10-Q: News Corp Q1 FY26: Revenue Up 2%, Digital Growth Drives Profit

News Corporation reports a 2% revenue increase to $2.144 billion for Q1 FY26, driven by strong digital performance in Dow Jones and Digital Real Estate Services, despite declines in Book Publishing.

Summary

• Total Revenues increased by $48 million, or 2%, to $2.144 billion for the three months ended September 30, 2025, compared to $2.096 billion in the prior year.
• Net income attributable to News Corporation stockholders decreased by $7 million, or 6%, to $112 million from $119 million in the prior year.
• Net income from continuing operations increased by $1 million, or 1%, to $150 million.
• Total Segment EBITDA increased by $15 million, or 5%, to $340 million from $325 million.
• Dow Jones segment revenues increased 6% to $586 million, with Segment EBITDA up 10% to $144 million, driven by higher circulation and subscription revenues (up 7%). Digital revenues represented 84% of total Dow Jones revenues.
• Digital Real Estate Services segment revenues increased 5% to $479 million, with Segment EBITDA up 13% to $158 million, primarily due to higher revenues at Move (up 9% to $152 million) and REA Group (up 3% to $327 million).
• Book Publishing segment revenues decreased 2% to $534 million, with Segment EBITDA down 28% to $58 million, mainly due to lower digital book sales and a $13 million write-off of a customer receivable.
• News Media segment revenues increased 1% to $545 million, with Segment EBITDA up 67% to $30 million, driven by cost savings initiatives and higher circulation/subscription revenues.
• Cash and cash equivalents were $2.198 billion as of September 30, 2025, down from $2.403 billion at June 30, 2025.
• Free cash flow improved significantly to $4 million from $(49) million in the corresponding period of fiscal 2025.
• The company announced a new $1 billion stock repurchase program on July 15, 2025, in addition to the remaining amount from the 2021 program, with approximately $1.216 billion remaining authorized as of September 30, 2025.
• A semi-annual cash dividend of $0.10 per share for Class A and Class B Common Stock was declared in August 2025 and paid on October 8, 2025.

Sentiment

Score: 7

Explanation: The company demonstrated solid performance in its digital-centric segments (Dow Jones, Digital Real Estate) with revenue and EBITDA growth, and a significant improvement in free cash flow. While net income attributable to stockholders declined slightly, this was offset by growth in continuing operations and strong segment EBITDA. Challenges in Book Publishing and overall advertising are noted but appear managed. The new stock repurchase program signals confidence.

Positives

• Total Revenues increased by 2% to $2.144 billion for the quarter.
• Net income from continuing operations increased by 1% to $150 million.
• Total Segment EBITDA increased by 5% to $340 million, indicating improved operational performance.
• Dow Jones segment revenues grew 6% to $586 million, with Segment EBITDA up 10% to $144 million, driven by strong circulation and subscription growth (7%). Digital revenues now constitute 84% of Dow Jones' total revenues.
• Digital Real Estate Services segment revenues increased 5% to $479 million, and Segment EBITDA rose 13% to $158 million, with notable growth from Move (up 9%) and REA Group (up 3%).
• News Media Segment EBITDA saw a significant increase of 67% to $30 million, attributed to cost savings initiatives and higher circulation/subscription revenues.
• Free cash flow improved substantially to $4 million from a negative $49 million in the prior year period, reflecting better cash generation from operations.
• Interest income, net, improved by $6 million, primarily due to higher interest on cash balances and lower borrowings at REA Group.
• Impairment and restructuring charges decreased to $19 million from $22 million in the prior year.
• Equity losses of affiliates improved by $1 million, or 33%.
• A new $1 billion stock repurchase program was announced, signaling management's confidence and commitment to shareholder returns, with $1.216 billion remaining authorized under the programs.

