Services | $142 | $118 | $261 | $200 | | Subscription Video Services | $124 | $70 | $202 | $151 | | Dow Jones | $109 | $76 | $181 | $125 | | Book Publishing | $104 | $63 | $175 | $112 | | News Media | $66 | $66 | $44 | $73 | | Other | $(48) | $(38) | $(98) | $(85) | | **Total Segment EBITDA** | **$497** | **$355** | **$765** | **$576** | - Digital Real Estate Services Segment EBITDA increased by **31%** for the six months ended December 31, 2020, driven by higher revenues from Move and REA Group, and deferred marketing costs[433](index=433&type=chunk)[185](index=185&type=chunk) - News Media Segment EBITDA declined by **40%** for the six months ended December 31, 2020, primarily due to lower contributions from the sale of News America Marketing and Unruly, and continued weakness in print advertising[460](index=460&type=chunk)[212](index=212&type=chunk) [Digital Real Estate Services](index=38&type=section&id=Digital%20Real%20Estate%20Services) This segment saw revenues increase by **11%** and Segment EBITDA by **31%** for H1 FY21, driven by higher real estate revenues and deferred marketing costs Digital Real Estate Services Performance (in millions, except %) | Metric | Three Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | Six Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | | :------------------------------------ | :------------------------------ | :-------------------- | :------- | :---------------------------- | :-------------------- | :------- | | Total Revenues | $339 | $45 | 15% | $629 | $63 | 11% | | Segment EBITDA | $142 | $24 | 20% | $261 | $61 | 31% | - Move's revenues increased by **20%** to **$293 million** for the six months ended December 31, 2020, driven by higher real estate revenues from increased lead and transaction volumes, with the referral model contributing approximately **30%** of total Move revenues[431](index=431&type=chunk)[183](index=183&type=chunk) - REA Group's revenues increased by **4%** to **$336 million** for the six months ended December 31, 2020, benefiting from a **$18 million** positive impact of foreign currency fluctuations and increased Australian residential depth revenue, despite declines in Asian market and commercial revenues[431](index=431&type=chunk)[183](index=183&type=chunk) [Subscription Video Services](index=39&type=section&id=Subscription%20Video%20Services) This segment saw a **1%** revenue decrease but a **34%** Segment EBITDA increase for H1 FY21, driven by lower sports costs and higher OTT revenues Subscription Video Services Performance (in millions, except %) | Metric | Three Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | Six Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | | :------------------------------------ | :------------------------------ | :-------------------- | :------- | :---------------------------- | :-------------------- | :------- | | Total Revenues | $511 | $10 | 2% | $1,007 | $(8) | (1)% | | Segment EBITDA | $124 | $54 | 77% | $202 | $51 | 34% | - Revenues for the six months ended December 31, 2020, decreased by **$8 million**, or **1%**, primarily due to fewer residential broadcast subscribers and a **$25 million** decline in commercial subscription revenues due to COVID-19, partially offset by **$27 million** higher revenues from OTT products (Kayo and Binge) and a **$53 million** positive foreign currency impact[436](index=436&type=chunk)[188](index=188&type=chunk) - Segment EBITDA increased by **$51 million**, or **34%**, for the six months ended December 31, 2020, driven by **$27 million** lower sports programming rights and production costs (due to renegotiated rights), lower entertainment programming, employee, and transmission costs, and a **$12 million** positive foreign currency impact[437](index=437&type=chunk)[189](index=189&type=chunk) Foxtel Key Performance Indicators (in 000's, except ARPU and Churn) | Metric | As of Dec 31, 2020 | As of Dec 31, 2019 | | :------------------------------------ | :----------------- | :----------------- | | Residential Broadcast Subscribers | 1,783 | 2,002 | | Commercial Broadcast Subscribers | 218 | 266 | | Foxtel Now Subscribers (Paid) | 258 | 334 | | Kayo Subscribers (Paid) | 624 | 350 | | Binge Subscribers (Paid) | 431 | — | | Total Paid Subscribers | 3,314 | 2,952 | | Broadcast ARPU (US$) | $58 | $53 | | Broadcast Subscriber Churn | 17.5% | 16.0% | [Dow Jones](index=40&type=section&id=Dow%20Jones) This segment reported a **2%** revenue increase and **45%** Segment EBITDA increase for H1 FY21, driven by digital subscriptions and Risk & Compliance revenues Dow Jones Performance (in millions, except %) | Metric | Three Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | Six Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | | :------------------------------------ | :------------------------------ | :-------------------- | :------- | :---------------------------- | :-------------------- | :------- | | Total Revenues | $446 | $16 | 4% | $832 | $20 | 2% | | Segment EBITDA | $109 | $33 | 43% | $181 | $56 | 45% | - Circulation and subscription revenues increased by **$45 million**, or **8%**, for the six months ended December 31, 2020, driven by digital-only subscriptions at The Wall Street Journal (**2.5 million**, up **28%** YoY for three months) and growth in Risk & Compliance