News Corp. Q3 Net Income Falls 29% As News Media Advertising Revenue Declines

News Corp. reported that its revenue dipped about 1% while its net income sunk 29% for the third fiscal quarter of 2024, which the media company attributed to lower advertising revenues in the news media segment, lower physical book sales and a challenging U.S. housing market.

Here are the top-line results:

Net income: $42 million, a 29% drop from $59 million in 2023

Revenue: $2.42 billion, short of the $2.48 billion estimated by analysts at Zacks Investment Research

EPS: An adjusted 11 cents per share vs. 10 cents estimated by Zacks

Subscriptions: 322,000 net additional digital subscriptions for Dow Jones to top 5 million in the quarter, a 17% increase year-over-year

News Corp. continued to battle declining advertising revenues, an industry-wide challenge, as it builds a bigger digital subscription and circulation base, particularly at its Dow Jones subsidiary, which owns The Wall Street Journal and Barrons.

Total average subscriptions to Dow Jones products reached over 5.7 million, a 12% increase compared to the same quarter in 2023. The Wall Street Journal’s total subscriptions grew 8% to over 4.2 million, while digital-only subscriptions grew 13% to 3.7 million.

But offsetting higher Dow Jones subscriptions were falling advertising revenues in the news media segment, which dipped $28 million, or 13% compared to 2023. News Corp. attributed the decline to lower print advertising revenue at News Corp. Australia and lower digital advertising spurred by traffic declines at some outlets resulting from platform alterations.

“We are in the midst of an exponential digital revolution, and our own company has continued to change significantly and profitably,” News Corp. CEO Robert Thomson said in a statement. “Importantly, we are working to promote our quality journalism in the age of Generative AI and are gratified that the most enlightened leaders in the industry appreciate the commercial and social value of that content.”

Revenues for the Dow Jones segment grew 3% year-over-year, or $15 million, which News Corp. attributed to growth in circulation, subscription revenues and the company’s personal information business. Digital revenues represented 81% of Dow Jones’ total, up from 79%. Circulation and subscription revenues for Dow Jones products rose $19 million, or 4% compared to 2023. Digital circulation revenues accounted for 70% of circulation revenues for the quarter, as print circulation continues to decline industry-wide.

New York-based News Corp. which also owns the New York Post, HarperCollins and a host of Australian and British newspapers, started the first half of 2024 on a financial high. The company broke records for quarterly revenues in Q2 for Dow Jones and REA Group, driven by Dow Jones’ professional information business, as well as strong results at the company’s book publishing arm and its digital real estate services. News Corp. also touted continued subscription growth, rising 10% to 5.4 million for The Wall Street Journal and Barron’s Group in Q2.

“News Corp’s profitability rose slightly in the third quarter as compared to the prior year, continuing our growth this fiscal year — and that increase, which gathered pace in April, follows the three most profitable years since the company was reincarnated in 2013,” Thomson said in a statement.

For the news media segment of the company, however, third quarter revenues decreased by 6% compared to 2023, primarily driven by the segment’s advertising revenue, which declined by $28 million, or 13% year-over-year, attributed to declining print advertising at News Corp Australia. Meanwhile, circulation and subscription revenues increased by $1 million compared to 2023.

In the book publishing segment of the company, revenues fell $9 million, or 2%, driven primarily by lower physical book sales. However, digital book sales increased 5% compared to 2023, attributed to market growth or downloadable audiobook sales. News Corp.’s publishing segment also benefited from a continued partnership with Spotify, which allows the audio streamer access to the HarperCollins portfolio.

Thomson praised Spotify on Wednesday as a company that has “transformed audiobook streaming revenue,” adding, “We’re proud to partner with [Spotify CEO] Daniel Ek and his talented team as they roll out streaming globally.”

Thomson warns of “AI-fueled falsehoods”

While News Corp. was initially hesitant of AI technology’s encroach on the media industry, Thomson has since changed his tune, making it clear in February that the company intends to be a “core content provider for generative AI companies who need the highest quality timely content to ensure the relevance of their products.”

On Wednesday Thomson signaled caution as AI technology continues to demonstrate the capacity to generate and circulate misinformation that is penetrating the journalism industry.

“Our trusted premium intellectual property resonates in an era of polarization and amidst a rising tide of AI-fueled falsehoods,” the News Corp. CEO said. “AI stands for authentic and authenticated intelligence, not artificial intelligence or the artifice of intelligence.”

As media organizations grapple with whether to litigate AI companies who have utilized copyrighted material in training chatbots or to partner with them, Thomson said in February, “Courtship is preferable to courtrooms,” a jab pointed toward The New York Times’ blockbuster lawsuit.

The Times in December sued Microsoft and OpenAI, accusing the tech giants of copyright infringement. The lawsuit marked the first blockbuster case from news publishers over generative AI’s capabilities and how chatbots were trained, as the technology begins to embed itself in the media industry. Many other media organizations have followed suit, launching their own lawsuits against the AI tech giants, including eight Alden Global Capital-owned newsrooms and digital outlets Raw Story, Alternet, and The Intercept.

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