FISCAL 2020 FIRST QUARTER KEY FINANCIAL
HIGHLIGHTS
- Revenues were $2.34 billion, a 7% decline compared to $2.52
billion in the prior year, which reflects the negative impact from
currency headwinds and the absence of a one-time benefit in the
prior year relating to the exit from Sun Bets
- Net loss was ($211) million compared to net income of $128
million in the prior year. The loss includes non-cash
impairment charges of $273 million
- Total Segment EBITDA was $221 million compared to $358 million
in the prior year
- Reported EPS were ($0.39) compared to $0.17 in the prior year –
Adjusted EPS were $0.04 compared to $0.17 in the prior year
- Announced in October a multi-year content partnership with
Facebook for The Wall Street Journal, Barron’s Media Group and the
New York Post – expected to drive incremental revenue and Segment
EBITDA
- Expanded relationship with Apple to include News Corp
publications in the U.K. and Australia for the launch of Apple News
Plus in the respective regions
- Subscribers to Dow Jones’ consumer products grew 9% to
approximately 3.3 million reflecting 17% growth in digital-only
subscribers at The Wall Street Journal to nearly 1.9 million
- Revenues at Move, home of realtor.com®, grew 4% driven by 11%
growth in real estate revenues compared to the prior year, with
significantly larger audience, which rose 18% in the quarter, and
improved lead volume
News Corporation (“News Corp” or the “Company”) (Nasdaq: NWS,
NWSA; ASX: NWS, NWSLV) today reported financial results for the
three months ended September 30, 2019.
Commenting on the results, Chief Executive Robert Thomson
said:
“In the first quarter of Fiscal Year 2020, News Corp showed
strong growth at Dow Jones and higher revenues at Move, the
operator of realtor.com®, but the results were affected by
pronounced currency headwinds, a particularly sluggish Australian
economy and property market, and comparisons with a prior year in
which there was a significant one-time revenue item.
We are pleased to note tangible progress in our efforts to
secure payment for our high-quality content from digital platforms,
a global cause which News Corp has led for more than a decade. With
the dominant platforms under intense regulatory scrutiny, there has
been a fundamental shift in the content landscape, highlighted by
Facebook's decision to pay a significant premium for our premium
journalism. This development establishes a precedent that changes
the terms of trade and we expect a positive financial impact at our
News and Information Services segment, beginning this fiscal
year.
Our efforts to simplify the company continue apace. We are in
active discussions about a sale of News America Marketing and also
are reviewing the potential sale of Unruly. We are taking steps to
reduce our sum of the parts discount, while investing in our
digital businesses, to the benefit of all shareholders.”
FIRST QUARTER RESULTS
The Company reported fiscal 2020 first quarter total revenues of
$2.34 billion, 7% lower compared to $2.52 billion in the prior year
period. The decline reflects an $84 million, or 3%, negative impact
from foreign currency fluctuations and a $48 million, or 2%,
negative impact from the absence of the net benefit related to News
UK’s exit from the gaming partnership with Tabcorp for Sun Bets
received in the prior year. The rest of the decline primarily
reflects lower print-related advertising revenues at the News and
Information Services segment, lower subscription revenues at
Foxtel, continued pressure at REA Group due to challenges in the
Australian housing market, and a difficult prior year comparison at
the Book Publishing segment. Adjusted Revenues (which exclude the
foreign currency impact, acquisitions and divestitures as defined
in Note 2) declined 4%.
Net loss for the quarter was ($211) million compared to net
income of $128 million in the prior year, reflecting $273 million
of non-cash impairment charges, primarily at News America
Marketing, lower Total Segment EBITDA, as discussed below, and
lower Other, net, partially offset by higher interest income,
primarily due to the settlement of cash flow hedges related to debt
maturities.
The Company reported first quarter Total Segment EBITDA of $221
million, a 38% decline compared to $358 million in the prior year,
reflecting lower revenues, as mentioned above, higher costs
associated with Cricket Australia rights and accelerated
entertainment programming cost amortization at the Subscription
Video Services segment, higher operating costs at the Digital Real
Estate Services segment and higher expenses at the Other segment
partly related to an increase in equity compensation. Adjusted
Total Segment EBITDA (as defined in Note 2) decreased 30%.
