8-K: News Corp Q1 FY26: Revenue & Profit Rise, Digital Drives Growth

News Corporation reports increased revenue and profitability in Q1 FY2026, driven by strong performance in Dow Jones and Digital Real Estate Services, despite a weak Book Publishing segment.

Summary

• Total revenues for the first quarter of fiscal 2026 increased by 2% to $2.14 billion, up from $2.10 billion in the prior year.
• Net income from continuing operations rose 1% to $150 million, compared to $149 million in the prior year.
• Total Segment EBITDA increased by 5% to $340 million, up from $325 million in the prior year.
• Reported EPS from continuing operations were $0.20, a decrease from $0.21 in the prior year, while Adjusted EPS increased to $0.22 from $0.20.
• Dow Jones segment revenues grew 6% to $586 million, with professional information business revenue up 10% and Risk & Compliance growing 16% to $94 million.
• Digital-only subscriptions to Dow Jones consumer products increased 10% to almost 5.9 million, and total Wall Street Journal subscriptions grew 8% to over 4.6 million.
• Move (Realtor.com) revenues increased 9% to $152 million, marking its highest quarterly year-over-year growth since Q2 fiscal 2022.
• Book Publishing segment revenues decreased 2% and Segment EBITDA fell 28%, impacted by a $13 million write-off of a customer receivable and softer consumer spending.
• News Media segment profitability significantly improved, with Segment EBITDA up 67% due to cost savings and higher pricing.
• Free cash flow improved substantially to $4 million, compared to a negative $49 million in the prior year period.
• The Company accelerated its share repurchases, running at over four times the fiscal 2025 pace.

Sentiment

Score: 8

Explanation: The company demonstrated solid revenue and EBITDA growth, particularly in its digital and professional information segments. Significant improvement in free cash flow and accelerated share buybacks indicate strong financial health and management confidence. While Book Publishing was weak, management noted recent improvements. The strategic focus on AI and IP monetization is a forward-looking positive.

Positives

• Overall revenue increased by 2% to $2.14 billion, demonstrating continued growth.
• Net income from continuing operations saw a 1% increase to $150 million.
• Total Segment EBITDA grew by 5% to $340 million, indicating improved operational efficiency.
• Adjusted EPS rose to $0.22 from $0.20, reflecting stronger underlying performance.
• Dow Jones segment revenues increased 6% to $586 million, driven by professional information and digital circulation.
• Risk & Compliance revenues within Dow Jones surged 16% to $94 million.
• Digital-only subscriptions for Dow Jones consumer products grew 10% to nearly 5.9 million.
• The Wall Street Journal's digital-only subscriptions increased 11% to over 4.2 million.
• Move (Realtor.com) revenues increased 9% to $152 million, the highest quarterly year-over-year growth since Q2 FY2022.
• News Media segment posted a strong 67% improvement in profitability (Segment EBITDA) due to cost savings and higher pricing.
• Free cash flow significantly improved to $4 million from a negative $49 million in the prior year.
• The Company materially increased the rate of share buybacks, running at over four times the fiscal 2025 pace, signaling confidence in valuation.

Negatives

• Reported EPS from continuing operations decreased to $0.20 from $0.21 in the prior year.
• Book Publishing segment revenues decreased 2% and Segment EBITDA declined 28% due to a $13 million write-off of a customer receivable and softer consumer spending.
• Digital sales in Book Publishing decreased 9%, with audiobook sales down 11% and e-book sales down 9%.
• Australian national residential buy listing volumes were down 8% compared to the prior year, with Sydney down 6% and Melbourne down 4%.
• Average monthly unique users of Realtor.com's web and mobile sites decreased 6% to 72 million.
• The Sun's digital offering reached 77 million global monthly unique users in September 2025, down from 80 million in the prior year.
• New York Post's digital network reached 94 million unique users in September 2025, down from 103 million in the prior year.
• Cash and cash equivalents decreased to $2,198 million as of September 30, 2025, from $2,403 million as of June 30, 2025.

Future Outlook

The Company expects to generate strong free cash flow for the current fiscal year. Management anticipates further partnerships related to the value of intellectual property in the age of AI, which are expected to positively impact future results. The Book Publishing segment, despite a weak quarter, has shown signs of improvement in recent weeks.

