10-K: News Corp FY25: Digital Growth & Foxtel Sale Boost Profits

News Corporation reports significant profit growth in fiscal year 2025, driven by digital expansion and the strategic divestiture of Foxtel, despite challenges in traditional media.

Summary

• Total Revenues increased by $200 million (2%) to $8,452 million in fiscal year 2025 compared to $8,252 million in fiscal year 2024.
• Net income increased by $986 million (279%) to $1,340 million in fiscal year 2025 from $354 million in fiscal year 2024.
• Net income from continuing operations increased by $269 million (71%) to $648 million in fiscal year 2025 from $379 million in fiscal year 2024.
• Net income from discontinued operations, primarily from the sale of Foxtel, was $692 million in fiscal year 2025, compared to a loss of $(25) million in fiscal year 2024.
• Total Segment EBITDA increased by $174 million (14%) to $1,415 million in fiscal year 2025 from $1,241 million in fiscal year 2024.
• The Dow Jones segment's revenue increased 4% to $2,331 million, with Segment EBITDA up 8% to $588 million; digital revenues represented 82% of total Dow Jones revenue.
• The Digital Real Estate Services segment's revenue increased 9% to $1,802 million, with Segment EBITDA up 18% to $601 million, driven by higher Australian residential revenues and REA India.
• The Book Publishing segment's revenue increased 3% to $2,149 million, with Segment EBITDA up 10% to $296 million, due to higher digital book sales and improved returns in the U.S.; digital sales represented 24% of consumer revenues.
• The News Media segment's revenue decreased 4% to $2,170 million, but Segment EBITDA increased 15% to $153 million, primarily due to cost savings initiatives.
• Cash and cash equivalents were $2.4 billion as of June 30, 2025.
• Free cash flow increased to $571 million in fiscal year 2025 from $540 million in fiscal year 2024.
• The company repurchased $150 million of its Class A and Class B Common Stock in fiscal year 2025.
• A new stock repurchase program authorizing up to $1 billion was announced on July 15, 2025.

Sentiment

Score: 8

Explanation: The company reported strong financial results for fiscal year 2025, with significant increases in net income and Segment EBITDA, largely boosted by the strategic sale of Foxtel. Growth in digital segments like Dow Jones and Digital Real Estate Services, coupled with effective cost savings in News Media, indicate a positive operational trajectory. While macroeconomic headwinds and evolving digital landscape risks exist, the company's focus on digital transformation, content licensing, and AI integration positions it favorably for future growth. The announcement of a new $1 billion stock repurchase program signals confidence in future cash flows and commitment to shareholder returns.

Positives

• Net income increased significantly by 279% to $1,340 million, largely driven by the strategic divestiture of Foxtel.
• Net income from continuing operations saw a substantial 71% increase to $648 million, indicating strong underlying business performance.
• Total Segment EBITDA grew by 14% to $1,415 million, reflecting improved operational profitability across the company's segments.
• The Digital Real Estate Services segment demonstrated robust growth with a 9% increase in revenue and an 18% increase in Segment EBITDA.
• The Dow Jones segment achieved a 4% revenue increase and an 8% Segment EBITDA increase, with digital revenues comprising 82% of its total.
• Book Publishing segment revenues increased by 3% and Segment EBITDA by 10%, supported by a 5% rise in digital book sales and growth in audiobooks.
• The News Media segment improved its Segment EBITDA by 15% through cost savings initiatives, despite a revenue decline.
• Free cash flow increased to $571 million, demonstrating enhanced liquidity and cash generation.
• A new $1 billion stock repurchase program was authorized, signaling confidence in future performance and commitment to shareholder returns.

Negatives

• Overall advertising revenues decreased by 2% ($33 million) for the fiscal year ended June 30, 2025.
• The News Media segment's total revenue decreased by 4% ($100 million), primarily due to the transfer of third-party printing revenue contracts and lower advertising revenues.
• Print advertising revenues declined at both the Dow Jones and News Media segments.
• Digital advertising revenues at News UK (The Sun) decreased due to algorithm changes at certain platforms, leading to a decline in traffic.
• The U.S. real estate market continued to be adversely impacted by persistent inflation in home prices, elevated interest rates, and lower consumer confidence, resulting in a 9% decline in lead volumes for Move.
• The U.S. book publishing industry experienced softer consumer spending due to recent economic uncertainty.
• Factiva's revenues decreased by $11 million due to the impact of a customer dispute.
• Equity losses of affiliates worsened by $9 million (150%) for the fiscal year ended June 30, 2025.