revenues[444](index=444&type=chunk)[445](index=445&type=chunk)[196](index=196&type=chunk) - Digital revenues represented **71%** of total Dow Jones revenues for the six months ended December 31, 2020, up from **65%** in the prior year[443](index=443&type=chunk)[195](index=195&type=chunk) - Advertising revenues decreased by **$19 million**, or **9%**, for the six months ended December 31, 2020, due to print advertising weakness, partially offset by a **$20 million** increase in digital advertising revenue[449](index=449&type=chunk)[201](index=201&type=chunk) [Book Publishing](index=42&type=section&id=Book%20Publishing) This segment achieved significant growth, with revenues increasing by **18%** and Segment EBITDA by **56%** for H1 FY21, driven by strong sales and acquisitions Book Publishing Performance (in millions, except %) | Metric | Three Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | Six Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | | :------------------------------------ | :------------------------------ | :-------------------- | :------- | :---------------------------- | :-------------------- | :------- | | Total Revenues | $544 | $102 | 23% | $1,002 | $155 | 18% | | Segment EBITDA | $104 | $41 | 65% | $175 | $63 | 56% | - Revenues for the six months ended December 31, 2020, increased by **$155 million**, or **18%**, driven by higher backlist sales of children's titles, strong performance of General Books, and a **$22 million** impact from a European book publisher acquisition[454](index=454&type=chunk)[206](index=206&type=chunk) - Digital sales increased by **18%** for the six months ended December 31, 2020, due to growth in e-books and downloadable audiobooks, representing approximately **21%** of consumer revenues[454](index=454&type=chunk)[206](index=206&type=chunk) [News Media](index=43&type=section&id=News%20Media) This segment experienced a significant revenue decrease of **33%** and a **40%** Segment EBITDA decline for H1 FY21, primarily due to the News America Marketing sale and print advertising weakness News Media Performance (in millions, except %) | Metric | Three Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | Six Months Ended Dec 31, 2020 | Change (Better/Worse) | % Change | | :------------------------------------ | :------------------------------ | :-------------------- | :------- | :---------------------------- | :-------------------- | :------- | | Total Revenues | $573 | $(238) | (29)% | $1,060 | $(518) | (33)% | | Segment EBITDA | $66 | — | —% | $44 | $(29) | (40)% | - Revenues for the six months ended December 31, 2020, decreased by **$518 million**, or **33%**, primarily due to a **$391 million** impact from the sale of News America Marketing, continued print advertising weakness, and a **$57 million** impact from the closure of Australian regional newspapers[459](index=459&type=chunk)[211](index=211&type=chunk) - Segment EBITDA declined by **$29 million**, or **40%**, for the six months ended December 31, 2020, due to lower contributions from News Corp Australia and News UK, and the net impact from the sales of News America Marketing and Unruly[460](index=460&type=chunk)[212](index=212&type=chunk) [News Corp Australia](index=44&type=section&id=News%20Corp%20Australia) News Corp Australia's revenues decreased by **15%** for H1 FY21, primarily due to newspaper closures and advertising declines, partially offset by digital growth - Revenues were **$473 million** for the six months ended December 31, 2020, a decrease of **$85 million**, or **15%**, compared to the prior year[461](index=461&type=chunk)[213](index=213&type=chunk) - The closure or transition to digital of regional and community newspapers in Australia resulted in a **$69 million** revenue decrease[461](index=461&type=chunk)[213](index=213&type=chunk) - Advertising revenues decreased by **$93 million**, primarily due to newspaper closures, print advertising weakness, and lower digital advertising, partially offset by a **$11 million** positive foreign currency impact[461](index=461&type=chunk)[213](index=213&type=chunk) [News UK](index=44&type=section&id=News%20UK) News UK's revenues decreased by **6%** for H1 FY21, primarily due to advertising declines, partially offset by digital subscriber growth and cover price increases - Revenues were **$451 million** for the six months ended December 31, 2020, a decrease of **$31 million**, or **6%**, compared to the prior year[462](index=462&type=chunk)[214](index=214&type=chunk) - Advertising revenues decreased by **$26 million**, primarily due to continued weakness in the print advertising market exacerbated by COVID-19[462](index=462&type=chunk)[214](index=214&type=chunk) - Circulation and subscription revenues increased by **$1 million**, driven by digital subscriber growth at The Times and cover price increases at The Sun, along with a **$9 million** positive foreign currency impact, offsetting single-copy volume declines[462](index=462&type=chunk)[214](index=214&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=45&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) News Corporation's liquidity is supported by **$1.6 billion** cash and a **$750 million** credit facility, with improved operating and free cash flow [Current Financial Condition](index=45&type=section&id=Current%20Financial%20Condition) News