Management Comments

• "News Corp continued to increase both revenue and profitability in the first quarter of fiscal 2026, led by strength at Dow Jones and Digital Real Estate Services, and bolstered by digital and AI-related revenues."
• "The positive results came despite an uncharacteristically weak performance in Book Publishing, which has been showing signs of improvement in recent weeks."
• "Clearly, our current cash position is robust, and we expect to generate strong free cash flow this fiscal year, and have thus materially increased the rate of our share buybacks."
• "We believe our shares are undervalued, given the sum of our valuable parts and our profit trajectory, and we will continue to focus on ways and means to maximize shareholder value."
• "It is also patently clear that the value of IP in the age of AI is misconceived. Information and sophisticated data are the essence of AI, and without these essential ingredients, AI is but empty, ignorant infrastructure. Electricity without alacrity. Buildings without billings. Chips without chops."
• "Thankfully, we are seeing a positive trend with both enlightened companies and wise courts deciding that creativity and content must not be stolen, but purchased for a reasonable price. Courtship and courts are both crucial components of our strategy. Our wooing has gained increasing traction, and we expect to announce further partnerships in the near future, which we expect to have a positive impact on our results."

Industry Context

News Corporation's results reflect a broader industry trend of digital transformation, with strong growth in digital subscriptions and professional information services (Dow Jones) and digital real estate (Realtor.com). The emphasis on the value of intellectual property in the AI era highlights a critical industry-wide discussion on content monetization and copyright. The Book Publishing segment's weakness, attributed to softer consumer spending, indicates challenges in traditional media consumption, while News Media's profitability improvement through cost savings and pricing suggests a focus on efficiency in a competitive landscape. The decline in unique users for some digital news properties (The Sun, New York Post) could indicate shifting audience engagement or increased competition.

Comparison to Industry Standards

• Realtor.com continued to gain share among other real estate portals, according to Comscore, indicating competitive strength in the digital real estate market.
• The Book Publishing segment was impacted by 'softer consumer spending within the industry', suggesting a broader market challenge rather than company-specific issues.
• Australian national residential buy listing volumes were down 8% compared to the prior year, with Sydney down 6% and Melbourne down 4%, reflecting a challenging housing market environment in Australia.

Legal Proceedings

• The Company continues to incur fees and costs related to claims and investigations arising out of certain conduct at The News of the World (the U.K. Newspaper Matters).
• The Company also incurs charges for other significant, non-ordinary course legal or regulatory matters (litigation charges).

Stakeholder Impact

• Shareholders: Positive impact due to increased revenue, profitability, improved free cash flow, and accelerated share buybacks, potentially leading to increased shareholder value.
• Employees: Continued growth in digital segments may lead to stability or growth in relevant departments, while cost savings initiatives in News Media could imply efficiency measures.
• Customers: Benefits from continued growth in digital offerings and professional information services, but potentially impacted by higher pricing in News Media and Book Publishing.
• Creditors: Improved financial health and free cash flow strengthen the company's ability to meet its obligations.
• Suppliers: No specific impact mentioned, but overall company health generally benefits supplier relationships.

Next Steps

• Announce further partnerships related to the value of intellectual property in the age of AI.
• Continue to focus on ways and means to maximize shareholder value, including ongoing share buybacks.
• Monitor signs of improvement in the Book Publishing segment.

Key Dates

Recommendation

The filing indicates strong underlying business performance with revenue and EBITDA growth driven by key digital segments (Dow Jones, Digital Real Estate Services). The significant improvement in free cash flow and the accelerated share repurchase program signal robust financial health and management's belief that the shares are undervalued. While the Book Publishing segment faced challenges, management noted recent improvements. The strategic focus on monetizing intellectual property in the AI era presents a substantial future growth opportunity. These factors collectively suggest a positive outlook and potential for capital appreciation.

Keywords

News Corporation, Financial Results, Q1 FY2026, Earnings, Media, Information Services, Digital Real Estate, Dow Jones, Realtor.com, Book Publishing, News Media, Share Buybacks, AI, Intellectual Property, Profitability, Revenue Growth