News Corp Income and Revenue Drop but Beat Estimates

Company touts latest Divergent book release as bright spot for publisher HarperCollins

News Corp. reported a 4 percent decline in fiscal 2014 second quarter revenue on Thursday, though the media giant topped estimates in the measurement, as well as net income and earnings per share.

The company reported quarterly revenues of $2.24 billion, a 4 percent decrease versus prior year ($2.32 billion). The majority of the decline stems from advertising revenues at the company’s News and Information Services segment — primary its Australian newspapers revenue, which declined 17 percent — as well as from foreign exchange fluctuations and the sale of the Dow Jones Local Media Group.

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The lost revenue was partially offset by the inclusion of Fox Sports Australia — whose consolidation began in November 2012 — and strength in the Digital Real Estate Services and Book Publishing segments.

News Corp. touted the Divergent book trilogy as a particular bright spot for HarperCollins this quarter; “Allegiant,” the final book in the trilogy, was released in October 2013. They expect an even larger windfall when the theatrical version of “Divergent” is released on March 31.

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Net income available to News Corp. stockholders was $150 million versus $1,399 million in the prior year. Last year’s quarterly numbers included a non-taxable gain of approximately $1.3 billion related to the acquisition of Consolidated Media Holdings in November 2012.

News Corp. reported EPS of $0.31, down from last year’s $2.26, but also beating estimates.

“The earnings report demonstrates a measure of progress as we navigate a challenging advertising market,” CEO Robert Thomson said in a statement accompanying the earnings release. “The digital transformation is certainly underway, as the acquisition of Storyful and the robust growth in digital sales at HarperCollins attest. Digital subscriptions and website traffic are on the rise at most of our sites, and revenue at REA, the online real estate company, continues to expand encouragingly.”