News (NWS) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents News Corporation's unaudited consolidated financial statements and management's discussion and analysis for the three months ended September 30, 2024 ITEM 1. FINANCIAL STATEMENTS This section presents News Corporation's unaudited consolidated financial statements for the three months ended September 30, 2024 and 2023, including the Statements of Operations, Comprehensive Income (Loss), Balance Sheets, and Cash Flows, along with detailed notes explaining the basis of presentation, revenue recognition, impairment, investments, borrowings, equity, financial instruments, earnings per share, commitments, contingencies, income taxes, segment information, and other financial details Consolidated Statements of Operations The consolidated statements of operations show significant increases in net income and total revenues for the quarter | Metric | Three Months Ended Sep 30, 2024 (Millions) | Three Months Ended Sep 30, 2023 (Millions) | Change (Millions) | % Change | | :----------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | :---------------- | :------- | | Total Revenues | $2,577 | $2,499 | $78 | 3% | | Operating expenses | $(1,263) | $(1,273) | $10 | 1% | | Selling, general and administrative | $(899) | $(862) | $(37) | (4)% | | Depreciation and amortization | $(189) | $(171) | $(18) | (11)% | | Impairment and restructuring charges | $(24) | $(38) | $14 | 37% | | Equity losses of affiliates | $(3) | $(2) | $(1) | (50)% | | Interest expense, net | $(18) | $(23) | $5 | 22% | | Other, net | $23 | $(35) | $58 | ** | | Income before income tax expense | $204 | $95 | $109 | 115% | | Income tax expense | $(60) | $(37) | $(23) | (62)% | | Net income | $144 | $58 | $86 | 148% | | Net income attributable to News Corporation stockholders | $119 | $30 | $89 | 297% | | Net income attributable to News Corporation stockholders per share, basic and diluted | $0.21 | $0.05 | | | Consolidated Statements of Comprehensive Income (Loss) This section presents the consolidated statements of comprehensive income (loss), showing a significant positive swing in comprehensive income for the period | Metric | Three Months Ended Sep 30, 2024 (Millions) | Three Months Ended Sep 30, 2023 (Millions) | | :------------------------------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Net income | $144 | $58 | | Other comprehensive income (loss): | | | | Foreign currency translation adjustments | $170 | $(145) | | Net change in the fair value of cash flow hedges | $(16) | $(1) | | Benefit plan adjustments, net | $(3) | $15 | | Other comprehensive income (loss) | $151 | $(131) | | Comprehensive income (loss) | $295 | $(73) | | Net income attributable to noncontrolling interests | $(25) | $(28) | | Other comprehensive (income) loss attributable to noncontrolling interests | $(31) | $31 | | Comprehensive income (loss) attributable to News Corporation stockholders | $239 | $(70) | Consolidated Balance Sheets The consolidated balance sheets reflect an increase in total assets and total equity as of September 30, 2024 | Metric | As of Sep 30, 2024 (Millions) | As of Jun 30, 2024 (Millions) | Change (Millions) | | :------------------------------------ | :---------------------------- | :---------------------------- | :---------------- | | Total current assets | $4,506 | $4,372 | $134 | | Total assets | $16,927 | $16,684 | $243 | | Total current liabilities | $3,269 | $3,055 | $214 | | Total liabilities and equity | $16,927 | $16,684 | $243 | | Total News Corporation stockholders' equity | $8,253 | $8,120 | $133 | | Noncontrolling interests | $913 | $891 | $22 | | Total equity | $9,166 | $9,011 | $155 | Consolidated Statements of Cash Flows The consolidated statements of cash flows show a significant improvement in operating cash flow and reduced cash used in investing activities | Metric | Three Months Ended Sep 30, 2024 (Millions) | Three Months Ended Sep 30, 2023 (Millions) | Change (Millions) | | :------------------------------------------------ | :----------------------------------------- | :----------------------------------------- | :---------------- | | Net cash provided by (used in) operating activities | $64 | $(55) | $119 | | Net cash used in investing activities | $(136) | $(159) | $23 | | Net cash used in financing activities | $(147) | $(65) | $(82) | | Net change in cash and cash equivalents | $(219) | $(279) | $60 | | Cash and cash equivalents, end of period | $1,778 | $1,529 | $249 | Notes to the Unaudited Consolidated Financial Statements This section provides detailed notes to the unaudited consolidated financial statements, covering business description, revenue recognition, impairment, investments, borrowings, equity, financial instruments, earnings per share, commitments, contingencies, income taxes, and segment information NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION News Corporation is a global diversified media and information services company. The financial statements are unaudited, prepared in accordance with GAAP for interim information, and reflect management's estimates. The fiscal year ends on the Sunday closest to June 30. The