Negatives

• Net income attributable to News Corporation stockholders decreased by $7 million, or 6%, to $112 million.
• Book Publishing segment revenues decreased 2% to $534 million, and Segment EBITDA declined 28% to $58 million, primarily due to lower digital book sales and a $13 million write-off of a customer receivable related to an expected book distributor closure.
• Selling, general and administrative expenses increased $44 million, or 5%, primarily due to higher employee and marketing costs at Dow Jones and higher employee costs at Book Publishing.
• Other, net, decreased by $18 million, or 82%, to $4 million.
• Overall advertising revenues decreased by $4 million, or 1%, with News Media advertising revenues specifically down 4%.
• Cash and cash equivalents decreased by $205 million from $2.403 billion at June 30, 2025, to $2.198 billion at September 30, 2025.
• Net cash used in financing activities from continuing operations increased to $179 million from $109 million, largely due to higher stock repurchases and dividend payments.

Risks

• The outcome of various legal proceedings, claims, and governmental inspections or investigations is subject to significant uncertainty, and potential fees, expenses, fines, penalties, judgments, or settlement costs could adversely affect results of operations and financial condition.
• The Company is unable to estimate the amount of loss or range of loss for certain contingencies, including ongoing antitrust litigation against OPIS and HarperCollins.
• Potential damage to reputation, impairment of business, and adverse effects on results of operations and financial condition could arise from the U.K. Newspaper Matters.
• Access to, and the availability of, financing on acceptable terms in the future is affected by factors such as the Company's financial performance, credit ratings, debt instrument provisions, liquidity of credit and capital markets, and the state of the economy.
• Foreign currency fluctuations can impact revenues and expenses, as evidenced by a $7 million negative impact on REA Group revenues.
• The macroeconomic environment continues to negatively impact the U.S. housing market, affecting the Digital Real Estate Services segment's lead volumes (down 1%).
• Softness in consumer spending is impacting the Book Publishing segment.
• The Company is currently evaluating the impact of recently issued accounting pronouncements (ASU 2023-09, ASU 2024-03, ASU 2025-05, ASU 2025-06) on its consolidated financial statements.
• The application of the OECD's Pillar 2 global minimum tax rules continues to evolve, and the outcome may alter aspects of how the Company's tax obligations are determined in countries where it operates.

Future Outlook

REA India revenues are expected to be impacted in the near-term by recent divestitures and discontinuations of certain businesses. HarperCollins' new warehouse equipment lease is expected to increase efficiencies. The Company anticipates its current liquidity sources, including cash on hand and access to credit markets, will meet its needs for at least the next twelve months. The timing, declaration, amount, and payment of future dividends are at the discretion of the Board of Directors and depend on various financial and market factors. The Company does not expect the OBBBA to materially impact its effective tax rate and continues to assess its implications, along with the evolving application of Pillar 2 global minimum tax rules.

Management Comments

• Management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of the end of the reporting period.
• Management assesses available evidence to determine whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets, and has established a valuation allowance against certain deferred tax assets where realization is less likely.
• 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.
• HarperCollins believes it has been compliant with applicable laws and intends to defend itself vigorously in antitrust litigation.

