News Corp is undergoing its most radical change since the split of June 2013 as digital subscriptions in newspaper and from the newly merged Foxtel/Fox Sports business becomes the most important revenue and profit driver, supported by the company’s growing digital real estate operations in Australia and the US.
News Corp (NWS) continues to be a variable-speed company, highlighted by a first quarter result which revealed strong growth for the two online real estate businesses countered by FX headwinds and a struggling print division.
News Corp is reviewing its strategic options for News America Marketing, including a potential sale. Revenue has been under pressure in recent years, declining -6% in FY18. The business provides a range of marketing solutions to advertisers.
Macquarie assesses the outlook for News Corp ahead of the third quarter result on May 9. A weaker Australian housing market, Brexit and the launch of Kayo by Foxtel are likely to have a negative impact.
News Corp's Q2 report was better-than-expected, on underlying assessment, with growth at REA Group ((REA)) expected to slow, but Citi analysts consider this a temporary revenue dip only. The Q2 result was heavily dominated by full consolidation of Foxtel, point out the analysts.
First quarter results were better-than-expected, with each segment in line or ahead of UBS estimates. The broker upgrades forecasts for FY19 operating earnings by 5.2% and FY20 by 1.6%. The broker still envisages value in the 'stub', ex REA Group ((REA)) and Foxtel.