Company is evaluating the impact of recently issued FASB ASUs on segment reporting, income tax disclosures, and expense disaggregation - News Corporation is a global diversified media and information services company, operating in information services and news, digital real estate services, book publishing, and subscription video services in Australia[15] - The Company is currently evaluating the impact of ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Tax Disclosures), and ASU 2024-03 (Expense Disaggregation Disclosures) on its financial statements, with effective dates ranging from fiscal 2025 to fiscal 2028[21][23][24] NOTE 2. REVENUES Total revenues for the three months ended September 30, 2024, increased to $2,577 million from $2,499 million in the prior year. The increase was primarily driven by growth in circulation and subscription, consumer, and real estate revenues, while advertising and other revenues saw slight declines. The Company recognized $112 million in revenues from prior period performance obligations and expects to recognize $1,324 million from unsatisfied performance obligations in future periods Disaggregated Revenues by Type (Millions) | Revenue Type | Sep 30, 2024 | Sep 30, 2023 | Change | % Change | | :----------------------- | :----------- | :----------- | :----- | :------- | | Circulation and subscription | $1,157 | $1,129 | $28 | 2% | | Advertising | $381 | $391 | $(10) | (3)% | | Consumer | $521 | $502 | $19 | 4% | | Real estate | $357 | $311 | $46 | 15% | | Other | $161 | $166 | $(5) | (3)% | | Total Revenues | $2,577 | $2,499 | $78 | 3% | Contract Liabilities (Millions) | Metric | Sep 30, 2024 | Sep 30, 2023 | | :-------------------------- | :----------- | :----------- | | Balance, beginning of period | $551 | $622 | | Deferral of revenue | $967 | $937 | | Recognition of deferred revenue | $(969) | $(929) | | Other | $10 | $(6) | | Balance, end of period | $559 | $624 | - As of September 30, 2024, the remaining transaction price related to unsatisfied performance obligations was approximately $1,324 million, with $381 million expected to be recognized over the remainder of fiscal 2025, $354 million in fiscal 2026, and $235 million in fiscal 2027[31] NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES The Company recorded restructuring charges of $24 million for the three months ended September 30, 2024, primarily for employee termination benefits, an increase from $17 million in the prior year. No impairment charges were recognized in the current quarter, compared to $21 million in the prior year related to News Media's fixed assets Restructuring Charges (Millions) | Metric | Sep 30, 2024 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | | Restructuring charges | $24 | $17 | | Impairment charges (News Media segment) | $0 | $21 | Changes in Restructuring Program Liabilities (Millions) | Metric | Sep 30, 2024 | Sep 30, 2023 | | :-------------------------- | :----------- | :----------- | | Balance, beginning of period | $62 | $94 | | Additions | $24 | $17 | | Payments | $(27) | $(40) | | Other | $0 | $(1) | | Balance, end of period | $59 | $70 | NOTE 4. INVESTMENTS Total investments increased to $458 million as of September 30, 2024, from $430 million as of June 30, 2024, primarily driven by an increase in equity and other securities. The Company's share of equity losses from affiliates increased to $3 million from $2 million year-over-year, while total gains on equity securities improved significantly to $10 million from a loss of $23 million Company's Investments (Millions) | Investment Type | As of Sep 30, 2024 | As of Jun 30, 2024 | | :-------------------------- | :----------------- | :----------------- | | Equity method investments | $223 | $216 | | Equity and other securities | $235 | $214 | | Total Investments | $458 | $430 | Gains/Losses on Equity Securities (Millions) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------------------------------------ | :------------------------------ | :------------------------------ | | Total gains (losses) recognized on equity securities | $10 | $(23) | | Less: Net gains (losses) recognized on equity securities sold | $0 | $0 | | Unrealized gains (losses) recognized on equity securities held at end of period | $10 | $(23) | - The Company's share of losses from equity affiliates increased to $3 million for the three months ended September 30, 2024, compared to $2 million in the prior year[36] NOTE 5. BORROWINGS Total borrowings slightly decreased to $2,900 million as of September 30, 2024, from $2,909 million as of June 30, 2024. The Company and its consolidated subsidiaries were in compliance with all debt covenants. Key borrowings include News Corporation's Term Loan A and Senior Notes, and Foxtel Group and REA Group's credit facilities, with various interest rates and maturities Total Borrowings (Millions) | Borrower/Facility | Interest Rate at Sep 30, 2024 | Maturity at Sep 30, 2024 | As of Sep 30, 2024 | As of Jun 30, 2024 | | :---------------------------------------------- | :---------------------------- | :----------------------- | :----------------- | :----------------- | | News Corporation: | | | | | | 2022 Term loan A | 6.810% | Mar 31, 2027 | $484 | $484 | | 2022 Senior notes | 5.125% | Feb 15, 2032 | $493 | $493 | | 2021 Senior notes | 3.875% | May 15, 2029 | $992 | $991 | | Foxtel Group: | | | | | | 2024 Foxtel credit facility — tranche 1 | 7.33% | Aug 1, 2026 | $428 | $434 | | 2024 Foxtel credit facility — USD portion — tranche 2 | 8.36% | Aug 1, 2027 | $44 | $49 | | 2024 Foxtel credit facility — tranche 3 | 7.48% | Aug 1, 2027 | $195 | $208 | | 2017 Working capital facility | 7.33% | Aug 1, 2026 | $21 | $0 | | Telstra facility | 12.25% | Dec 22, 2027 | $89 | $93 | | REA Group: | | | | | | 2024 REA credit facility — tranche 1 | 5.93% | Sep 15, 2028 | $0 | $0 | | 2024 REA credit facility — tranche 2 | 5.63% | Sep 16, 2025 | $138 | $79 | | 2024 Subsidiary facility | 0% | Sep 28, 2025 | $0 | $55 | | Finance Leases: | | | | | | Finance lease liability | | | $16 | $23 | | Total borrowings | | | $2,900 | $2,909 | | Less: current portion | | | $(194) | $(54) | | Long-term borrowings | | | $2,706 | $2,855 | - The Company was in compliance with all debt covenants as of September 30, 2024[40] NOTE 6. EQUITY Total News Corporation stockholders' equity increased to $8,253 million as of September 30, 2024, from $8,120 million as of June 30, 2024, primarily due to net income and other comprehensive income, partially offset by dividends and share repurchases. The Company repurchased $38 million of its Class A and Class B Common Stock during the quarter, with $422 million remaining under the authorized repurchase program. A semi-annual cash dividend of $0.10 per share was declared in August 2024 Changes in Equity (Millions) | Metric | Balance, Jun 30, 2024 | Net Income | Other Comprehensive Income | Dividends | Share Repurchases | Other | Balance, Sep 30, 2024 | | :-------------------------------------------- | :-------------------- | :--------- | :------------------------- | :-------- | :---------------- | :---- | :-------------------- | | Total News Corp Equity | $8,120 | $119 | $120 | $(57) | $(38) | $(11) | $8,253 | | Noncontrolling Interests | $891 | $25 | $31 | $(35) | $0 | $1 | $913 | | Total Equity | $9,011 | $144 | $151 | $(92) | $(38) | $(10) | $9,166 | Stock Repurchases (Millions) | Stock Class | Shares Repurchased (Millions) - Sep 30, 2024 | Amount Paid (Millions) - Sep 30, 2024 | Shares Repurchased (Millions) - Sep 30, 2023 | Amount Paid (Millions) - Sep 30, 2023 | | :----------------------- | :------------------------------------------- | :------------------------------------ | :------------------------------------------- | :------------------------------------ | | Class A Common Stock | 0.9 | $25 | 1.0 | $20 | | Class B Common Stock | 0.4 | $13 | 0.4 | $9 | | Total | 1.3 | $38 | 1.4 | $29 | - As of September 30, 2024, approximately $422 million remained authorized under the Company's $1 billion share repurchase program[43] - In August 2024, the Board of Directors declared a semi-annual cash dividend of $0.10 per share for Class A and Class B Common Stock, paid on October 9, 2024[46] NOTE 7. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS The Company uses derivative instruments to mitigate foreign currency exchange rate risk and interest rate risk, primarily through interest rate swaps, foreign currency contracts, and cross-currency interest rate swaps. These derivatives are classified across Level 1, 2, and 3 of the fair value hierarchy. The fair value of total assets measured at fair value on a recurring basis increased to $249 million as of September 30, 2024, from $243 million as of June 30, 2024, while total liabilities increased to $(11) million from $(2) million Assets and Liabilities Measured at Fair Value on a Recurring Basis (Millions) | Metric | As of Sep 30, 2024 | As of Jun 30, 2024 | | :------------------------------------------------ | :----------------- | :----------------- | | Total assets (Interest rate derivatives, Equity and other securities) | $249 | $243 | | Total liabilities (Interest rate, Foreign currency, Cross-currency derivatives) | $(11) | $(2) | - The Company uses derivative instruments, including interest rate derivatives, foreign currency derivatives, and cross-currency interest rate derivatives, to manage foreign currency exchange rate risk and interest rate risk[54][57] - The total notional value of interest rate swap derivatives designated for hedging was approximately $484 million for News Corporation and A$610 million for Foxtel Debt Group borrowings as of September 30, 2024[58] NOTE 8. EARNINGS (LOSS) PER SHARE Basic and diluted earnings per share attributable to News Corporation stockholders increased significantly to $0.21 for the three months ended September 30, 2024, compared to $0.05 in the prior year, driven by higher net income Earnings Per Share Computation | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------------------------------------ | :------------------------------ | :------------------------------ | | Net income attributable to News Corporation stockholders (Millions) | $119 | $30 | | Weighted-average number of shares of common stock outstanding - basic (Millions) | 569.2 | 572.3 | | Dilutive effect of equity awards (Millions) | 2.0 | 1.8 | | Weighted-average number of shares of common stock outstanding - diluted (Millions) | 571.2 | 574.1 | | Net income attributable to News Corporation stockholders per share - basic and diluted | $0.21 | $0.05 | NOTE 9. COMMITMENTS AND CONTINGENCIES The Company's commitments have not materially changed from the prior fiscal year. Legal contingencies include ongoing antitrust complaints against HarperCollins, which have been dismissed but are subject to appeal, and U.K. Newspaper Matters, for which the Company has accrued $62 million in liabilities, with $68 million indemnified by FOX Corporation - The Company's commitments under firm contractual arrangements have not significantly changed from the disclosures in the 2024 Form 10-K[67] - HarperCollins is involved in antitrust class action complaints, which have been dismissed by the N.Y. District Court, but plaintiffs' appeal time is pending final determination against Amazon[70] - For the U.K. Newspaper Matters, the Company has accrued approximately $62 million in liabilities as of September 30, 2024, with a corresponding receivable of approximately $68 million from FOX Corporation due to indemnification agreements[74] NOTE 10. INCOME TAXES Income tax expense for the three months ended September 30, 2024, was $60 million on pre-tax income of $204 million, resulting in a higher effective tax rate than the U.S. statutory rate due to foreign operations and valuation allowances. The Company is evaluating the potential impact of the OECD's global minimum tax rules, which are not expected to have a material impact on results of operations - For the three months ended September 30, 2024, income tax expense was $60 million on pre-tax income of $204 million, compared to $37 million on $95 million in the prior year. The effective tax rate was higher than the U.S. statutory rate due to foreign operations and valuation allowances[77][78] - The Company has assessed the potential impact of the OECD's global minimum tax proposals, effective for its financial year beginning July 1, 2024, and does not expect them to have a material impact on its results of operations[82] - Cash paid for taxes was $48 million for the three months ended September 30, 2024, up from $25 million in the prior year[83][100] NOTE 11. SEGMENT INFORMATION News Corporation manages its businesses across six segments: Dow Jones, Digital Real Estate Services, Book Publishing, Subscription Video Services, News Media, and Other. Total Segment EBITDA increased to $415 million for the three months ended September 30, 2024, from $364 million in the prior year, driven by strong performance in Dow Jones, Digital Real Estate Services, and Book Publishing - The Company operates in six segments: Dow Jones, Digital Real Estate Services, Book Publishing, Subscription Video Services, News Media, and Other[84][85][86][87] Segment Revenues and EBITDA (Millions) | Segment | Revenues Sep 30, 2024 | Segment EBITDA Sep 30, 2024 | Revenues Sep 30, 2023 | Segment EBITDA Sep 30, 2023 | | :--------------------------- | :-------------------- | :-------------------------- | :-------------------- | :-------------------------- | | Dow Jones | $552 | $131 | $537 | $124 | | Digital Real Estate Services | $457 | $140 | $403 | $122 | | Book Publishing | $546 | $81 | $525 | $65 | | Subscription Video Services | $501 | $92 | $486 | $93 | | News Media | $521 | $16 | $548 | $14 | | Other | $0 | $(45) | $0 | $(54) | | Total | $2,577 | $415 | $2,499 | $364 | Total Assets by Segment (Millions) | Segment | As of Sep 30, 2024 | As of Jun 30, 2024 | | :--------------------------- | :----------------- | :----------------- | | Dow Jones | $4,113 | $4,139 | | Digital Real Estate Services | $3,090 | $3,020 | | Book Publishing | $2,824 | $2,647 | | Subscription Video Services | $2,556 | $2,587 | | News Media | $2,115 | $2,003 | | Other | $1,771 | $1,858 | | Investments | $458 | $430 | | Total assets | $16,927 | $16,684 | NOTE 12. ADDITIONAL FINANCIAL INFORMATION This note provides further details on receivables, other non-current assets, other current liabilities, and the components of 'Other, net' in the income statement. Receivables, net, increased to $1,698 million, while royalty advances to authors remained a significant component of other non-current assets. 'Other, net' saw a positive swing of $58 million, primarily due to a $10 million gain on remeasurement of equity securities compared to a $23 million loss in the prior year Receivables, net (Millions) | Metric | As of Sep 30, 2024 | As of Jun 30, 2024 | | :--------------- | :----------------- | :----------------- | | Receivables | $1,768 | $1,568 | | Less: allowances | $(70) | $(65) | | Receivables, net | $1,698 | $1,503 | Components of Other Non-Current Assets (Millions) | Metric | As of Sep 30, 2024 | As of Jun 30, 2024 | | :-------------------------- | :----------------- | :----------------- | | Royalty advances to authors | $361 | $375 | | Retirement benefit assets | $159 | $147 | | Inventory | $226 | $226 | | Other | $428 | $422 | | Total Other non-current assets | $1,174 | $1,170 | Components of Other, net (Millions) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :-------------------------------------------- | :------------------------------ | :------------------------------ | | Remeasurement of equity securities | $10 | $(23) | | Dividends received from equity security investments | $0 | $2 | | Gain on remeasurement of previously-held interest | $0 | $4 | | Other | $13 | $(18) | | Total Other, net | $23 | $(35) | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on News Corporation's financial condition and results of operations for the three months ended September 30, 2024, compared to the prior year. It covers an overview of the Company's diversified media businesses, a detailed analysis of consolidated and segment-level financial performance, and a discussion of liquidity and capital resources, including cash flows, debt, equity, and commitments Introduction This introduction outlines the scope of the discussion, covering News Corporation's financial condition, changes, and results of operations - The discussion provides an understanding of News Corporation's financial condition, changes in financial condition, and results of operations, covering business overview, results of operations, and liquidity and capital resources[105] Overview of the Company's Businesses News Corporation operates a diversified portfolio across six segments, and is currently evaluating strategic options for its Foxtel Group - News Corporation operates through six segments: Dow Jones, Digital Real Estate Services, Book Publishing, Subscription Video Services, News Media, and Other[107][108][109] - The Company is reviewing strategic and financial options for the Foxtel Group, including its capital structure and assets, in response to third-party interest[110] Results of Operations This section analyzes News Corporation's consolidated and segment-level financial performance for the three months ended September 30, 2024, highlighting key drivers of revenue and EBITDA changes Consolidated Results Consolidated revenues increased by 3% to $2,577 million, driven by Digital Real Estate Services, Book Publishing, Dow Jones, and Subscription Video Services, partially offset by News Media. Net income surged by 148% to $144 million, primarily due to higher revenues, lower operating expenses, and a significant positive swing in 'Other, net' income Consolidated Operating Results (Millions) | Metric | 2024 | 2023 | Change (Better/(Worse)) | % Change | | :----------------------------------------------------- | :------ | :------ | :---------------------- | :------- | | Total Revenues | $2,577 | $2,499 | $78 | 3% | | Operating expenses | $(1,263) | $(1,273) | $10 | 1% | | Selling, general and administrative | $(899) | $(862) | $(37) | (4)% | | Depreciation and amortization | $(189) | $(171) | $(18) | (11)% | | Impairment and restructuring charges | $(24) | $(38) | $14 | 37% | | Equity losses of affiliates | $(3) | $(2) | $(1) | (50)% | | Interest expense, net | $(18) | $(23) | $5 | 22% | | Other, net | $23 | $(35) | $58 | ** | | Income before income tax expense | $204 | $95 | $109 | 115% | | Income tax expense | $(60) | $(37) | $(23) | (62)% | | Net income | $144 | $58 | $86 | 148% | | Net income attributable to News Corporation stockholders | $119 | $30 | $89 | 297% | - Revenue increase was driven by Digital Real Estate Services (higher Australian residential revenues), Book Publishing (higher digital book sales), Dow Jones (professional information business), and Subscription Video Services (streaming revenues), partially offset by News Media (third-party printing contracts transfer, lower advertising/circulation)[114] - Operating expenses decreased by $10 million (1%) due to cost savings at News Media, partially offset by higher expenses at Subscription Video Services related to Hubbl product, sports programming rights, and production costs[116][117] Segment Analysis Segment EBITDA, the primary performance measure, increased by 14% to $415 million. Dow Jones, Digital Real Estate Services, and Book Publishing segments all reported increased revenues and Segment EBITDA, driven by digital growth, price increases, and new products. Subscription Video Services saw revenue growth from streaming but a slight EBITDA decline due to Hubbl costs. News Media experienced revenue declines but improved EBITDA due to cost savings Segment EBITDA Reconciliation (Millions) | Metric | 2024 | 2023 | | :-------------------------------------------- | :--- | :--- | | Net income | $144 | $58 | | Add: Income tax expense | $60 | $37 | | Add: Other, net | $(23) | $35 | | Add: Interest expense, net | $18 | $23 | | Add: Equity losses of affiliates | $3 | $2 | | Add: Impairment and restructuring charges | $24 | $38 | | Add: Depreciation and amortization | $189 | $171 | | Total Segment EBITDA | $415 | $364 | Dow Jones Dow Jones revenues increased by 3% to $552 million, primarily due to higher professional information business revenues (Risk & Compliance, Dow Jones Energy) and content licensing. Digital revenues accounted for 82% of total revenues. Segment EBITDA grew by 6% to $131 million, benefiting from revenue growth and lower newsprint/production costs Dow Jones Segment Performance (Millions) | Metric | 2024 | 2023 | Change (Better/(Worse)) | % Change | | :-------------------------- | :---- | :---- | :---------------------- | :------- | | Total Revenues | $552 | $537 | $15 | 3% | | Segment EBITDA | $131 | $124 | $7 | 6% | - Dow Jones's revenue increase was primarily driven by higher professional information business revenues, with digital revenues representing 82% of total revenues[136] Dow Jones Circulation and Subscription Revenues (Millions) | Revenue Type | 2024 | 2023 | Change | % Change | | :-------------------------------- | :--- | :--- | :----- | :------- | | Professional information business | $221 | $204 | $17 | 8% | | Circulation and other | $238 | $232 | $6 | 3% | | Total | $459 | $436 | $23 | 5% | - Advertising revenues decreased by 7% due to lower advertising spend in the technology and finance sectors, though digital advertising represented 67% of total advertising revenue[139] Digital Real Estate Services Digital Real Estate Services revenues increased by 13% to $457 million, primarily driven by REA Group's higher Australian residential revenues and growth in REA India. Move's revenues slightly decreased due to macroeconomic impacts on the U.S. housing market. Segment EBITDA grew by 15% to $140 million, largely from REA Group's contribution, despite $12 million in costs related to a withdrawn offer to acquire Rightmove Digital Real Estate Services Segment Performance (Millions) | Metric | 2024 | 2023 | Change (Better/(Worse)) | % Change | | :-------------------------- | :---- | :---- | :---------------------- | :------- | | Total Revenues | $457 | $403 | $54 | 13% | | Segment EBITDA | $140 | $122 | $18 | 15% | - REA Group's revenues increased by $57 million (22%) to $318 million, driven by higher Australian residential revenues (price increases, depth penetration, national listings growth) and REA India[141] - Move's revenues decreased by $2 million (1%) to $140 million due to the macroeconomic environment impacting the U.S. housing market, leading to lower lead and transaction volumes, partially offset by growth in seller, new homes, and rentals[141] - Segment EBITDA increase was partially offset by $12 million in costs related to the withdrawn offer to acquire Rightmove and higher employee costs[142] Book Publishing Book Publishing revenues increased by 4% to $546 million, driven by higher digital book sales (audiobooks and e-books) and improved returns in the U.S. Digital sales represented 25% of consumer revenues, up from 22%. Segment EBITDA grew by 25% to $81 million, primarily due to the revenue increase Book Publishing Segment Performance (Millions) | Metric | 2024 | 2023 | Change (Better/(Worse)) | % Change | | :-------------------------- | :---- | :---- | :---------------------- | :------- | | Total Revenues | $546 | $525 | $21 | 4% | | Segment EBITDA | $81 | $65 | $16 | 25% | - Revenue growth was primarily due to higher digital book sales (15% increase), driven by strong audiobook market growth (including Spotify partnership) and e-book sales. Digital sales represented approximately 25% of consumer revenues[144] - Backlist sales represented approximately 64% of consumer revenues, up from 61% in the prior year[144] Subscription Video Services Subscription Video Services revenues increased by 3% to $501 million, driven by higher streaming revenues (Kayo and BINGE volume and pricing) and positive foreign currency fluctuations, partially offset by fewer residential broadcast subscribers. Segment EBITDA slightly decreased by 1% to $92 million, impacted by $11 million in Hubbl product costs and higher sports programming rights, despite revenue growth Subscription Video Services Segment Performance (Millions) | Metric | 2024 | 2023 | Change (Better/(Worse)) | % Change | | :-------------------------- | :---- | :---- | :---------------------- | :------- | | Total Revenues | $501 | $486 | $15 | 3% | | Segment EBITDA | $92 | $93 | $(1) | (1)% | - Revenue increase was driven by $16 million higher streaming revenues from Kayo and BINGE, and positive foreign currency fluctuations, partially offset by lower residential broadcast subscription revenues[145] - Foxtel Group streaming subscription revenues represented approximately 34% of total segment circulation and subscription revenues, up from 30% in the prior year[145] - Segment EBITDA decreased due to $11 million in costs related to the Hubbl product and higher sports programming rights costs, partially offset by revenue growth and foreign currency benefits[146] Foxtel Group Key Performance Indicators (Thousands, except %) | Metric | As of Sep 30, 2024 | As of Sep 30, 2023 | | :----------------------------------- | :----------------- | :----------------- | | Broadcast Subscribers - Residential | 1,185 | 1,310 | | Broadcast Subscribers - Commercial | 237 | 233 | | Streaming Subscribers - Kayo (Paid) | 1,499 | 1,403 | | Streaming Subscribers - BINGE (Paid) | 1,552 | 1,449 | | Streaming Subscribers - Foxtel Now (Paid) | 131 | 161 | | Total Subscribers - Total (Paid) | 4,622 | 4,573 | | Broadcast ARPU (US$) | $60 | $56 | | Broadcast Subscriber Churn | 11.0% | 11.4% | News Media News Media revenues decreased by 5% to $521 million, primarily