News (US:NWS)2023-05-12 02:11Financial Data and Key Metrics Changes - Total revenues for Q3 2023 were over $2.4 billion, down only 2% year-over-year, a significant improvement from the 7% decline in Q2 2023 [10][35] - Profitability was $320 million, down 11% compared to the prior year, reflecting external pressures [10][37] - Adjusted earnings per share were $0.09, down from $0.16 in the prior year [37] Business Line Data and Key Metrics Changes - Digital real estate services segment revenues were $363 million, down 13% year-over-year, impacted by macroeconomic pressures [39] - Subscription video services revenues were $477 million, down 3% year-over-year, but up 2% on a constant currency basis [43] - Dow Jones revenues were $529 million, up 9% year-over-year, with digital revenues accounting for 79% of total revenues [47][50] Market Data and Key Metrics Changes - In Australia, Foxtel's streaming now accounts for two-thirds of the total subscription base, offsetting declines in broadcast revenue [16] - The U.S. advertising market remains weak, particularly in tech advertising, although there were signs of improvement in April [15][52] - The digital real estate market in the U.S. and Australia is experiencing uncertainty due to rising interest rates [20] Company Strategy and Development Direction - The company is focused on cost reduction, with a headcount reduction of 5% expected to yield over $160 million in annualized savings [11][38] - Generative AI is seen as both a challenge and an opportunity, with the company expecting to be compensated for the use of its content in AI applications [12][13] - The company aims to prioritize simplification, cost reductions, and thoughtful capital stewardship to create enduring value for shareholders [33] Management Comments on Operating Environment and Future Outlook - Management noted improvements in macro and sectoral trends, with a focus on cost-cutting measures [7][10] - There is cautious optimism regarding advertising trends, with improvements noted in April [52][59] - The company expects to see improvements in profitability in Q4 2023 despite ongoing supply chain and inflationary pressures [59][63] Other Important Information - The professional information business at Dow Jones reported a 38% increase in revenues, driven by acquisitions and strong demand for Risk & Compliance products [14][48] - The company is expanding product offerings in renewables and carbon metrics, anticipating strong growth ahead [22] Q&A Session Summary Question: Impact of generative AI on news consumption - Management acknowledged the profound impact of generative AI on content and business management, highlighting its potential to transform operations [66][67] Question: Cost reduction program details - Management confirmed that the headcount reduction would exceed initial estimates, with a focus on scrutinizing all areas of spending [75][76] Question: Printing costs and supply chain issues - Management noted that while some supply chain pressures are easing, costs related to paper and fuel remain elevated [82][84] Question: Performance of the news media business - Management expressed surprise at the resilience of print advertising, attributing improvements to specific categories such as travel and retail [88] Question: Book publishing revenue trends - Management indicated that adjustments at Amazon have been completed, leading to improved confidence in profitability for HarperCollins [91][93]