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News Corp. Reports Lower Revenues

News Corp. Reports Lower Revenues
Feb 05, 2016 By Simon Herrmann Tags: NWS

Diversified media company News Corporation (ASX:NWS) released earnings report for the second quarter of FY16.

Income from Continued Operations Declined 41%

The multinational media corp. reported total revenues of $2.16 billion, which is a 4% declined from the previous year. The company states that the revenues were impacted by foreign currency fluctuations of $141 million. Its total segment EBITDA plunged 20%, to $280 million. A strong growth in its Digital Real Estate Services segment was offset by the declines in its News and Information Services, Book Publishing, and Cable Network Programming segments. Again, negative currency fluctuations had an impact of $25 million on the company’s EBITDA performance. Subsequently, income earned from continuing operations declined 41%, to $160 million.

While the company’s Chief Executive Officer, Robert Thomson, stated that their News and Information Services segment suffered due to challenging conditions in print advertisements, he also indicated that the company has seen a rise in digital advertising and circulation revenues. He further added on the company’s strategies: “We are particularly focused on cost reductions and sharing services around News Crop to streamline operations at the newspapers in Australia and the UK. Macroeconomic conditions in most of our markets have not been auspicious, and foreign exchange fluctuations have been particularly volatile, but we believe in the enduring value of our prestigious brands and the sound logic of our digital strategy.”

Segment Performance

News and Information Services segment faced a set-back primarily due to weakness in print advertising, negative foreign currency fluctuations and lower revenues at News America Marketing.

The Book Publishing segment recorded 5% lower revenues, compared to the prior year, due to lower e-book sales, negative foreign currency fluctuations and lower revenues from its ‘Divergent’ series. Digital sales represented 16% of total consumer revenues for the quarter.

However, revenues from its Digital Real Estate Services increased 35%, to $54 million, which was principally driven by a strong performance of Move, which the company acquired in November 2014.

Newscorp’s Cable Network Programming segment posted a 5% decline in revenues, to $6 million dollar, as higher programming rights and production costs weighed on earnings.

NWS eased slightly upon opening, however it is down 6.5% for the year.

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Simon Herrmann Author: Simon Herrmann Feb 05, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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