due to the transfer of third-party printing contracts, lower print advertising, and reduced digital advertising traffic. Despite revenue declines, Segment EBITDA increased by 14% to $16 million, driven by cost savings from printing operations consolidation and other initiatives News Media Segment Performance (Millions) | Metric | 2024 | 2023 | Change (Better/(Worse)) | % Change | | :-------------------------- | :---- | :---- | :---------------------- | :------- | | Total Revenues | $521 | $548 | $(27) | (5)% | | Segment EBITDA | $16 | $14 | $2 | 14% | - Revenue decrease was primarily driven by a $13 million decline in other revenues (due to transfer of third-party printing contracts) and a $10 million decrease in advertising revenues (lower print and digital advertising)[149] - Circulation and subscription revenues decreased by 1% due to print volume declines, partially offset by cover price increases and positive foreign currency fluctuations[149] - Segment EBITDA increased due to cost savings from the combination of News UK's printing operations with DMG Media and other cost savings initiatives, largely offsetting the revenue declines[150] Liquidity and Capital Resources News Corporation's liquidity is primarily supported by internally generated funds and $1.8 billion in cash and cash equivalents. The Company's operating cash flow significantly improved, and free cash flow also saw a substantial improvement. Debt levels remained stable, and the Company continues its share repurchase program and semi-annual dividend payments Current Financial Condition The Company maintains strong liquidity with $1.8 billion in cash and cash equivalents, supported by internal funds and available credit facilities, while managing operational and investment expenditures - As of September 30, 2024, the Company's cash and cash equivalents were $1.8 billion. Principal liquidity sources include internally generated funds and available borrowing capacity under revolving credit facilities[153] - Approximately $859 million of cash and cash equivalents were held by foreign subsidiaries, with $100 million held by REA Group not readily accessible without a dividend declaration[154] - Principal uses of cash include operational expenditures, capital expenditures, income tax payments, investments, acquisitions, share repurchases, dividends, and debt repayment[155] Issuer Purchases of Equity Securities The Company continued its share repurchase program, with $422 million remaining authorized as of September 30, 2024 - The Board of Directors authorized a $1 billion share repurchase program for Class A and Class B Common Stock, with approximately $422 million remaining as of September 30, 2024[156] Share Repurchases (Millions) | Stock Class | Shares Repurchased (Millions) - Sep 30, 2024 | Amount Paid (Millions) - Sep 30, 2024 | Shares Repurchased (Millions) - Sep 30, 2023 | Amount Paid (Millions) - Sep 30, 2023 | | :----------------------- | :------------------------------------------- | :------------------------------------ | :------------------------------------------- | :------------------------------------ | | Class A Common Stock | 0.9 | $25 | 1.0 | $20 | | Class B Common Stock | 0.4 | $13 | 0.4 | $9 | | Total | 1.3 | $38 | 1.4 | $29 | Dividends A semi-annual cash dividend of $0.10 per share was declared in August 2024 and subsequently paid in October - In August 2024, a semi-annual cash dividend of $0.10 per share for Class A and Class B Common Stock was declared and paid on October 9, 2024[159] Sources and Uses of Cash Operating cash flow significantly improved, while cash used in investing activities decreased, and cash used in financing activities increased due to borrowing repayments and share repurchases Net Cash Provided by (Used in) Operating Activities (Millions) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by (used in) operating activities | $64 | $(55) | - Net cash provided by operating activities improved by $119 million, primarily due to lower working capital and higher Total Segment EBITDA, partially offset by higher tax payments[160] Net Cash Used in Investing Activities (Millions) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash used in investing activities | $(136) | $(159) | - Net cash used in investing activities decreased by $23 million, driven by $29 million lower capital expenditures (primarily at Foxtel), partially offset by a $6 million increase in cash used for acquisitions and investments[161] Net Cash Used in Financing Activities (Millions) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash used in financing activities | $(147) | $(65) | - Net cash used in financing activities increased to $147 million, primarily due to $185 million in borrowing repayments, $38 million in stock repurchases, and $35 million in dividends paid to noncontrolling interests, partially offset by $153 million in new borrowings[163] Reconciliation of Free Cash Flow Free cash flow significantly improved, primarily driven by higher operating cash flow and reduced capital expenditures Free Cash Flow Reconciliation (Millions) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by (used in) operating