Risks

• The company operates in a highly competitive business environment, intensified by evolving technologies like generative AI, which can lead to content commoditization and reduced demand for traditional products.
• Generative AI-powered tools using the company's content without permission or compensation may reduce traffic to digital products and harm revenue streams.
• The company's ability to compete depends on differentiating brands, responding to new technologies, developing new products, protecting intellectual property, and adapting to changes by large digital platforms.
• Macroeconomic and market conditions, including economic weakness, inflation, elevated interest rates, and geopolitical tensions, may adversely affect the company's business, particularly the U.S. real estate market.
• Settlements of class action lawsuits against brokerages and NAR in the U.S. residential real estate industry could significantly affect how home buyers and sellers engage with agents, potentially impacting Move's business model.
• A decline in customer advertising expenditures due to shifting consumer preferences, audience fragmentation, programmatic buying, and evolving digital advertising standards (e.g., phase-out of third-party cookies) could cause revenues to decline.
• Strategic transactions, including acquisitions, investments, and divestitures, introduce significant risks such as integration difficulties, loss of key employees, and failure to achieve anticipated benefits.
• Dependence on a single or limited number of third-party suppliers (e.g., Amazon Web Services, Google) for critical products and services poses risks of supply interruptions or significant price increases.
• Damage to the company's reputation, credibility, and brands from incidents that erode consumer trust, perceptions of bias, or negative publicity could adversely affect business and results of operations.
• Significant increases in the cost to print and distribute books and newspapers (e.g., paper, labor, transportation) or disruptions in the supply chain could adversely affect the business.
• The company's use of AI may expose it to risks related to accuracy, bias, infringement, regulatory scrutiny, and potential labor disputes.
• International operations expose the company to additional risks, including economic volatility, geopolitical tensions, and compliance with diverse foreign laws and regulations.
• An inability to attract and retain skilled talent could adversely affect the company's business and strategy execution.
• Payment processing risks, including increased fees, system failures, and fraudulent use of payment methods, could negatively impact the company's ability to accept payments or retain customers.
• Agreements with third parties, such as Move's perpetual agreement with NAR, contain operational restrictions and termination clauses that could adversely affect the company.
• Labor disputes, including strikes or work slowdowns, could cause production delays, business interruptions, and higher costs.
• Unauthorized use of the company's content and intellectual property, particularly by generative AI tools, may decrease revenue and increase enforcement costs.
• Third parties may challenge the validity or scope of the company's intellectual property, leading to substantial costs and diversion of resources.
• A breach, failure, or misuse of the company's or its third-party providers' network and information systems could cause service disruptions, increased costs, reputational damage, or other harm.
• Failure to comply with complex and evolving data privacy and security laws and regulations (e.g., GDPR, UK GDPR, CCPA, DUA Act) could result in significant penalties and reputational damage.
• The company could be subject to significant additional tax liabilities due to complex and changing tax laws, regulations, and interpretations (e.g., OBBBA, OECD Pillar 2, digital services taxes).
• Fluctuations in foreign currency exchange rates can impact the company's reported revenues and expenses.
• The company could suffer losses due to asset impairment and restructuring charges, negatively impacting results of operations and financial condition.
• The company's indebtedness and financing arrangements may limit its ability to obtain additional financing and affect its operational flexibility.
• The market price of the company's stock may fluctuate significantly due to various internal and external factors.
• Certain directors and significant stockholders have actual or potential conflicts of interest due to their equity ownership in Fox Corporation and/or serving as officers/directors of FOX.
• Certain provisions in the company's corporate documents and the concentration of ownership by the Murdoch Family Trust may discourage takeovers and affect voting results.

Future Outlook

The company expects to continue pursuing new strategic initiatives, incorporating new technologies, and developing new and enhanced products and services to remain competitive, including licensing arrangements with large platforms and expanding into new business models. It anticipates ongoing challenges from macroeconomic factors, particularly in the U.S. real estate market, and evolving regulatory landscapes for data privacy and AI. The company intends to permanently reinvest approximately $1 billion of undistributed foreign earnings generated after the Tax Act.

Management Comments

• The company believes its current relationships with employees are generally good.
• The company believes HarperCollins is well positioned in the evolving book publishing market with significant size and brand recognition across multiple categories and geographies.
• The company believes that changes in technology and consumer behavior will continue to pose opportunities and challenges, and that it is well positioned to leverage its global reach, brand recognition and proprietary technology to take advantage of the opportunities presented by these changes.
• The company is not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company.
• The company believes it has appropriately accrued for the expected outcome of tax reviews and examinations and any related litigation.
• The company believes its current estimates for tax provision are reasonable, but actual results could differ from these estimates.
• The company believes it has appropriately accrued for the expected outcome of uncertain tax matters and believes such liabilities represent a reasonable provision for taxes ultimately expected to be paid.

Industry Context

The media and information services industry is undergoing rapid transformation driven by evolving technologies, particularly generative AI, and shifting consumer preferences towards digital content. This has intensified competition for audience and advertising, leading to audience fragmentation and increased demand for digital offerings. The real estate market, especially in the U.S., faces headwinds from elevated interest rates and inflation, impacting transaction volumes. The book publishing industry also sees softer consumer spending. News Corp is actively adapting by leveraging digital platforms, pursuing content licensing with large technology companies, and integrating AI solutions into its products, while navigating increased regulatory scrutiny on data privacy and AI.

