News Corp Revenues, Earnings Down Slightly in Fiscal 2014

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Robert Thompson

A year after it was spun off, the publishing company touts international and organic growth.

A year after Rupert Murdoch spun off his newspaper division from TV operations, News Corp on Thursday reported fiscal 2014 revenues of $8.57 billion compared to $8.89 billion last year; and earnings per share of 46 cents, down from 62 cents last year.

News Corp attributed the 4 percent decrease to lower advertising revenue, foreign currency fluctuations and the sale of some Dow Jones assets.

However, the declines were somewhat offset by the addition of Fox Sports Australia to the company and improved performance in book publishing and the digital real estate businesses.

In the fourth quarter, News Corp had revenues of $2.19 billion, slightly above analysts' expectations, and net income per share of 2 cents, slightly below analysts' expectations.

The $2.19 billion was a 3 percent decrease from the same quarter last year when revenue was $2.26 billion. After adjusting for one-time events, the revenues for the quarter were down only one percent.

Net income in the quarter was $127 million, which was a 2 percent decrease from the $130 million in the prior year. That incorporated costs of $16 million related to the company's U.K. newspaper scandals.

For the full fiscal year EBITDA (earnings before interest, taxes, depreciation and amortization), which is a key indicator of a company's operations, was $770 million compared to $688 million in the prior year. 

"We finished our first full year as the new News Corp and made significant progress in achieving the mission we articulated at the outset — to be more global and more digital through organic growth, product launches and strategic acquisitions," said CEO Robert Thompson. "Thanks to the exciting e-evolution of News Corp's leading global brands, we are enjoying enhanced engagement with our expanding paid audiences, underscoring the growth potential of our diverse portfolio."

Thompson said that last week News Corp completed a previously announced $420 million acquisition of Harlequin Enterprises Ltd, the book publisher. He also praised results from REA, a digital real estate services company, which has expanded into new markets in Southeast Asia and elsewhere.

Harlequin is now a division of Harper Collins.

"While we are operating in a challenging advertising environment," added Thompson, "our results highlight the diversification of our portfolio and our cost discipline, leading to improved free cash flow and a firm foundation for sustained growth."

For the full year, the 9 percent decrease in revenues, was blamed on 18 percent lower revenues from the Australian newspapers (of which 10 percent related to foreign currency fluctuations). Overall circulation and subscription revenues declined 5 percent, in part because of lower revenues from discontinued and sold Dow Jones businesses.

That was partly offset by higher cover prices in the U.K. and Australia and higher subscription pricing for The Wall Street Journal (Dow Jones). Adjusted revenues for the news and information services declined 5 percent compared to a year earlier.

Revenues from book publishing were up 5 percent to $65 million. According to the company, that improvement was driven by the success of the Divergent series of books by Veronica Roth, which sold more than 19 million units; as well as the success of The First Phone Call From Heaven by Mitch Albom and The Pioneer Woman Cooks: A Year of the Holidays by Ree Drummond.

E-book revenues improved by 35 percent and represented 22 percent of consumer revenues, up from 17 percent the year before. Overall book-publishing revenues increased 6 percent.