FISCAL 2018 SECOND QUARTER KEY
FINANCIAL HIGHLIGHTS
- Revenues of $2.18 billion, a 3%
increase compared to $2.12 billion in the prior year
- The Company recorded a charge of
$174 million related to the recently enacted U.S. Tax Cuts and Jobs
Act
- Net loss improved to ($66) million
compared to ($219) million in the prior year
- Total Segment EBITDA of $329
million, a 1% increase compared to $325 million in the prior
year
- Reported EPS were ($0.14) compared
to ($0.50) in the prior year – Adjusted EPS were $0.24 compared to
$0.19 in the prior year
- Digital Real Estate Services segment
revenues grew 21%, benefiting from continued traffic growth at both
REA Group and realtor.com®
- Digital revenues represented 29% of
News and Information Services segment revenues, compared to 26% in
the prior year
- Strong paid digital subscriber
growth at key news mastheads, led by The Wall Street Journal with a
29% increase in its digital-only subscribers to approximately 1.4
million
News Corporation (“News Corp” or the “Company”)
(NASDAQ:NWS)(NASDAQ:NWSA)(ASX:NWS)(ASX:NWSLV) today reported
financial results for the three months ended December 31, 2017.
Commenting on the results, Chief Executive Robert Thomson
said:
“The robust first half results highlight the virtue of our
strategy to become increasingly digital and global, the discipline
of our financial management, and our commitment to premium content
and high-quality, high-integrity news. First half revenues were up
4% and profitability improved by 27%, including strong results in
the second quarter.
Our digital real estate services businesses continue to thrive,
with flourishing audiences, strong lead volume, and product
enhancements benefiting both consumers and agents. This quarter,
the segment posted 21% revenue growth and an increase of 25% in
Segment EBITDA.
Clearly there are profound changes taking place in the creation
and distribution of digital content. The big tech disruptors are in
the midst of a particularly disruptive period, commercially,
socially and politically. We appreciate that Google has ended the
prejudicial First Click Free and that Facebook is prioritizing
provenance, but these are modest steps toward changing a digital
environment that is dysfunctional at its core. The bot-infested
badlands are hardly a safe space for advertisers, whose brands are
being tainted by association with the extreme, the violent and the
repulsive.
It is certainly in the interests of our shareholders that there
be a reorientation towards quality and integrity, and that readers
and platforms are encouraged to pay for professional journalism.
Our mastheads are recording digital subscriber and audience growth,
with digital accounting for 60 per cent of WSJ subscribers, while
The Sun has now exceeded 90 million global monthly average uniques
in the second quarter. But the potential returns for our journalism
would be far higher in a less chaotic, less debased digital
environment.”
SECOND QUARTER RESULTS
The Company reported fiscal 2018 second quarter total revenues
of $2.18 billion, a 3% increase compared to $2.12 billion in the
prior year period, reflecting continued strong growth in the
Digital Real Estate Services segment, a $47 million positive impact
from foreign currency fluctuations and the acquisitions of
Australian Regional Media (“ARM”) and Australian News Channel Pty
Ltd (“ANC”). Growth was partially offset by lower News America
Marketing and print advertising revenues at the News and
Information Services segment. Adjusted Revenues (which exclude the
foreign currency impact and acquisitions and divestitures as
defined in Note 1) decreased 1%.
Net loss for the quarter was ($66) million, an improvement of
70%, as compared to ($219) million in the prior year. The
improvement was primarily due to the absence of a pre-tax non-cash
impairment charge related to fixed-assets of $310 million and a
$227 million pre-tax non-cash write-down of the Foxtel investment
in the prior year period. The improvement was partially offset by
higher tax expense, which reflects the $174 million provisional
charge resulting from the U.S. Tax Cuts and Jobs Act (refer to
“Other items – U.S. Tax Reform”).
The Company reported second quarter Total Segment EBITDA of $329
million, a 1% increase compared to $325 million in the prior year,
driven by continued growth in the Digital Real Estate Services
segment, partially offset by the increase in sports rights costs at
the Cable Network Programming segment as a result of the timing of
programming amortization. Adjusted Total Segment EBITDA (as defined
in Note 1) was flat.
Loss per share available to News Corporation stockholders was
($0.14) as compared to ($0.50) in the prior year.
Adjusted EPS (as defined in Note 3) were $0.24 compared to $0.19
in the prior year.
