The News Corporation Class B Voting CDI (ASX: NWS) share price is on the up this morning after announcing a record second quarter.
Currently, the News Corp share price is up 4.28% to $32.92.
The media empire majority-owned by Rupert Murdoch operates five divisions: Digitial Real Estate, Subscription Video, Dow Jones, Book Publishing and News Media.
Four of five divisions firing
Key highlights from the second quarter ending 31 December include:
- Revenue of US$2.72 billion, a 13% increase year-on-year (YoY)
- Segment EBITDA of US$586 million, an 18% jump YoY
- Net income of US$262 million, flat YoY
- Semi-annual dividend of AU$0.14 per share
News Corp reported its best quarter on record post the separation of 21st Century Fox.
“For the first half of fiscal year 2022, News Corp’s profitability reached nearly $1 billion, up 30% year-over-year, with the second quarter delivering record revenues and the highest profit of any quarter since the company was formed in 2013″
Digital Real Estate was the standout, increasing sales by 35% led by increased volumes through its North American operation Move.
The division also benefitted from a record profit result by realestate.com.au owner REA Group Limited (ASX: REA), of which News Corp owns 61%.
Dow Jones, Book Publishing and News Media all achieved growth in the low-to-mid teens, continuing the positive momentum from Q1.
During the quarter, News Corp added to its stable agreements with big tech to pay for the content shown through apps such as Google and Apple news.
“In addition to the substantial deals with Google and Facebook, we expanded our multi-year global agreement with Apple, which is expected to be an important source of subscriptions and of advertising revenue for our news sites around the world”
Of the five divisions, Subscription Video was the laggard, with revenue falling 3% year-on-year.
Growth in Kayo and BINGE subscribers couldn’t offset an 18% decline in Foxtel subscribers.
Earnings growth stifled by cost pressures
Despite the record quarter and strong divisional performance, News Corp cited several cost headwinds, which weighed on profits.
These include freight and supply chain in Publishing, higher overall interest and tax payments, wage inflation and increased marketing expenses.
The company also noted the impact of one-off acquisition costs relating to OPIS and Base Chemicals.
What next for the News Corp share price?
Management believes the News Corp share price is undervalued given its repurchasing 8% of its shares on issue.
“Our increasing momentum has given us the ability to make opportunistic acquisitions and further our $1 billion share buyback program. News Corp is clearly going from strength to strength”
On that premise, the News Corp share price could be heading higher in the short term.
But over the longer term, I’d have to do more research into the company.
If you’re looking for more share ideas, check out 22 ASX shares I’m excited about it 2022.
Alternatively, bookmark the Rask Media home page and February reporting season calendar to keep up to date with the latest company news.