activities | $64 | $(55) | | Less: Capital expenditures | $(95) | $(124) | | Free cash flow | $(31) | $(179) | - Free cash flow improved by $148 million to $(31) million, primarily due to higher cash provided by operating activities and lower capital expenditures[167] Borrowings Total borrowings remained stable at $2.9 billion, with the Company and its subsidiaries maintaining compliance with all debt covenants - As of September 30, 2024, total borrowings were $2.9 billion, with News Corporation having $1,969 million in borrowings and $750 million undrawn commitments under its Revolving Facility[168][169] - The Foxtel Debt Group had approximately $777 million in borrowings and A$203 million in undrawn commitments, while REA Group had approximately $138 million in borrowings and A$400 million in undrawn commitments[170][172] - All Company borrowings contain customary representations, covenants, and events of default, with the Company in compliance as of September 30, 2024[173] Commitments The Company's contractual commitments have not materially changed from the prior fiscal year - The Company's commitments under firm contractual arrangements have not changed significantly from the disclosures in the 2024 Form 10-K[174] Contingencies The Company is routinely involved in various legal proceedings and claims, with liabilities accrued when a loss is probable and estimable - The Company is routinely involved in various legal proceedings, claims, and governmental investigations, with outcomes subject to significant uncertainty. Accrued liabilities are established when a loss is probable and estimable[175][176] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There has been no material change in the Company's assessment of its market risk sensitivity since the prior fiscal year - There has been no material change in the Company's assessment of its sensitivity to market risk since the presentation in the 2024 Form 10-K[177] ITEM 4. CONTROLS AND PROCEDURES Management concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting - Management, with the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024[178] - There has been no material change in the Company's internal control over financial reporting during the first quarter of fiscal 2025[179] PART II. OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity security sales, and other disclosures ITEM 1. LEGAL PROCEEDINGS This section refers to the detailed discussion of legal proceedings, commitments, and contingencies provided in Note 9 to the Consolidated Financial Statements - Information regarding legal proceedings is incorporated by reference from Note 9—Commitments and Contingencies in the accompanying Consolidated Financial Statements[181] ITEM 1A. RISK FACTORS There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 - No material changes to the risk factors described in the 2024 Form 10-K have occurred[182] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The Company continued its stock repurchase program, purchasing 1.3 million shares of Class A and Class B Common Stock for $38 million during the three months ended September 30, 2024. Approximately $422 million remains authorized under the program - The Company's stock repurchase program, authorizing up to $1 billion, had approximately $422 million remaining as of September 30, 2024[183][184] Monthly Share Repurchases (Millions, except per share amounts) | Period | Class A Shares Purchased | Class B Shares Purchased | Average Price Paid Per Share (Class A) | Average Price Paid Per Share (Class B) | Total Shares Purchased | Dollar Value Remaining | | :----------------------------------- | :----------------------- | :----------------------- | :------------------------------------- | :------------------------------------- | :--------------------- | :--------------------- | | July 1, 2024 - July 28, 2024 | 0.3 | 0.1 | $27.71 | $28.56 | 0.4 | $449 | | July 29, 2024 - September 1, 2024 | 0.3 | 0.2 | $27.36 | $28.37 | 0.5 | $434 | | September 2, 2024 - September 29, 2024 | 0.3 | 0.1 | $26.50 | $27.73 | 0.4 | $422 | | Total | 0.9 | 0.4 | $27.19 | $28.22 | 1.3 | | ITEM 3. DEFAULTS UPON SENIOR SECURITIES This item is not applicable to the Company for the reporting period - This item is not applicable[185] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the Company for the reporting period - This item is not applicable[185] ITEM 5. OTHER INFORMATION No other information or trading plans were reported under this item - No other information was reported under this item[185] ITEM 6. EXHIBITS This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including employment agreements, certifications by the CEO and CFO, and financial information formatted in Inline XBRL - Exhibits include Amended and Restated Employment Agreements, CEO and CFO Certifications (Rules 13a-14, 15d-14, and 18 U.S.C. Section 1350), and financial information formatted in Inline XBRL[186] SIGNATURE The report was duly signed on behalf of News Corporation by Susan Panuccio, Chief Financial Officer, on November 8, 2024 - The report was signed by Susan Panuccio, Chief Financial Officer of News Corporation, on November 8, 2024[188]