Net (loss) income per share attributable to News Corporation
stockholders was ($0.39) as compared to $0.17 in the prior
year.
Adjusted EPS (as defined in Note 3) were $0.04 compared to $0.17
in the prior year.
SEGMENT REVIEW
For the three months ended
September 30,
2019
2018
% Change
(in millions)
Better/
(Worse)
Revenues:
News and Information Services
$
1,149
$
1,248
(8)
%
Subscription Video Services
514
565
(9)
%
Book Publishing
405
418
(3)
%
Digital Real Estate Services
272
293
(7)
%
Other
-
-
**
Total Revenues
$
2,340
$
2,524
(7)
%
Segment EBITDA:
News and Information Services
$
56
$
109
(49)
%
Subscription Video Services
81
113
(28)
%
Book Publishing
49
68
(28)
%
Digital Real Estate Services
82
105
(22)
%
Other
(47)
(37)
(27)
%
Total Segment EBITDA
$
221
$
358
(38)
%
** - Not meaningful
News and Information Services
Revenues in the quarter decreased $99 million, or 8%, as
compared to the prior year, reflecting a $35 million, or 3%,
negative impact from foreign currency fluctuations. Within the
segment, Dow Jones revenues grew 6%, while revenues at News America
Marketing and News Corp Australia declined 10% and 11%,
respectively. Revenues at News UK declined 22%, primarily due to
the absence of the $48 million net benefit related to the exit from
the gaming partnership in the prior year. Adjusted Revenues for the
segment decreased 5% compared to the prior year.
Advertising revenues declined 8% compared to the prior year, of
which $15 million, or 3%, was related to the negative impact from
foreign currency fluctuations. The remainder of the decline was
driven by weakness in the print advertising market, primarily in
Australia, and lower home delivered revenues, which include
free-standing insert products, at News America Marketing. The
declines were mitigated by stable advertising revenues at News UK
(growth in local currency) and growth at Dow Jones. Advertising
revenues at Dow Jones increased 2% in the quarter, driven by the
strong growth in digital advertising. Digital revenues represented
42% of total Dow Jones advertising revenues in the quarter.
Circulation and subscription revenues increased 1%, which
includes a $15 million, or 3%, negative impact from foreign
currency fluctuations. Circulation and subscription revenues again
benefited from a healthy contribution from Dow Jones, which saw a
6% increase in its circulation revenues, reflecting 17% digital
paid subscriber growth at The Wall Street Journal and subscription
price increases, and continued growth in its Risk & Compliance
products. Dow Jones’ consumer products reached approximately 3.3
million total subscribers, reflecting a 9% increase compared to the
prior year. Price increases and digital subscriber growth at other
mastheads also contributed to the results. These increases were
largely offset by lower print volume in Australia and the U.K.
Segment EBITDA decreased $53 million in the quarter, or 49%, as
compared to the prior year, primarily due to the absence of the
benefit related to the exit from the gaming partnership, as
mentioned above. The results also reflect lower revenues at News
Corp Australia and News America Marketing, which were offset by
cost savings initiatives and lower newsprint, production and
distribution costs, as well as higher contribution from Dow Jones.
Adjusted Segment EBITDA (as defined in Note 2) decreased 46%.
Digital revenues represented 34% of News and Information
Services segment revenues in the quarter, compared to 33% in the
prior year. Digital revenues in the prior year included the gaming
partnership-related benefit at News UK. For the quarter, digital
revenues for Dow Jones and the newspaper mastheads represented 38%
of their combined revenues, and at Dow Jones, digital accounted for
56% of its circulation revenues. Digital subscribers and users
across key properties within the News and Information Services
segment are summarized below:
- The Wall Street Journal average daily digital subscribers in
the three months ended September 30, 2019 were 1,854,000, compared
to 1,584,000 in the prior year (Source: Internal data)
- Closing digital subscribers at News Corp Australia’s mastheads
as of September 30, 2019 were 542,400, compared to 442,400 in the
prior year (Source: Internal data)
- The Times and Sunday Times closing digital subscribers as of
September 30, 2019 were 312,000, compared to 263,000 in the prior
year (Source: Internal data)
- The Sun’s digital offering reached approximately 129 million
global monthly unique users in September 2019 (Source: Google
Analytics; prior year comparable statistic unavailable due to
source change)
Subscription Video Services
Revenues in the quarter decreased $51 million, or 9%, compared
with the prior year, of which $34 million, or 6%, was due to the
negative impact from foreign currency fluctuations. The remainder
of the revenue decline was driven by the impact from lower
broadcast subscribers and changes in the subscriber package mix,
partially offset by higher revenues from Foxtel’s OTT products,
Kayo and Foxtel Now. Adjusted Revenues for the segment decreased 3%
compared to the prior year.
