News Corp: Assessing the Performance of Key Business Segments
Key business segments
News Corp (NWSA) announced its fiscal 1Q16 earnings on November 5, 2015. News Corp has four business segments: News and Information Services, Book Publishing, Digital Real Estate Services, and Cable Network Programming. The company recorded fiscal 1Q16 revenues of $2.0 billion, a fall of 4% over fiscal 1Q15 revenues of $2.1 billion.
As the chart below shows, the News and Information Services segment was a significant contributor to the company’s revenue, at 64% of News Corp’s revenues in fiscal 1Q16, $1.3 billion. The company’s Book Publishing business contributed 20% to its revenues in fiscal 1Q16, with revenues of $409 million. Digital Real Estate Services and Cable Network Programming made up 9% and 6%, respectively, of the company’s total revenues of $2 billion in fiscal 1Q16.
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Now let’s take a look at these segments in detail.
News and information services
This segment recorded revenues of $1.3 billion in fiscal 1Q16, a decline of 11% over fiscal 1Q15. Revenues for this segment were affected by a 13% year-over-year decline in advertising revenues. Advertising revenues fell mainly because of foreign currency exchange rate fluctuations. These fluctuations also affected circulation and subscription revenues, which fell 6% year-over-year.
News Corp’s segment EBITDA was $83 million in fiscal 1Q16, a fall of 21% over the corresponding quarter last year.
This business segment had revenues of $409 million in fiscal 1Q16, an increase of 1% over fiscal 1Q15. The rise in revenues was mainly driven by strong sales of the book Go Set a Watchman and the inclusion of revenues from Harlequin, which News Corp acquired in August last year.
Segment EBITDA was $42 million in fiscal 1Q16, a fall of 24% over fiscal 1Q15. The decrease in EBITDA was due to foreign currency exchange rate fluctuations and lower revenues from e-book sales.
Digital Real Estate Services
This business recorded revenues of $191 million in fiscal 1Q16, a rise of 71% over fiscal 1Q15. The revenue growth was mainly driven by the inclusion of revenues from Move. News Corp acquired Move in November last year. Move is an online real estate portal in the United States.
This segment’s EBITDA was $57 million in fiscal 1Q16, flat year-over-year.
Cable Network Programming
This business recorded revenues of $124 million in fiscal 1Q16, a decline of 11% over fiscal 1Q15. The fall in revenue was also mostly a result of foreign currency exchange rate fluctuations.
This segment’s EBITDA was $28 million in fiscal 1Q16, a fall of 13% over fiscal 1Q15.
News Corp makes up 0.18% of the Guggenheim S&P 500 Equal Weight ETF (RSP). This ETF also invests 0.24% of its portfolio in Microsoft (MSFT), 0.23% in Amazon (AMZN), and 0.23% in Activision Blizzard (ATVI).