News Corp posted a wider loss in its latest quarter as advertising revenue halved amid the coronavirus pandemic, more than offsetting profit growth at Wall Street Journal parent Dow Jones & Co. and at the company's video-subscription unit.
The New York-based company, which owns the Journal, HarperCollins Publishers and newspapers in the U.K. and Australia, said its fiscal fourth-quarter loss was $397 million, or 67 cents a share, compared with a loss of $51 million, or 9 cents a share, a year earlier. The wider loss was partly due to noncash impairment charges of $292 million and higher restructuring costs related to the coronavirus crisis, News Corp said.
Results were heavily affected by the pandemic as well as by a decline in revenue related to the sale of the company's supermarket-coupon business, News Corp said. When adjusted to remove impairment and restructuring charges, the loss amounted to 3 cents a share, the company said.
Revenue fell 22% to $1.92 billion from $2.47 billion. Of that decline, $330 million was attributable to the negative impact of the pandemic and 7%, or $179 million, to the loss of contributions from News America Marketing, which was sold earlier this year, the company said. Another 3%, or $63 million, were the result of foreign-currency fluctuations, it said.
News Corp's advertising revenue was the most-heavily affected, dropping 52% to $332 million.
"Virtually all of our businesses prudently reduced costs, sometimes painfully, to ensure that they were robust enough to cope with volatility and disruption," Chief Executive Robert Thomson said in a call with analysts. "Conserving cash is a priority."
News Corp has been moving to shed noncore assets for more than a year in an effort to streamline the company. In addition to the sale of News America Marketing, News Corp also sold advertising-services company Unruly earlier this year. It has considered strategic alternatives for its Storyful video-authentication unit, including a possible sale, according to a person familiar with the matter. A News Corp spokesman on Thursday said of Storyful: "There's currently no consideration of alternatives or plans to sell."
The company for the first time broke out reporting for its Dow Jones unit, which publishes the Journal, MarketWatch, Barron's and others. The unit reported a 4% decline in revenue to $381 million, largely due to advertising declines. It saw a 13% rise in segment earnings to $60 million, the company said.
News Corp calculates segment earnings as revenue less operating and administrative expenses. Segment earnings exclude expenses such as interest, taxes, depreciation, amortization, impairment and restructuring charges, and other items.
Circulation and subscription revenue at the Dow Jones grew by 5.6% to $303 million, bolstered by gains in digital subscribers. The company said the Journal averaged more than 2.2 million digital subscribers in the quarter, up from 2.041 million in the March quarter. In a call with analysts, Chief Financial Officer Susan Panuccio said the Journal had added 203,000 net new digital subscribers in the quarter. In the previous quarter, it had gained 112,000 subscribers.
Overall ad revenue at Dow Jones fell 28% to $71 million, driven by a 43% decline in print advertising revenue. The segment earnings increase for the quarter was driven by cost savings from canceled events, lower print volume and other discretionary cost savings.
News Corp said its news media unit, which includes newspapers in the U.K. and Australia, recorded a 41% decline in revenue to $490 million. The unit recorded a segment loss of $44 million. Advertising revenue for the news media unit declined 58%, while circulation and subscription revenue fell by 9%.
Revenue at News Corp's book-publishing unit fell 2.9% to $407 million, reflecting foreign-currency fluctuations and lower sales due to bookstore closures as a result of the pandemic, the company said. Segment earnings rose 9.3% to $47 million.
The digital real-estate business, which includes Move Inc., reported a 16% decline in revenue to $238 million, reflecting lower listing volumes due to the pandemic, News Corp said. The segment's earnings fell 10% to $71 million.
Revenue at News Corp's subscription-video-services unit, which includes the Foxtel pay-TV business in Australia, fell 24% to $407 million, the company said. The segment's earnings rose 24% to $104 million, thanks in part to lower sports-programming rights costs as a result of the suspension of sporting events due to the coronavirus pandemic.
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News Corp. is the parent company of news outlets The Wall Street Journal, The New York Post, The Sun in the United Kingdom as well as newspaper and TV assets in Australia.
Fox Corp. is the parent company of Fox Business and Fox News.