As of September 30, 2019, Foxtel’s total closing subscribers
were 3.065 million, an increase of 6% compared to the prior year,
primarily due to the launch of Kayo and modest subscriber growth at
Foxtel Now, partially offset by lower broadcast subscribers. 2.326
million of the total closing subscribers were broadcast and
commercial subscribers, and the remainder consisted of Foxtel Now
and Kayo subscribers. As of September 30, 2019, there were 430,000
Kayo subscribers, of which 364,000 were paying subscribers, and
385,000 Foxtel Now subscribers, of which 375,000 were paying
subscribers. As of November 5th, there were 402,000 paying Kayo
subscribers. Broadcast subscriber churn in the quarter was 14.4%
compared to 12.9% in the prior year, reflecting the impact of the
price increase implemented in October 2018 as well as increased
volume of churn from lower-value customers on expiring contracts,
and was lower than the prior quarter. Broadcast ARPU for the
quarter increased 2% compared to the prior year to approximately
A$78 (US$53).
Segment EBITDA in the quarter decreased $32 million, or 28%,
compared with the prior year, primarily due to lower revenues, $16
million of higher sports programming costs related to Cricket
Australia and $14 million higher non-cash expense related to the
acceleration of entertainment programming cost amortization,
partially offset by lower overhead costs. Adjusted Segment EBITDA
decreased 24%.
Book Publishing
Revenues in the quarter declined $13 million, or 3%, compared to
the prior year, of which foreign currency fluctuations had a
negative impact of $5 million, or 1%. The revenue decline was
primarily due to lower sales of Girl, Wash Your Face by Rachel
Hollis, The Hate U Give by Angie Thomas and The Subtle Art of Not
Giving a F*ck by Mark Manson. Digital sales declined 5% compared to
the prior year, primarily due to the lower overall sales, and
represented 22% of Consumer revenues for the quarter. Segment
EBITDA for the quarter declined $19 million, or 28%, from the prior
year, primarily due to the different mix of titles.
Digital Real Estate Services
Revenues in the quarter declined $21 million, or 7%, compared to
the prior year, of which foreign currency fluctuations had a
negative impact of $10 million, or 3%. Segment EBITDA in the
quarter declined $23 million, or 22%, compared to the prior year,
primarily due to lower revenues, higher costs associated with the
acquisition of and continued investment in Opcity and the $5
million negative impact from foreign currency fluctuations.
Adjusted Revenues and Adjusted Segment EBITDA declined 5% and 2%,
respectively.
In the quarter, revenues at REA Group decreased 14% to $149
million from $173 million in the prior year, primarily due to lower
revenues associated with weakness in listing volumes and fewer new
project launches, the negative impact from foreign currency
fluctuations and the extended duration of Premiere All
listings.
Move’s revenues in the quarter increased 4% to $123 million from
$118 million in the prior year, primarily due to 11% growth in its
real estate revenues, partially offset by lower revenues from
software and services. The increase in real estate revenues, which
represent 80% of total Move revenues, reflects the acquisition of
Opcity, growth in audience and higher lead volume. Realtor.com®
continued to migrate leads from its ConnectionsSM Plus product to
its performance-based Opcity product, as it further evolves and
scales its platform. Based on Move’s internal data, average monthly
unique users of realtor.com®’s web and mobile sites for the fiscal
first quarter grew 18% year-over-year to approximately 71 million,
with mobile representing more than half of all unique users.