SEGMENT REVIEW
For the three months ended For the six months
ended December 31, December 31, 2017 2016 % Change
2017 2016 % Change (in millions)
Better/(Worse)
(in millions)
Better/(Worse)
Revenues: News and Information Services $ 1,298 $ 1,303 - %
$ 2,539 $ 2,525 1 % Book Publishing 469 466 1 % 870 855 2 % Digital
Real Estate Services 292 242 21 % 563 468 20 % Cable Network
Programming 120 104 15 % 265 232 14 % Other 1 1 - %
1 1 - %
Total Revenues $ 2,180 $ 2,116 3 % $
4,238 $ 4,081 4 %
Segment EBITDA: News and
Information Services $ 140 $ 142 (1) % $ 213 $ 188 13 % Book
Publishing 80 75 7 % 130 123 6 % Digital Real Estate Services 119
95 25 % 214 162 32 % Cable Network Programming 33 51 (35) % 60 65
(8) % Other(a) (43) (38) (13) % (39)
(83) 53 %
Total Segment EBITDA $ 329 $ 325 1 % $ 578 $ 455
27 %
(a)
Other Segment EBITDA for the six months ended December 31,
2017 includes a $46 million benefit from the reversal of certain
previously accrued net liabilities for the U.K. Newspaper Matters
as a result of an agreement reached with the relevant tax authority
related to certain employment taxes.
News and Information Services
Revenues in the quarter were relatively flat compared to the
prior year. Within the segment, News UK, News Corp Australia and
Dow Jones revenues grew 7%, 4% and 1%, respectively, while revenues
at News America Marketing declined 16%. Adjusted Revenues for the
segment were 5% lower compared to the prior year.
Advertising revenues declined 6% compared to the prior year. The
decline was driven by lower home delivered revenues of $37 million
at News America Marketing primarily due to two fewer free-standing
inserts and a decline in custom publishing revenues. The results
also reflect the weakness in the print advertising market and the
decision to cease The Wall Street Journal’s international print
editions in the second quarter of fiscal 2018. The decline was
partially offset by $21 million from the acquisition of ARM, the
positive impact from foreign currency fluctuations and a modest
increase in advertising revenues at News UK.
Circulation and subscription revenues increased 6%, primarily
due to a healthy contribution from Dow Jones, which saw a 10%
increase in its circulation revenues, reflecting continued digital
subscriber growth at The Wall Street Journal, as well as strong
growth in its professional information business. Cover and
subscription price increases, the positive impact from foreign
currency fluctuations and the acquisition of ARM also contributed
to the revenue improvement. These increases were partially offset
by lower newsstand volume at News UK.
Segment EBITDA declined $2 million in the quarter, or 1%, as
compared to the prior year, as increased contributions from News UK
and News Corp Australia, driven by lower expenses, were more than
offset by lower contribution from News America Marketing, as a
result of lower revenues, and higher marketing expenses at Dow
Jones. Adjusted Segment EBITDA (as defined in Note 1) declined
7%.
Digital revenues represented 29% of segment revenues in the
quarter, compared to 26% in the prior year. For the quarter,
digital revenues for Dow Jones and the newspaper mastheads
represented 32% of their combined revenues, and at Dow Jones,
digital accounted for more than 50% 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 December 31, 2017
were 1,389,000, compared to 1,080,000 in the prior year (Source:
Internal data)
- Closing digital subscribers at News
Corp Australia’s mastheads as of December 31, 2017 were 389,600
(including ARM), compared to 309,200 in the prior year (Source:
Internal data)
- The Times and Sunday Times closing
digital subscribers as of December 31, 2017 were 220,000, compared
to 184,000 in the prior year (Source: Internal data)
- The Sun’s digital offering reached
approximately 86 million global monthly unique users in December
2017, compared to 61 million in the prior year, based on ABCe
(Source: Omniture)
Book Publishing
Revenues in the quarter increased $3 million, or 1%, compared to
the prior year, primarily due to the success of frontlist titles
such as Ree Drummond’s The Pioneer Woman Cooks: Come and Get It!
and David Walliams’ Bad Dad, as well as the $8 million positive
impact from foreign currency fluctuations and higher backlist sales
at the Children’s books division. The growth was partially offset
by lower sales due to the absence of revenues associated with the
release of The Magnolia Story by Chip and Joanna Gaines, Settle for
More by Megyn Kelly and Hillbilly Elegy by J.D. Vance in the prior
year quarter. Digital sales increased 2% compared to the prior year
and represented 16% of Consumer revenues for the quarter, driven by
the growth in downloadable audiobook sales. Segment EBITDA for the
quarter increased $5 million, or 7%, from the prior year due to the
mix of titles. Adjusted Revenues declined 1% and Adjusted Segment
EBITDA increased 5%.