Corporation's primary liquidity sources are internally generated funds and $1.6 billion in cash and cash equivalents as of December 31, 2020. The company also has access to a $750 million revolving credit facility and expects to meet its liquidity needs for at least the next 12 months. However, access to financing could be impacted by various factors, including the COVID-19 pandemic - As of December 31, 2020, the Company's cash and cash equivalents were **$1.6 billion**[464](index=464&type=chunk)[216](index=216&type=chunk) - The Company has access to an unsecured **$750 million** revolving credit facility (2019 News Corp Credit Facility) for general corporate purposes[464](index=464&type=chunk)[216](index=216&type=chunk) - Approximately **$839 million** of cash and cash equivalents were held by foreign subsidiaries, with **$137 million** held by REA Group not readily accessible without a dividend declaration[465](index=465&type=chunk)[217](index=217&type=chunk) [Issuer Purchases of Equity Securities](index=45&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) News Corporation did not purchase any of its Class A Common Stock or Class B Common Stock during the six months ended December 31, 2020 and 2019 - The Company did not purchase any of its Class A Common Stock or Class B Common Stock during the six months ended December 31, 2020 and 2019[467](index=467&type=chunk)[219](index=219&type=chunk) [Dividends](index=45&type=section&id=Dividends) In August 2020, News Corporation's Board of Directors declared a semi-annual cash dividend of $0.10 per share for Class A and Class B Common Stock, which was paid on October 14, 2020. Future dividend payments are at the discretion of the Board, considering various financial and market factors - A semi-annual cash dividend of **$0.10 per share** for Class A and Class B Common Stock was declared in August 2020 and paid on October 14, 2020[468](index=468&type=chunk)[220](index=220&type=chunk) - Future dividend decisions depend on financial condition, earnings, capital requirements, debt covenants, legal requirements, and market volatility[468](index=468&type=chunk)[220](index=220&type=chunk) [Sources and Uses of Cash](index=46&type=section&id=Sources%20and%20Uses%20of%20Cash) Net cash from operating activities significantly increased for H1 FY21, while investing activities increased and financing activities decreased Net Cash Flows (in millions) for the six months ended December 31 | Cash Flow Activity | 2020 | 2019 | | :------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $483 | $192 | | Net cash used in investing activities | $(276) | $(234) | | Net cash used in financing activities | $(219) | $(328) | - Net cash provided by operating activities increased by **$291 million**, primarily due to higher Total Segment EBITDA and lower working capital[471](index=471&type=chunk)[223](index=223&type=chunk) - Net cash used in investing activities increased by **$42 million**, with **$173 million** for capital expenditures (including **$79 million** for Foxtel) and **$90 million** for acquisitions (Elara and Avail)[471](index=471&type=chunk)[223](index=223&type=chunk) [Reconciliation of Free Cash Flow Available to News Corporation](index=46&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow%20Available%20to%20News%20Corporation) Free cash flow available to News Corporation significantly increased for H1 FY21, driven by higher operating cash flow and lower capital expenditures Free Cash Flow Available to News Corporation (in millions) for the six months ended December 31 | Metric | 2020 | 2019 | | :------------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $483 | $192 | | Less: Capital expenditures | $(173) | $(237) | | Free cash flow | $310 | $(45) | | Less: REA Group free cash flow | $(65) | $(86) | | Plus: Cash dividends received from REA Group | $32 | $35 | | **Free cash flow available to News Corporation** | **$277** | **$(96)** | - Free cash flow available to News Corporation increased by **$373 million**, primarily due to higher net cash provided by operating activities and lower capital expenditures[477](index=477&type=chunk)[229](index=229&type=chunk) - This non-GAAP measure provides insight into cash available for strengthening the balance sheet and strategic opportunities, excluding REA Group's free cash flow and including only dividends received from REA Group[475](index=475&type=chunk)[227](index=227&type=chunk) [Borrowings](index=47&type=section&id=Borrowings) As of December 31, 2020, News Corporation had total borrowings of $1.3 billion, primarily from the Foxtel Debt Group ($958 million) and REA Debt Group ($182 million), which are non-recourse to News Corp. The company also has access to a $750 million unsecured revolving credit facility, which was undrawn. All debt covenants were in compliance - Total borrowings as of December 31, 2020, were **$1.3 billion**, including current portion and finance lease liabilities[478](index=478&type=chunk)[230](index=230&type=chunk) - Borrowings primarily consist of **$958 million** from Foxtel Debt Group and **$182 million** from REA Debt Group, which are non-recourse to News Corp[478](index=478&type=chunk)[230](index=230&type=chunk) - The Company has an undrawn **$750 million** revolving credit facility and was in compliance with all