CASH FLOW
The following table presents a reconciliation of net cash
provided by operating activities to free cash flow available to
News Corporation:
For the three months ended
September 30,
2019
2018
(in millions)
Net cash provided by operating
activities
$
27
$
113
Less: Capital expenditures
(117
)
(133
)
(90
)
(20
)
Less: REA Group free cash flow
(28
)
(38
)
Plus: Cash dividends received from REA
Group
35
37
Free cash flow available to News
Corporation
$
(83
)
$
(21
)
Net cash provided by operating activities of $27 million for the
three months ended September 30, 2019 was $86 million lower than
$113 million in the prior year period, primarily due to lower Total
Segment EBITDA as noted above, partially offset by lower working
capital.
Free cash flow available to News Corporation in the three months
ended September 30, 2019 was ($83) million compared to ($21)
million in the prior year period. The decline was primarily due to
lower cash provided by operating activities, as mentioned above,
partially offset by lower capital expenditures. Foxtel’s capital
expenditures for the three months ended September 30, 2019 were $66
million, compared to $69 million in the prior year period.
Free cash flow available to News Corporation is a non-GAAP
financial measure defined as net cash provided by operating
activities, less capital expenditures (“free cash flow”), less REA
Group free cash flow, plus cash dividends received from REA
Group.
The Company considers free cash flow available to News
Corporation to provide useful information to management and
investors about the amount of cash that is available to be used to
strengthen the Company’s balance sheet and for strategic
opportunities including, among others, investing in the Company’s
business, strategic acquisitions, dividend payouts and repurchasing
stock. The Company believes excluding REA Group’s free cash flow
and including dividends received from REA Group provides users of
its consolidated financial statements with a measure of the amount
of cash flow that is readily available to the Company, as REA Group
is a separately listed public company in Australia and must declare
a dividend in order for the Company to have access to its share of
REA Group’s cash balance. The Company believes free cash flow
available to News Corporation provides a more conservative view of
the Company’s free cash flow because this presentation includes
only that amount of cash the Company actually receives from REA
Group, which has generally been lower than the Company’s unadjusted
free cash flow. A limitation of free cash flow available to News
Corporation is that it does not represent the total increase or
decrease in the cash balance for the period. Management compensates
for the limitation of free cash flow available to News Corporation
by also relying on the net change in cash and cash equivalents as
presented in the Company’s consolidated statements of cash flows
prepared in accordance with GAAP which incorporates all cash
movements during the period.
COMPARISON OF NON-GAAP TO U.S. GAAP INFORMATION
Adjusted Revenues, Total Segment EBITDA, Adjusted Total Segment
EBITDA, Adjusted Segment EBITDA, adjusted net income attributable
to News Corporation stockholders, Adjusted EPS and free cash flow
available to News Corporation are non-GAAP financial measures
contained in this earnings release. The Company believes these
measures are important tools for investors and analysts to use in
assessing the Company’s underlying business performance and to
provide for more meaningful comparisons of the Company’s operating
performance between periods. These measures also allow investors
and analysts to view the Company’s business from the same
perspective as Company management. These non-GAAP measures may be
different than similar measures used by other companies and should
be considered in addition to, not as a substitute for, measures of
financial performance calculated in accordance with GAAP.
Reconciliations for the differences between non-GAAP measures used
in this earnings release and comparable financial measures
calculated in accordance with U.S. GAAP are included in Notes 1, 2
and 3 and the reconciliation of net cash provided by operating
activities to free cash flow available to News Corporation is
included above.
Conference call
News Corporation’s earnings conference call can be heard live at
5:30pm EST on November 7, 2019. To listen to the call, please visit
http://investors.newscorp.com.
Annual Meeting of Stockholders
News Corporation will provide a live audio webcast of its 2019
Annual Meeting of Stockholders to be held in New York, New York on
Wednesday, November 20, 2019, beginning at 10:00am EST. The webcast
will be available via
http://newscorp.com/annual-meeting-information. A replay will be
available at the same location for a period of time following the
meeting.