Digital Real Estate Services
Revenues in the quarter increased $50 million, or 21%, compared
to the prior year, primarily due to the continued strong growth at
REA Group and Move. Segment EBITDA in the quarter increased $24
million, or 25%, compared to the prior year, primarily due to the
higher revenues discussed above. Adjusted Revenues and Adjusted
Segment EBITDA increased 18% and 22%, respectively.
In the quarter, revenues at REA Group increased 24% to $178
million from $144 million in the prior year, primarily due to an
increase in Australian residential depth revenue, driven by
favorable product mix and pricing increases, as well as the
acquisition of Smartline, partially offset by the sale of its
European business in fiscal 2017.
Move’s revenues in the quarter increased 18% to $110 million
from $93 million in the prior year, primarily due to the continued
growth in its Connections℠ for Buyers product. The growth was
partially offset by the $2 million decline in revenue associated
with the sale of TigerLead® in November 2016. Based on Move’s
internal data, average monthly unique users of realtor.com®’s web
and mobile sites for the fiscal second quarter grew 14%
year-over-year to more than 50 million, with mobile representing
more than half of all unique users.
Cable Network Programming
Revenues in the quarter increased $16 million, or 15%, compared
to the prior year due to the acquisition of ANC, operator of
Australia’s SKY NEWS network, and higher affiliate revenues at FOX
SPORTS Australia. Segment EBITDA in the quarter decreased $18
million, or 35%, compared with the prior year, primarily due to the
timing of programming amortization related to the launch of a
dedicated National Rugby League channel at FOX SPORTS Australia and
$2 million of transaction costs related to the proposed combination
of Foxtel and FOX SPORTS Australia. Adjusted Revenues and Adjusted
Segment EBITDA increased 6% and declined 22%, respectively.
REVIEW OF EQUITY LOSSES OF AFFILIATES’ RESULTS
Equity losses of affiliates for the second quarter were ($18)
million compared to ($238) million in the prior year.
For the three months ended For the six months ended
December 31, December 31, 2017 2016 2017 2016 (in
millions) (in millions) Foxtel(a) $ 1 $ (233 ) $ (4 ) $ (244
) Other equity affiliates, net(b) (19 ) (5 )
(24 ) (9 ) Total equity losses of affiliates $ (18 ) $ (238
) $ (28 ) $ (253 )
(a)
The Company amortized $15 million and $32 million related to
excess cost over the Company’s proportionate share of its
investment’s underlying net assets allocated to finite-lived
intangible assets during the three and six months ended December
31, 2017, respectively, and $18 million and $37 million in the
corresponding periods of fiscal 2017. Such amortization is
reflected in Equity losses of affiliates in the Statements of
Operations. During the three and six months ended December 31,
2016, the Company recognized a $227 million non-cash write-down of
the carrying value of its investment in Foxtel to fair value.
(b)
During the three months ended December 31, 2017, the Company
recognized $13 million in non-cash write-downs of certain equity
method investments’ carrying values to fair value. The write-downs
are reflected in Equity losses of affiliates in the Statements of
Operations for the three and six months ended December 31, 2017.
On a U.S. GAAP basis, Foxtel revenues for the second quarter
declined $4 million, or 1%, to $598 million from $602 million in
the prior year period. In local currency, Foxtel revenues decreased
3% due to lower subscriber volume and lower advertising revenues.
Foxtel’s total closing subscribers were approximately 2.8 million
as of December 31, 2017, which was lower than the prior year,
primarily due to the shutdown of Presto. In the second quarter,
cable and satellite churn was 14.5% compared to 15.6% in the prior
year. Broadcast residential ARPU for the second quarter declined 2%
compared to the prior year.
Foxtel’s net income of $32 million increased from $24 million in
the prior year period, primarily due to the absence of losses
resulting from the change in the fair value of Foxtel’s investment
in Ten Network Holdings and the losses associated with Foxtel
management’s decision to cease Presto operations in January 2017,
lower interest expense, as well as lower non-programming expenses,
partially offset by planned increases in sports rights costs.
Equity income (losses) of affiliates for Foxtel of $1 million and
($233) million for the three months ended December 31, 2017 and
2016, respectively, reflect the Company's share of Foxtel's net
income, less the Company's amortization of $15 million and $18
million, respectively, related to the Company's excess cost over
its share of Foxtel's finite-lived intangible assets, as well as
the $227 million non-cash write-down of the carrying value of
Foxtel in fiscal 2017.
