News Corp Revenue, Net Income Down In Third Quarter

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The book publishing unit reported improved results, mostly from the success of the "Divergent" series of books; costs related to the scandal in the UK were $46 million.

Nine months after it was spun off from the company's entertainment assets, the new News Corp. on Thursday reported a decrease in adjusted net income for the fiscal third quarter (ending March 31) to $66 million compared to $73 million in the prior year. The adjusted earnings per share were 11 cents compared to 56 cents in the prior year.

Revenue for the company, which owns newspapers and other media in the U.S., U.K. and Australia, was also was down 5 percent to $2.08 billion from $2.18 billion in the prior year. However EBITDA rose to $175 million from $169 million in the prior year, and the free cash flow was $496 million, up from $134 million in the prior year.

In a statement, the company noted the majority of the revenue decline was due to fluctuations in foreign currency, lower advertising revenues at the News and Information services segment and sale of the Dow Jones Local Media Group. Third quarter revenue from the Australian newspapers was down 21 percent, of which the company attributed 13 percent to currency fluctuation.

Circulation and subscription revenues were down at Wall Street Journal-publisher Dow Jones by 5 percent due to lower print circulation and decline in institutional revenues. That was partly offset by improved results in book publishing and digital real-estate services. The company, which owns publisher Harper Collins, also recently announced plans to acquire Harlequin Books.

Book publishing revenues were up 14 percent for the quarter, driven by the popularity of the Divergent series of books by Veronica Roth, which sold more than 8 million units in the quarter. E-book revenue was up 46 percent and represented 26 percent of total revenues for the segment.

The actual new income fell from $323 million in the prior year, when there was a non-taxable gain on the sale of Sky Network Tele to $48 million. Revenues form cable network programming were down 10 percent due to higher costs.

News Corp. reported that costs and fees related to claims and investigations at the now shuttered News Of The World were $46 million compared to a cost of $34 million a year earlier. 

News Corp stock was down a tick on Thursday to $16.57 a share. That is down from its 52-week high price of $34.12 a share.

In a statement released with the third-quarter results, CEO Robert Thomson said: "The past quarter marked another robust stride in the direction of expanding our digital and international businesses, which was the goal we articulated on our investor day last year. Through the planned acquisition of Harlequin we will extend the global reach not only of HarperCollins but of the broader News Corp, which will clearly benefit from that company's commercial infrastructure. We are already reaping benefits from the acquisition of Storyful, which is powering a new social newswire and creating video content communities around our mastheads, whose digital transition is continuing apace. The improved results underscore the strength and diversity of our portfolio. It is also patent that we have been consistently disciplined on costs across the company and around the globe, leading to an improvement in our profitability."