Cautionary Statement Concerning Forward-Looking
Statements
This document contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include, but are not
limited to, statements regarding trends and uncertainties affecting
the Company’s business, results of operations and financial
condition, the Company’s strategy and strategic initiatives,
including potential acquisitions, investments and dispositions such
as the strategic review and potential sale of NAM and Unruly, and
the outcome of contingencies such as litigation and investigations.
These statements are based on management’s views and assumptions
regarding future events and business performance as of the time the
statements are made. Actual results may differ materially from
these expectations due to changes in global economic, business,
competitive market, regulatory and other factors. More detailed
information about these and other factors that could affect future
results is contained in our filings with the Securities and
Exchange Commission. The “forward-looking statements” included in
this document are made only as of the date of this document and we
do not have and do not undertake any obligation to publicly update
any “forward-looking statements” to reflect subsequent events or
circumstances, and we expressly disclaim any such obligation,
except as required by law or regulation.
About News Corporation
News Corp (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) is a global,
diversified media and information services company focused on
creating and distributing authoritative and engaging content and
other products and services. The company comprises businesses
across a range of media, including: news and information services,
subscription video services in Australia, book publishing and
digital real estate services. Headquartered in New York, News Corp
operates primarily in the United States, Australia, and the United
Kingdom, and its content and other products and services are
distributed and consumed worldwide. More information is available
at: www.newscorp.com.
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited; in millions,
except per share amounts)
For the three months ended
September 30,
2019
2018
Revenues:
Circulation and subscription
$
995
$
1,034
Advertising
608
664
Consumer
387
400
Real estate
218
227
Other
132
199
Total Revenues
2,340
2,524
Operating expenses
(1,337
)
(1,340
)
Selling, general and administrative
(782
)
(826
)
Depreciation and amortization
(162
)
(163
)
Impairment and restructuring charges
(297
)
(18
)
Equity losses of affiliates
(2
)
(3
)
Interest income (expense), net
4
(16
)
Other, net
4
20
(Loss) income before income tax benefit
(expense)
(232
)
178
Income tax benefit (expense)
21
(50
)
Net (loss) income
(211
)
128
Less: Net income attributable to
noncontrolling interests
(16
)
(27
)
Net (loss) income attributable to News
Corporation stockholders
$
(227
)
$
101
Weighted average shares outstanding:
Basic
587
584
Diluted
587
586
Net (loss) income attributable to News
Corporation stockholders per share - basic and diluted
$
(0.39
)
$
0.17
NEWS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in
millions)
As of September 30, 2019
As of June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
1,441
$
1,643
Receivables, net
1,540
1,544
Inventory, net
402
348
Other current assets
416
515
Total current assets
3,799
4,050
Non-current assets:
Investments
329
335
Property, plant and equipment, net
2,433
2,554
Operating lease right-of-use assets
1,290
-
Intangible assets, net
2,239
2,426
Goodwill
4,885
5,147
Deferred income tax assets
305
269
Other non-current assets
953
930
Total assets
$
16,233
$
15,711
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
406
$
411
Accrued expenses
1,167
1,328
Deferred revenue
448
428
Current borrowings
622
449
Other current liabilities
849
724
Total current liabilities
3,492
3,340
Non-current liabilities:
Borrowings
707
1,004
Retirement benefit obligations
258
266
Deferred income tax liabilities
274
295
Operating lease liabilities
1,329
-
Other non-current liabilities
344
495
Commitments and contingencies
Equity:
Class A common stock
4
4
Class B common stock
2
2
Additional paid-in capital
12,174
12,243
Accumulated deficit
(2,200
)
(1,979
)
Accumulated other comprehensive loss
(1,266
)
(1,126
)
Total News Corporation stockholders'
equity
8,714
9,144
Noncontrolling interests
1,115
1,167
Total equity
9,829
10,311
Total liabilities and equity
$
16,233
$
15,711
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited; in
millions)
For the three months ended
September 30,
2019
2018
Operating activities:
Net (loss) income
$
(211
)
$
128
Adjustments to reconcile net (loss) income
to cash provided by operating activities:
Depreciation and amortization
162
163
Operating lease expense
43
-
Equity losses of affiliates
2
3
Cash distributions received from
affiliates
2
4
Impairment charges
273
-
Other, net
(4
)
(20
)
Deferred income taxes and taxes
payable
(45
)
31
Change in operating assets and
liabilities, net of acquisitions:
Receivables and other assets