Foxtel EBITDA declined $28 million, or 19%, to $116 million from
$144 million in the prior year. In local currency, Foxtel EBITDA
decreased 22% due to planned increases in sports programming costs
of $23 million, primarily related to the Australian Football League
rights, partially offset by lower sales and marketing costs. Foxtel
operating income declined to $57 million from $93 million in the
prior year, primarily as a result of the increased programming
spend noted above. Operating income includes depreciation and
amortization of $59 million compared to $51 million in the prior
year.
CASH FLOW
The following table presents a reconciliation of net cash
provided by continuing operating activities to free cash flow
available to News Corporation:
For the six months ended
December 31,
2017 2016 (in millions) Net cash provided by
continuing operating activities $ 204 $ 4 Less: Capital
expenditures (128 ) (108 ) 76 (104 ) Less: REA Group
free cash flow (93 ) (84 ) Plus: Cash dividends received from REA
Group 33 28 Free cash flow available to
News Corporation $ 16 $ (160 )
Net cash provided by continuing operating activities improved
$200 million for the six months ended December 31, 2017 as compared
to the prior year period, primarily due to the absence of the NAM
Group’s settlement payments of $250 million and higher Total
Segment EBITDA, partially offset by increased working capital
related to higher sports rights payments and certain timing-related
items.
Free cash flow available to News Corporation in the six months
ended December 31, 2017 was $16 million compared to ($160) million
in the prior year period. The improvement was primarily due to
higher net cash provided by continuing operating activities as
discussed above, partially offset by higher capital
expenditures.
Free cash flow available to News Corporation is a non-GAAP
financial measure defined as net cash provided by continuing
operating activities, less capital expenditures (“free cash flow”),
less REA Group free cash flow, plus cash dividends received from
REA Group. Free cash flow available to News Corporation excludes
cash flows from discontinued operations.
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. 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.
OTHER ITEMS
U.S. Tax Reform
On December 22, 2017, the U.S. government enacted comprehensive
tax legislation commonly referred to as the Tax Cuts and Jobs Act
(the “Tax Act”). The Tax Act reduces the federal statutory tax rate
on U.S. earnings to 21% and moves from a global taxation regime to
a modified territorial regime. As the Company has a June 30 fiscal
year-end, the impact of the lower corporate tax rate will be phased
in, resulting in a U.S. statutory federal rate of approximately 28%
for the fiscal year ending June 30, 2018 and 21% in fiscal years
thereafter. The Tax Act also adds many new provisions, some of
which do not apply to the Company until 2019.
As part of the Tax Act, U.S. companies are required to pay a
one-time tax on historical earnings generated offshore that have
not been repatriated to the U.S. In addition, the lower U.S.
statutory tax rate of 21% will result in a re-measurement of the
Company’s net U.S. deferred tax asset position. These transitional
impacts resulted in a provisional charge of $174 million comprised
of an estimated repatriation tax charge of $34 million and an
estimated deferred tax charge (due to re-measurement) of $140
million, in the three months ended December 31, 2017.
The changes included in the Tax Act are broad and complex and
thus the final transition impacts of the Tax Act may differ from
the above estimate, possibly materially, due to a number of
factors.
Dividends
The Company today declared a semi-annual cash dividend of $0.10
per share for Class A Common Stock and Class B Common Stock. This
dividend is payable on April 18, 2018 to stockholders of record as
of March 14, 2018.
COMPARISON OF ADJUSTED INFORMATION TO U.S. GAAP
INFORMATION
Adjusted Revenues, Total Segment EBITDA, Adjusted Total Segment
EBITDA, Adjusted Segment EBITDA, adjusted net income available 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 continuing
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
5:00pm EST on February 8, 2018. To listen to the call, please visit
http://investors.newscorp.com.
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 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 and regulatory 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 any obligation to publicly
update any “forward-looking statements” to reflect subsequent
events or circumstances, except as required by law.