Management Changes

Corporate Governance

Legal Proceedings

• Purported class action complaints have been filed in the U.S. District Court for the Northern District of Illinois against Oil Price Information Service, LLC (OPIS) and others, alleging antitrust violations related to PVC pipe. A settlement was entered in May 2025, receiving preliminary court approval in July 2025, but remains subject to final approval.
• OPIS received a grand jury subpoena from the U.S. Department of Justice Antitrust Division in January 2025 and a civil investigative demand (CID) from a state attorney general in April 2025, both related to PVC pipe and the PVC and Pipe Weekly Report. OPIS is complying with these obligations.
• Purported class action complaints have been filed in the U.S. District Court for the Southern District of New York against Amazon.com, Inc. and HarperCollins Publishers, L.L.C., alleging antitrust and competition law violations. Complaints against the Publishers were dismissed with prejudice in March 2024, but the plaintiffs' time to appeal does not expire until the complaint against Amazon is finally determined.
• Civil claims related to U.K. Newspaper Matters (voicemail interception and inappropriate payments to public officials at The News of the World and The Sun) continue. The company has admitted liability in many civil cases and settled a number of claims. FOX Corporation indemnifies News Corp for most of these liabilities post-June 28, 2013.

Related Party Transactions

• Net revenue (expense) from related parties was $(53) million for the fiscal year ended June 30, 2025.
• Accounts receivable from related parties were $14 million as of June 30, 2025.
• Accounts payable to related parties were $16 million as of June 30, 2025.
• Approximately $29 million to be indemnified by FOX Corporation related to U.K. Newspaper Matters was recorded as a receivable in Other current assets as of June 30, 2025.
• Certain directors and significant stockholders may have actual or potential conflicts of interest due to their equity ownership in Fox Corporation (FOX) and/or serving as officers and/or on the Board of Directors of FOX.
• The Murdoch Family Trust (MFT) beneficially owns approximately 40.6% of the company's Class B Common Stock as of June 30, 2025, and has a stockholders agreement limiting its voting power to 44% of the outstanding Class B Common Stock.

Stakeholder Impact

• Shareholders are positively impacted by the significant increase in net income, improved free cash flow, and the announcement of a new $1 billion stock repurchase program, indicating a commitment to shareholder returns. However, the concentration of voting power by the Murdoch Family Trust may influence corporate decisions.
• Employees benefit from the company's focus on human capital management, including programs for health, safety, security, wellbeing, competitive compensation, benefits, and ongoing training and development. The company's use of AI tools may impact workforce dynamics.
• Customers are offered a variety of premium and engaging content and services across digital and traditional platforms, with a focus on quality and product innovation. However, they face risks from content commoditization, AI-generated content, and changes by large digital platforms affecting content visibility.
• Suppliers, particularly those providing critical technology infrastructure, cloud services, and paper, are essential to the company's operations. Dependence on a limited number of suppliers introduces risks of supply disruptions or increased costs.
• Creditors are impacted by the company's outstanding indebtedness and financing arrangements, which could affect its ability to obtain additional financing or its financial flexibility. The company reports compliance with all debt covenants as of June 30, 2025.

Next Steps

• Evaluate all U.S. deferred tax balances and any other financial impacts from the H.R. 1 One Big Beautiful Bill Act (OBBBA) in the first quarter of fiscal 2026.
• Continue to monitor the evolving application of OECD Pillar 2 global minimum tax rules and digital services taxes.
• Continue to evaluate possible future acquisitions and dispositions of certain businesses.
• Make required pension contributions of approximately $1 million in fiscal 2026.
• Continue to make voluntary pension contributions as necessary to improve funded status.
• Pay a semi-annual cash dividend of $0.10 per share on October 8, 2025, to stockholders of record as of September 10, 2025.
• Julian Delany is expected to relocate to the New York City metropolitan area within three months following June 30, 2025.

Key Dates

Recommendation

News Corporation's fiscal year 2025 results demonstrate strong financial performance, with a substantial increase in net income driven by the strategic sale of Foxtel and robust growth in its digital segments. The Dow Jones and Digital Real Estate Services segments are performing well, and the News Media segment is improving profitability through cost efficiencies despite revenue challenges. The announcement of a new $1 billion stock repurchase program signals confidence in future cash flows and commitment to shareholder returns. While macroeconomic headwinds and evolving digital landscape risks exist, the company's focus on digital transformation, content licensing, and AI integration positions it favorably for future growth. The current valuation, combined with positive financial trends and capital allocation initiatives, makes it an attractive investment.

Keywords

News Corporation, Media, Information Services, Digital Real Estate, Book Publishing, News Media, Dow Jones, Realtor.com, HarperCollins, The Wall Street Journal, SEC Filing, 10-K, Financial Results, Earnings, Revenue, EBITDA, Cash Flow, Stock Repurchase, Foxtel Sale, Artificial Intelligence, AI, Cybersecurity, Data Privacy, Risk Management, Corporate Governance, Shareholder Value