(1,551
)
(21
)
Inventories, net
(72
)
(23
)
Accounts payable and other liabilities
1,428
(152
)
Net cash provided by operating
activities
27
113
Investing activities:
Capital expenditures
(117
)
(133
)
Acquisitions, net of cash acquired
-
1
Investments in equity affiliates and
other
(5
)
(10
)
Proceeds from dispositions
-
5
Proceeds from property, plant and
equipment and other asset dispositions
3
-
Other, net
1
16
Net cash used in investing activities
(118
)
(121
)
Financing activities:
Borrowings
199
131
Repayment of borrowings
(290
)
(192
)
Dividends paid
(22
)
(23
)
Other, net
18
(40
)
Net cash used in financing activities
(95
)
(124
)
Net change in cash and cash
equivalents
(186
)
(132
)
Cash and cash equivalents, beginning of
period
1,643
2,034
Exchange movement on opening cash
balance
(16
)
(16
)
Cash and cash equivalents, end of
period
$
1,441
$
1,886
NOTE 1 – TOTAL SEGMENT EBITDA
Segment EBITDA is defined as revenues less operating expenses
and selling, general and administrative expenses. Segment EBITDA
does not include: depreciation and amortization, impairment and
restructuring charges, equity losses of affiliates, interest
(expense) income, net, other, net and income tax (expense) benefit.
Management believes that Segment EBITDA is an appropriate measure
for evaluating the operating performance of the Company’s business
segments because it is the primary measure used by the Company’s
chief operating decision maker to evaluate the performance of and
allocate resources within the Company’s businesses. Segment EBITDA
provides management, investors and equity analysts with a measure
to analyze the operating performance of each of the Company’s
business segments and its enterprise value against historical data
and competitors’ data, although historical results may not be
indicative of future results (as operating performance is highly
contingent on many factors, including customer tastes and
preferences).
Total Segment EBITDA is a non-GAAP measure and should be
considered in addition to, not as a substitute for, net income
(loss), cash flow and other measures of financial performance
reported in accordance with GAAP. In addition, this measure does
not reflect cash available to fund requirements and excludes items,
such as depreciation and amortization and impairment and
restructuring charges, which are significant components in
assessing the Company’s financial performance. The Company believes
that the presentation of Total Segment EBITDA provides useful
information regarding the Company’s operations and other factors
that affect the Company’s reported results. Specifically, the
Company believes that by excluding certain one-time or non-cash
items such as impairment and restructuring charges and depreciation
and amortization, as well as potential distortions between periods
caused by factors such as financing and capital structures and
changes in tax positions or regimes, the Company provides users of
its consolidated financial statements with insight into both its
core operations as well as the factors that affect reported results
between periods but which the Company believes are not
representative of its core business. As a result, users of the
Company’s consolidated financial statements are better able to
evaluate changes in the core operating results of the Company
across different periods. The following table reconciles net (loss)
income to Total Segment EBITDA.
For the three months ended
September 30,
2019
2018
Change
% Change
(in millions)
Net (loss) income
$
(211)
$
128
$
(339)
**
Add:
Income tax (benefit) expense
(21)
50
(71)
**
Other, net
(4)
(20)
16
80
%
Interest (income) expense, net
(4)
16
(20)
**
Equity losses of affiliates
2
3
(1)
(33)
%
Impairment and restructuring charges
297
18
279
**
Depreciation and amortization
162
163
(1)
(1)
%
Total Segment EBITDA
$
221
$
358
$
(137)
(38)
%
** - Not meaningful
NOTE 2 – ADJUSTED REVENUES, ADJUSTED TOTAL SEGMENT EBITDA AND
ADJUSTED SEGMENT EBITDA
The Company uses revenues, Total Segment EBITDA and Segment
EBITDA excluding the impact of acquisitions, divestitures, fees and
costs, net of indemnification, related to the claims and
investigations arising out of certain conduct at The News of the
World (the “U.K. Newspaper Matters”) and foreign currency
fluctuations (“Adjusted Revenues,” “Adjusted Total Segment EBITDA”
and “Adjusted Segment EBITDA,” respectively) to evaluate the
performance of the Company’s core business operations exclusive of
certain items that impact the comparability of results from period
to period such as the unpredictability and volatility of currency
fluctuations. The Company calculates the impact of foreign currency
fluctuations for businesses reporting in currencies other than the
U.S. dollar by multiplying the results for each quarter in the
current period by the difference between the average exchange rate
for that quarter and the average exchange rate in effect during the
corresponding quarter of the prior year and totaling the impact for
all quarters in the current period.