About News Corporation
News Corporation (NASDAQ: NWS, NWSA; ASX: NWS,
NWSLV) is a global, diversified media and information services
company focused on creating and distributing authoritative and
engaging content to consumers throughout the world. The
company comprises businesses across a range of media, including:
news and information services, book publishing, digital real estate
services, cable network programming in Australia, and pay-TV
distribution in Australia. Headquartered in New York, the
activities of News Corporation are conducted primarily in the
United States, Australia, and the United Kingdom. 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 For the six months
ended December 31, December 31, 2017 2016 2017 2016
Revenues: Advertising $ 702 $ 748 $ 1,372 $ 1,418
Circulation and subscription 637 595 1,288 1,216 Consumer 453 450
839 824 Real estate 222 185 425 357 Other 166
138 314 266 Total
Revenues 2,180 2,116 4,238 4,081 Operating expenses (1,139 )
(1,126 ) (2,288 ) (2,283 ) Selling, general and administrative (712
) (665 ) (1,372 ) (1,343 ) Depreciation and amortization (100 )
(120 ) (197 ) (240 ) Impairment and restructuring charges (12 )
(356 ) (27 ) (376 ) Equity losses of affiliates (18 ) (238 ) (28 )
(253 ) Interest, net 1 15 7 22 Other, net (31 ) 123
(23 ) 140 Income (loss) before income
tax (expense) benefit 169 (251 ) 310 (252 ) Income tax (expense)
benefit (235 ) 32 (289 ) 33
Net (loss) income (66 ) (219 ) 21 (219 ) Less: Net income
attributable to noncontrolling interests (17 ) (70 )
(36 ) (85 ) Net loss attributable to News Corporation
stockholders $ (83 ) $ (289 ) $ (15 ) $ (304 ) Less: Adjustments to
Net loss attributable to News Corporation stockholders – Redeemable
preferred stock dividends (1 ) (1 ) (1 )
(1 ) Net loss available to News Corporation stockholders $
(84 ) $ (290 ) $ (16 ) $ (305 ) Weighted average shares
outstanding: Basic 583 581 583 581 Diluted 583 581 583 581
Net loss available to News Corporation stockholders per share -
basic and diluted $ (0.14 ) $ (0.50 ) $ (0.03 ) $ (0.52 )
NEWS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions)
As of December 31,
As of June 30,
2017
2017
ASSETS (unaudited) (audited) Current assets: Cash and cash
equivalents $ 1,856 $ 2,016 Receivables, net 1,379 1,276 Other
current assets 483 523 Total current
assets 3,718 3,815 Non-current
assets: Investments 2,019 2,027 Property, plant and equipment, net
1,631 1,624 Intangible assets, net 2,281 2,281 Goodwill 3,917 3,838
Deferred income tax assets 349 525 Other non-current assets
444 442 Total assets $ 14,359 $ 14,552
LIABILITIES AND EQUITY Current liabilities:
Accounts payable $ 216 $ 222 Accrued expenses 1,113 1,204 Deferred
revenue 390 426 Other current liabilities 551
600 Total current liabilities 2,270
2,452 Non-current liabilities: Borrowings 187 276
Retirement benefit obligations 305 319 Deferred income tax
liabilities 59 61 Other non-current liabilities 360 351
Commitments and contingencies Redeemable preferred stock 20
20 Equity: Class A common stock 4 4 Class B common stock 2 2
Additional paid-in capital 12,350 12,395 Accumulated deficit (664 )
(648 ) Accumulated other comprehensive loss (832 )
(964 ) Total News Corporation stockholders' equity 10,860 10,789
Noncontrolling interests 298 284 Total
equity 11,158 11,073 Total liabilities
and equity $ 14,359 $ 14,552
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited; in millions)
For the six months ended December 31, 2017
2016
Operating activities: Net income (loss) $ 21 $ (219 )
Less: Income from discontinued operations, net of tax -
- Income (loss) from continuing operations 21
(219 ) Adjustments to reconcile income (loss) from
continuing operations to cash provided by operating activities:
Depreciation and amortization 197 240 Equity losses of affiliates
28 253 Cash distributions received from affiliates 1 - Impairment
charges - 310 Other, net 23 (140 ) Deferred income taxes and taxes
payable 200 (102 ) Change in operating assets and liabilities, net
of acquisitions: Receivables and other assets (73 ) (131 )
Inventories, net (8 ) (9 ) Accounts payable and other liabilities
(185 ) 52 NAM Group settlement - (250 ) Net cash
provided by operating activities from continuing operations 204 4
Net cash used in operating activities from discontinued operations
- (3 ) Net cash provided by operating
activities 204 1
Investing
activities: Capital expenditures (128 ) (108 ) Changes in
restricted cash for Wireless Group acquisition - 315 Acquisitions,
net of cash acquired (53 ) (342 ) Investments in equity affiliates
and other (33 ) (39 ) Proceeds from property, plant and equipment
and other asset dispositions 15 59 Other, net 23 (3 )
Net cash used in investing activities from continuing operations
(176 ) (118 ) Net cash used in investing activities from
discontinued operations - - Net cash
used in investing activities (176 ) (118 )
Financing activities: Repayment of borrowings (93 ) (23 )
Dividends paid (80 ) (77 ) Other, net (29 ) (21 ) Net cash
used in financing activities from continuing operations (202 ) (121
) Net cash used in financing activities from discontinued
operations - - Net cash used in
financing activities (202 ) (121 ) Net
decrease in cash and cash equivalents (174 ) (238 ) Cash and cash
equivalents, beginning of period 2,016 1,832 Exchange movement on
opening cash balance 14 (30 ) Cash and cash
equivalents, end of period $ 1,856 $ 1,564
NOTE 1 – 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 and six months ended December 31, 2017
and 2016.