debt covenants as of December 31, 2020[479](index=479&type=chunk)[480](index=480&type=chunk)[231](index=231&type=chunk) [Commitments](index=48&type=section&id=Commitments) News Corporation has firm contractual commitments totaling $2,258 million as of December 31, 2020, primarily for sports programming rights. These commitments secure future rights and services for normal operations, with significant payments due in the 1-3 year timeframe - Total firm commitments for future payments were **$2,258 million** as of December 31, 2020, primarily for sports programming rights[481](index=481&type=chunk)[233](index=233&type=chunk) Sports Programming Rights Commitments (in millions) as of December 31, 2020 | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :---- | :--------------- | :-------- | :-------- | :---------------- | | $2,258 | $223 | $896 | $737 | $402 | [Contingencies](index=48&type=section&id=Contingencies) News Corporation is routinely involved in legal proceedings, claims, and governmental investigations, the outcomes of which are uncertain. The company accrues liabilities for probable and estimable losses and believes it has appropriately accrued for uncertain tax matters, though adjustments may be needed as new information becomes available - The Company is routinely involved in various legal proceedings, claims, and governmental inspections or investigations, with uncertain outcomes[483](index=483&type=chunk)[235](index=235&type=chunk) - Accrued liabilities are established for legal claims when a loss is probable and reasonably estimable, and are adjusted as new information becomes available[484](index=484&type=chunk)[236](index=236&type=chunk) - The Company believes it has appropriately accrued for uncertain tax matters, but liabilities may require adjustment based on ongoing tax examinations or settlements[485](index=485&type=chunk)[237](index=237&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to News Corporation's assessment of its sensitivity to market risk since the disclosures in its 2020 Form 10-K - No material change in the Company's assessment of its sensitivity to market risk since the 2020 Form 10-K[486](index=486&type=chunk)[238](index=238&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) News Corporation's management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2020. There have been no material changes to internal control over financial reporting during the second quarter of fiscal 2021 - The Company's disclosure controls and procedures were effective as of December 31, 2020[487](index=487&type=chunk)[239](index=239&type=chunk) - No material changes to internal control over financial reporting occurred during the second quarter of fiscal 2021[489](index=489&type=chunk)[241](index=241&type=chunk) [Part II. Other Information](index=50&type=section&id=Part%20II.%20Other%20Information) This section provides additional information not covered in the financial statements, including legal proceedings and risk factors [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10—Commitments and Contingencies for details on News Corporation's legal proceedings - Details on legal proceedings are provided in Note 10—Commitments and Contingencies[491](index=491&type=chunk)[243](index=243&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously described in the Company's 2020 Form 10-K, as supplemented by the Quarterly Report on Form 10-Q for the period ended September 30, 2020 - No material changes to risk factors since the 2020 Form 10-K and Q1 FY21 10-Q[492](index=492&type=chunk)[244](index=244&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities and use of proceeds[492](index=492&type=chunk)[244](index=244&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the current report - Item 3. Defaults Upon Senior Securities is not applicable[492](index=492&type=chunk)[244](index=244&type=chunk) [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the current report - Item 4. Mine Safety Disclosures is not applicable[492](index=492&type=chunk)[244](index=244&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the current report - Item 5. Other Information is not applicable[492](index=492&type=chunk)[244](index=244&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and financial information formatted in Inline XBRL - Exhibits include CEO and CFO certifications required by Rules 13a-14 and 15d-14, and financial information formatted in Inline XBRL[493](index=493&type=chunk)[245](index=245&type=chunk) [Signature](index=51&type=section&id=Signature) The report is duly signed on behalf of News Corporation by Susan Panuccio, Chief Financial Officer, on February 5, 2021 - The report was signed by Susan Panuccio, Chief Financial Officer, on February 5, 2021[495](index=495&type=chunk)[247](index=247&type=chunk)

News Corporation (NASDAQ:NWSA) Q1 2021 Earnings Conference Call November 5, 2020 5:00 PM ET Company Participants Mike Florin - Senior Vice President & Head of Investor Relations Robert Thomson - Chief Executive Officer Susan Panuccio - Chief Financial Officer Conference Call Participants Kane Hannan - Goldman Sachs Entcho Raykovski - Crédit Suisse Craig Huber - Huber Research Partners Brian Han - Morningstar Operator Good day. And welcome to the News Corp 1Q Fiscal 2021 Conference Call. Today's conference i ...