The calculation of Adjusted Revenues, Adjusted Total Segment
EBITDA and Adjusted Segment EBITDA may not be comparable to
similarly titled measures reported by other companies, since
companies and investors may differ as to what type of events
warrant adjustment. Adjusted Revenues, Adjusted Total Segment
EBITDA and Adjusted Segment EBITDA are not measures of performance
under generally accepted accounting principles and should not be
construed as substitutes for amounts determined under GAAP as
measures of performance. However, management uses these measures in
comparing the Company’s historical performance and believes that
they provide meaningful and comparable information to investors to
assist in their analysis of our performance relative to prior
periods and our competitors.
The following tables reconcile reported revenues and reported
Total Segment EBITDA to Adjusted Revenues and Adjusted Total
Segment EBITDA for the three months ended September 30, 2019 and
2018.
Revenues
Total Segment EBITDA
For the three months ended
For the three months ended
September 30,
September 30,
2019
2018
Difference
2019
2018
Difference
(in millions)
(in millions)
As reported
$
2,340
$
2,524
$
(184
)
$
221
$
358
$
(137
)
Impact of acquisitions
(16
)
-
(16
)
15
-
15
Impact of divestitures
-
(7
)
7
-
(1
)
1
Impact of foreign currency
fluctuations
84
-
84
13
-
13
Net impact of U.K. Newspaper Matters
-
-
-
2
2
-
As adjusted
$
2,408
$
2,517
$
(109
)
$
251
$
359
$
(108
)
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three months ended September 30, 2019 and 2018 are as follows:
For the three months ended
September 30,
2019
2018
% Change
(in millions)
Better/(Worse)
Adjusted Revenues:
News and Information Services
$
1,175
$
1,243
(5)%
Subscription Video Services
548
565
(3)%
Book Publishing
410
418
(2)%
Digital Real Estate Services
275
291
(5)%
Other
-
-
**
Adjusted Total Revenues
$
2,408
$
2,517
(4)%
Adjusted Segment EBITDA:
News and Information Services
$
58
$
108
(46)%
Subscription Video Services
86
113
(24)%
Book Publishing
49
68
(28)%
Digital Real Estate Services
103
105
(2)%
Other
(45
)
(35
)
(29)%
Adjusted Total Segment EBITDA
$
251
$
359
(30)%
** - Not meaningful
Foreign Exchange Rates
Average foreign exchange rates used in the calculation of the
impact of foreign currency fluctuations for the three months ended
September 30, 2019 and 2018 are as follows:
For the three months ended
September 30,
2019
2018
Australian Dollar / U.S. Dollar
0.69
0.73
British Pound Sterling / U.S. Dollar
1.23
1.30
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the three months ended September 30, 2019 and
2018.