Revenues Total Segment EBITDA For the three
months ended For the three months ended December 31, December 31,
2017 2016 Difference 2017
2016
Difference (in millions) (in millions)
As
reported $ 2,180 $ 2,116 $ 64 $ 329 $ 325 $ 4 Impact of
acquisitions (56 ) - (56 ) 2 - 2 Impact of divestitures -
(18 ) 18 - 1 (1 ) Impact of foreign currency fluctuations
(47 ) - (47 ) (6 ) - (6 ) Net impact of U.K. Newspaper
Matters - - - 3 2 1
As adjusted $
2,077 $ 2,098 $ (21 ) $ 328 $ 328 $ -
Revenues Total Segment EBITDA For the six
months ended December 31, For the six months ended December 31,
2017 2016 Difference 2017 2016 Difference (in millions) (in
millions)
As reported $ 4,238 $ 4,081 $ 157 $ 578 $
455 $ 123 Impact of acquisitions (132 ) - (132 ) - 5 (5 )
Impact of divestitures - (43 ) 43 - 1 (1 ) Impact of
foreign currency fluctuations (73 ) - (73 ) (10 ) - (10 )
Net impact of U.K. Newspaper Matters - - - (40 ) 4 (44 )
As adjusted $ 4,033 $ 4,038 $ (5
) $ 528 $ 465 $ 63
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three and six months ended December 31, 2017 and 2016 are as
follows:
For the three months ended December 31, 2017 2016
% Change (in millions) Better/(Worse)
Adjusted
Revenues: News and Information Services $ 1,233 $ 1,297 (5 ) %
Book Publishing 461 466 (1 ) % Digital Real Estate Services 272 230
18 % Cable Network Programming 110 104 6 % Other 1
1 - %
Total Adjusted Revenues $ 2,077
$ 2,098 (1 ) %
Adjusted Segment EBITDA:
News and Information Services $ 134 $ 144 (7 ) % Book Publishing 79
75 5 % Digital Real Estate Services 115 94 22 % Cable Network
Programming 40 51 (22 ) % Other (40 ) (36 ) (11 ) %
Total Adjusted Segment EBITDA $ 328 $ 328 -
% For the six months ended December 31, 2017
2016 % Change (in millions) Better/(Worse)
Adjusted Revenues: News and Information Services $ 2,405 $
2,506 (4 ) % Book Publishing 860 855 1 % Digital Real Estate
Services 527 444 19 % Cable Network Programming 240 232 3 % Other
1 1 - %
Total Adjusted
Revenues $ 4,033 $ 4,038 - %
Adjusted Segment EBITDA: News and Information Services $ 203
$ 196 4 % Book Publishing 129 123 5 % Digital Real Estate Services
206 160 29 % Cable Network Programming 69 65 6 % Other (79 )
(79 ) - %
Total Adjusted Segment EBITDA $ 528
$ 465 14 %
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 December 31, 2017 and
2016.
For the three months ended December 31, 2017
Impact of
Net Impact of
Foreign
U.K.
Impact of
Currency
Newspaper
As Reported
Acquisitions
Fluctuations
Matters
As Adjusted (in millions)
Revenues: News and
Information Services $ 1,298 $ (32 ) $ (33 ) $ - $ 1,233 Book
Publishing 469 - (8 ) - 461 Digital Real Estate Services 292 (16 )
(4 ) - 272 Cable Network Programming 120 (8 ) (2 ) - 110 Other
1 - - -
1
Total Revenues $ 2,180 $ (56 ) $ (47
) $ - $ 2,077
Segment EBITDA: News and
Information Services $ 140 $ (3 ) $ (3 ) $ - $ 134 Book Publishing
80 - (1 ) - 79 Digital Real Estate Services 119 (2 ) (2 ) - 115
Cable Network Programming 33 7 - - 40 Other (43 ) -
-
3
(40 )
Total Segment EBITDA $ 329 $ 2 $
(6 ) $ 3 $ 328 For the three months
ended December 31, 2016
Net Impact of
U.K.