Industry Context

The media and information services industry continues its digital transformation, with News Corporation's Dow Jones segment achieving 84% digital revenues and 75% digital circulation revenue, reflecting a successful pivot. The digital real estate sector, while a growth driver for the company through Move and REA Group, remains sensitive to macroeconomic conditions, as evidenced by the negative impact on the U.S. housing market. The book publishing segment faces broader industry challenges such as softness in consumer spending and shifts in digital sales mix. News Media's focus on cost savings is a common strategy for traditional media outlets to maintain profitability amidst evolving consumption patterns. The company is also navigating complex global tax regulations and ongoing antitrust scrutiny, which are prevalent themes across diversified media conglomerates.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• Dow Jones is involved in purported class action complaints in the U.S. District Court for the Northern District of Illinois and the Supreme Court of British Columbia, alleging antitrust violations related to pipe converters and pricing information. A settlement for the U.S. complaints received preliminary court approval in July 2025.
• OPIS (a Dow Jones subsidiary) received a grand jury subpoena from the U.S. Department of Justice Antitrust Division (January 2025) and a civil investigative demand from a state attorney general (April 2025) related to PVC pipe and its pricing report, to which OPIS is complying.
• HarperCollins is a defendant in purported class action complaints in the U.S. District Court for the Southern District of New York, alleging antitrust violations against Amazon and publishers. While complaints against publishers were dismissed with prejudice, the appeal period is contingent on the final determination of the case against Amazon. HarperCollins intends to defend itself vigorously.
• HarperCollins is a class member in a class action lawsuit against Anthropic PBC, which received preliminary court approval for settlement in September 2025. No gain has been recognized due to uncertainty regarding timing and final proceeds.
• The Company continues to address civil claims related to the U.K. Newspaper Matters (voicemail interception, inappropriate payments). FOX Corporation indemnifies News Corp for certain payments. An accrued liability of approximately $20 million exists as of September 30, 2025, with a corresponding receivable from FOX of $28 million. The ultimate outcome and cost are unpredictable and could damage reputation or affect financial condition.

Related Party Transactions

• A new stockholders agreement was entered into on September 8, 2025, with LGC Holdco, LLC and certain Murdoch family trusts, which are related parties.
• FOX Corporation indemnifies News Corp for certain payments made after June 28, 2013, arising out of civil claims and investigations relating to the U.K. Newspaper Matters, with a receivable of approximately $28 million from FOX as of September 30, 2025.

Stakeholder Impact

• Shareholders benefit from the new $1 billion stock repurchase program and the declared semi-annual cash dividend of $0.10 per share, indicating a commitment to returning capital.
• The new stockholders agreement impacts the voting power and share transfer rights of certain Murdoch family trusts, influencing corporate control dynamics.
• Employees are affected by restructuring charges, primarily related to termination benefits ($14 million in Q1 FY26), while higher employee costs were noted in Dow Jones and Book Publishing.
• Customers of Dow Jones benefit from increased circulation and subscription options, including digital-only subscriptions, and price increases. Digital Real Estate Services customers are offered more premium products.
• Customers of Book Publishing may experience impacts from softness in consumer spending and changes in digital sales mix.
• Creditors are assured by the Company's compliance with all applicable debt covenants, and HarperCollins' new finance lease for a warehouse represents a new financing obligation.

Next Steps

• HarperCollins' Equipment Lease may be drawn on until June 30, 2028, with lease payments commencing for a term of 7 years thereafter.
• The Company continues to assess the impact of the OBBBA and future expected guidance from the U.S. Treasury Department and States.
• The Company continues to monitor digital services taxes in various jurisdictions.
• The Board of Directors will determine the timing, declaration, amount, and payment of future dividends.
• The Company will update liability provisions and corresponding receivables for U.K. Newspaper Matters if more claims are filed and additional information becomes available.
• The Company continues to evaluate possible future acquisitions and dispositions of certain businesses.

Key Dates

Recommendation

News Corporation demonstrates resilience with growth in its digital-focused segments (Dow Jones, Digital Real Estate) and improved free cash flow, which are positive indicators. The new stock repurchase program and dividend reinforce shareholder value. However, the decline in net income attributable to stockholders, ongoing challenges in Book Publishing, and various legal contingencies introduce elements of uncertainty. The overall performance suggests stability and strategic alignment with digital trends, but not a compelling reason for a strong buy given the mixed results and existing headwinds. A 'Hold' position allows investors to monitor the execution of digital strategies and resolution of legal matters.

Keywords

News Corporation, NWSA, NWS, Media, Information Services, Digital Real Estate, Book Publishing, Dow Jones, REA Group, Realtor.com, HarperCollins, News Media, SEC Filing, Earnings, Financial Results, Q1 FY26, Stock Repurchase, Dividends, Antitrust Litigation, Corporate Governance, Digital Subscriptions