For the three months ended
September 30, 2019
As Reported
Impact of Acquisitions
Impact of Divestitures
Impact of Foreign Currency
Fluctuations
Net Impact of U.K. Newspaper
Matters
As Adjusted
(in millions)
Revenues:
News and Information Services
$
1,149
$
(9
)
$
-
$
35
$
-
$
1,175
Subscription Video Services
514
-
-
34
-
548
Book Publishing
405
-
-
5
-
410
Digital Real Estate Services
272
(7
)
-
10
-
275
Other
-
-
-
-
-
-
Total Revenues
$
2,340
$
(16
)
$
-
$
84
$
-
$
2,408
Segment EBITDA:
News and Information Services
$
56
$
-
$
-
$
2
$
-
$
58
Subscription Video Services
81
(1
)
-
6
-
86
Book Publishing
49
-
-
-
-
49
Digital Real Estate Services
82
16
-
5
-
103
Other
(47
)
-
-
-
2
(45
)
Total Segment EBITDA
$
221
$
15
$
-
$
13
$
2
$
251
For the three months ended
September 30, 2018
As Reported
Impact of Acquisitions
Impact of Divestitures
Impact of Foreign Currency
Fluctuations
Net Impact of U.K. Newspaper
Matters
As Adjusted
(in millions)
Revenues:
News and Information Services
$
1,248
$
-
$
(5
)
$
-
$
-
$
1,243
Subscription Video Services
565
-
-
-
-
565
Book Publishing
418
-
-
-
-
418
Digital Real Estate Services
293
-
(2
)
-
-
291
Other
-
-
-
-
-
-
Total Revenues
$
2,524
$
-
$
(7
)
$
-
$
-
$
2,517
Segment EBITDA:
News and Information Services
$
109
$
-
$
(1
)
$
-
$
-
$
108
Subscription Video Services
113
-
-
-
-
113
Book Publishing
68
-
-
-
-
68
Digital Real Estate Services
105
-
-
-
-
105
Other
(37
)
-
-
-
2
(35
)
Total Segment EBITDA
$
358
$
-
$
(1
)
$
-
$
2
$
359
NOTE 3 – ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO NEWS
CORPORATION STOCKHOLDERS AND ADJUSTED EPS
The Company uses net income (loss) attributable to News
Corporation stockholders and diluted earnings per share (“EPS”)
excluding expenses related to U.K. Newspaper Matters, impairment
and restructuring charges and “Other, net”, net of tax, recognized
by the Company or its equity method investees, as well as the
settlement of certain pre-Separation tax matters (“adjusted net
income (loss) attributable to News Corporation stockholders” and
“adjusted EPS,” respectively), to evaluate the performance of the
Company’s operations exclusive of certain items that impact the
comparability of results from period to period, as well as certain
non-operational items. The calculation of adjusted net income
(loss) attributable to News Corporation stockholders and adjusted
EPS may not be comparable to similarly titled measures reported by
other companies, since companies and investors may differ as to
what type of events warrant adjustment. Adjusted net income (loss)
attributable to News Corporation stockholders and adjusted EPS are
not measures of performance under generally accepted accounting
principles and should not be construed as substitutes for
consolidated net income (loss) attributable to News Corporation
stockholders and net income (loss) per share as determined under
GAAP as a measure of performance. However, management uses these
measures in comparing the Company’s historical performance and
believes that they provide meaningful and comparable information to
investors to assist in their analysis of our performance relative
to prior periods and our competitors.
The following table reconciles reported net (loss) income
attributable to News Corporation stockholders and reported diluted
EPS to adjusted net income attributable to News Corporation
stockholders and adjusted EPS for the three months ended September
30, 2019 and 2018.
For the three months ended
For the three months ended
September 30, 2019
September 30, 2018
(in millions, except per share data)
Net (loss) attributable to
stockholders
EPS
Net income attributable to
stockholders
EPS
Net (loss) income
$
(211
)
$
$
128
$
Less: Net income attributable to
noncontrolling interests
(16
)
(27
)
Net (loss) income attributable to News
Corporation stockholders
$
(227
)
$
(0.39
)
$
101
$
0.17
U.K. Newspaper Matters
2
-
2
-
Impairment and restructuring
charges(a)
297
0.50
18
0.03
Other, net
(4
)
-
(20
)
(0.03
)
Tax impact on items above
(41
)
(0.07
)
(4
)
-
Impact of noncontrolling interest on items
included above
(1
)
-
-
-
As adjusted
$
26
$
0.04
$
97
$
0.17
(a)
During the three months ended September 30, 2019, the Company
recognized $273 million of non-cash impairment charges, primarily
at News America Marketing.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191107006112/en/
Investor Relations Michael Florin
212-416-3363 mflorin@newscorp.com
Leslie Kim 212-416-4529 lkim@newscorp.com
Corporate Communications Jim
Kennedy 212-416-4064 jkennedy@newscorp.com
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