Impact of
Newspaper
As Reported
Divestitures
Matters
As Adjusted (in millions)
Revenues: News and
Information Services $ 1,303 $ (6 ) $ - $ 1,297 Book Publishing 466
- - 466 Digital Real Estate Services 242 (12 ) - 230 Cable Network
Programming 104 - - 104 Other 1 -
- 1
Total Revenues $ 2,116
$ (18 ) $ - $ 2,098
Segment
EBITDA: News and Information Services $ 142 $ 2 $ - $ 144 Book
Publishing 75 - - 75 Digital Real Estate Services 95 (1 ) - 94
Cable Network Programming 51 - - 51 Other (38 ) -
2
(36 )
Total Segment EBITDA $ 325 $ 1 $
2 $ 328
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the six months ended December 31, 2017 and 2016.
For the six months ended December 31, 2017
Impact of
Net Impact of
Foreign
U.K.
Impact of
Currency
Newspaper
As Reported
Acquisitions
Fluctuations
Matters
As Adjusted (in millions)
Revenues: News and
Information Services $ 2,539 $ (87 ) $ (47 ) $ - $ 2,405 Book
Publishing 870 - (10 ) - 860 Digital Real Estate Services 563 (26 )
(10 ) - 527 Cable Network Programming 265 (19 ) (6 ) - 240 Other
1 - - -
1
Total Revenues $ 4,238 $ (132 ) $ (73
) $ - $ 4,033
Segment EBITDA: News and
Information Services $ 213 $ (6 ) $ (4 ) $ - $ 203 Book Publishing
130 - (1 ) - 129 Digital Real Estate Services 214 (3 ) (5 ) - 206
Cable Network Programming 60 9 - - 69 Other (39 ) -
- (40 ) (79 )
Total Segment
EBITDA $ 578 $ - $ (10 ) $ (40 ) $ 528
For the six months ended December 31, 2016
Net Impact of
U.K.
Impact of
Impact of
Newspaper
As Reported
Acquisitions
Divestitures
Matters
As Adjusted (in millions)
Revenues: News and
Information Services $ 2,525 $ - $ (19 ) $ - $ 2,506 Book
Publishing 855 - - - 855 Digital Real Estate Services 468 - (24 ) -
444 Cable Network Programming 232 - - - 232 Other 1
- - - 1
Total Revenues $ 4,081 $ - $ (43 ) $ -
$ 4,038
Segment EBITDA: News and Information
Services $ 188 $
5
$ 3 $ - $ 196 Book Publishing 123 - - - 123 Digital Real Estate
Services 162 - (2 ) - 160 Cable Network Programming 65 - - - 65
Other (83 ) - -
4
(79 )
Total Segment EBITDA $ 455 $ 5 $
1 $ 4 $ 465
NOTE 2 – 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, net,
other, net, income tax expense (benefit) and net income
attributable to noncontrolling interests. 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 tables reconcile net income
(loss) to Total Segment EBITDA.
For the three months ended December 31, 2017 2016
Change % Change (in millions) Net loss $ (66 )
$ (219 ) $ 153 70 % Add: Income tax expense (benefit) 235 (32 ) 267
** Other, net 31 (123 ) 154 ** Interest, net (1 ) (15 ) 14 93 %
Equity losses of affiliates 18 238 (220 ) (92 ) % Impairment and
restructuring charges 12 356 (344 ) (97 ) % Depreciation and
amortization 100 120 (20 ) (17 )
% Total Segment EBITDA $ 329 $ 325 $ 4 1
% ** - Not meaningful For the six months ended
December 31, 2017 2016 Change % Change (in millions) Net
income (loss) $ 21 $ (219 ) $ 240 ** Add: Income tax expense
(benefit) 289 (33 ) 322 ** Other, net 23 (140 ) 163 ** Interest,
net (7 ) (22 ) 15 68 % Equity losses of affiliates 28 253 (225 )
(89 ) % Impairment and restructuring charges 27 376 (349 ) (93 ) %
Depreciation and amortization 197 240
(43 ) (18 ) % Total Segment EBITDA $ 578 $ 455
$ 123 27 % ** - Not meaningful
NOTE 3 – ADJUSTED NET INCOME (LOSS) AVAILABLE TO NEWS
CORPORATION STOCKHOLDERS AND ADJUSTED EPS
The Company uses net income (loss) available 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 investees and the impact of the Tax Act
(“adjusted net income (loss) available 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. The
calculation of adjusted net income (loss) available 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) available 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) available 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 tables reconcile reported net income (loss)
available to News Corporation stockholders and reported diluted EPS
to adjusted net income (loss) available to News Corporation
stockholders and adjusted EPS for the three and six months ended
December 31, 2017 and 2016.
For the three months ended For the three months ended
December 31, 2017 December 31, 2016
Net lossavailable tostockholders
EPS
Net lossavailable tostockholders
EPS (in millions, except per share data)
Net loss $ (66 ) $ $ (219 ) $ Less: Net income
attributable to noncontrolling interests (17 ) (70 ) Less:
Redeemable preferred stock dividends (1 )
(1 )
Loss
available to News Corporation stockholders $ (84 ) $ (0.14 ) $
(290 ) $ (0.50 ) U.K. Newspaper Matters 3 - 2 -
Impairment and restructuring charges
(a)
12 0.02 356 0.62
Other, net (b)
31 0.05 (123 ) (0.21 )
Equity losses of affiliates (c)
13 0.02 227 0.39
Tax impact on items above (d)
(3 ) - (108 ) (0.19 )
Impact of Tax Act (e)
174 0.30 - - Impact of noncontrolling interest on items
included above (8 ) (0.01 ) 46 0.08
As
adjusted $ 138 $ 0.24 $ 110
$ 0.19
(a)
Impairment and restructuring charges for the three months
ended December 31, 2016 included a non-cash impairment charge of
approximately $310 million related to the write-down of fixed
assets at the Australian newspapers.
(b)
Other, net in the three months ended December 31, 2016 included a
pre-tax gain of $120 million resulting from the sale of REA Group’s
European business.
(c)
During the three months ended December 31, 2017, the Company
recognized $13 million in non-cash write-downs of certain equity
method investments’ carrying values. During the three months ended
December 31, 2016, the Company recognized a $227 million non-cash
write-down of the carrying value of its investment in Foxtel.
(d)
The tax impact on items above for the three months ended December
31, 2016 includes a $121 million tax benefit from the non-cash
impairment charge and non-cash write-down noted above.
(e)
During the three months ended December 31, 2017, the Company
recorded a $174 million provisional charge as a result of the Tax
Act. For the six months ended For the six
months ended December 31, 2017 December 31, 2016
Net income(loss) availableto
stockholders
EPS
Net lossavailable tostockholders
EPS (in millions, except per share data)
Net income (loss) $ 21 $ $ (219 ) $ Less: Net
income attributable to noncontrolling interests (36 ) (85 ) Less:
Redeemable preferred stock dividends (1 )
(1 )
Loss
available to News Corporation stockholders $ (16 ) $ (0.03 ) $
(305 ) $ (0.52 )
U.K. Newspaper Matters (a)
(40 ) (0.07 ) 4 -
Impairment and restructuring charges
(b)
27 0.05 376 0.65
Other, net (c)
23 0.04 (140 ) (0.24 )
Equity losses of affiliates (d)
13 0.02 238 0.41
Tax impact on items above (e)
6 0.01 (115 ) (0.20 )
Impact of Tax Act (f)
174 0.30 - - Impact of noncontrolling interest on items
included above (8 ) (0.01 ) 46 0.08
As
adjusted $ 179 $ 0.31 $ 104
$ 0.18
(a)
During the six months ended December 31, 2017, the Company
recorded a $46 million benefit from the reversal of certain
previously accrued net liabilities for the U.K. Newspaper Matters
as a result of an agreement reached with the relevant tax authority
related to certain employment taxes.
(b)
Impairment and restructuring charges for the six months ended
December 31, 2016 included a non-cash impairment charge of
approximately $310 million related to the write-down of the fixed
assets at the Australian newspapers.
(c)
Other, net in the six months ended December 31, 2016 included a
pre-tax gain of $120 million resulting from the sale of REA Group’s
European business.
(d)
During the six months ended December 31, 2017, the Company
recognized $13 million in non-cash write-downs of certain equity
method investments’ carrying values. During the six months ended
December 31, 2016, the Company recognized a $227 million non-cash
write-down of the carrying value of its investment in Foxtel.
Foxtel’s net income in the six months ended December 31, 2016
included a $21 million loss resulting from Foxtel management’s
decision to cease Presto operations in January 2017. Equity losses
of affiliates were negatively affected by $11 million, which
represents the Company’s share of that loss.
(e)
The tax impact on items above for the six months ended December 31,
2016 includes a $121 million tax benefit from the non-cash
impairment charge and non-cash write-down noted above.
(f)
During the six months ended December 31, 2017, the Company recorded
a $174 million provisional charge as a result of the Tax Act.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180208006403/en/
News CorporationMichael Florin, 212-416-3363Investor
Relationsmflorin@newscorp.comorJim Kennedy, 212-416-4064Corporate
Communicationsjkennedy@newscorp.com
Grafico Azioni News (ASX:NWS)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni News (ASX:NWS)
Storico
Da Apr 2023 a Apr 2024