10-Q: News Corp Q2 Profit Dips Amid Revenue Growth, Buybacks

News Corporation reported a 6% revenue increase in Q2 2026, driven by digital segments, but net income attributable to stockholders declined 10% due to higher expenses and the absence of prior year gains.

Summary

• Total revenues increased by 6% to $2.36 billion for the three months ended December 31, 2025, and by 4% to $4.51 billion for the six months.
• Net income attributable to News Corporation stockholders decreased by 10% to $193 million for the three months and by 9% to $305 million for the six months.
• Net income from continuing operations decreased by 21% to $242 million for the three months and by 14% to $392 million for the six months.
• Basic EPS from continuing operations was $0.34 for the three months and $0.54 for the six months, down from $0.40 and $0.61 respectively in the prior year.
• Dow Jones segment revenues grew 8% and Segment EBITDA increased 10% for the three months, driven by circulation, subscriptions, and advertising.
• Digital Real Estate Services segment revenues rose 8% and Segment EBITDA increased 11% for the three months, with strong performance from REA Group and Move.
• Book Publishing revenues increased 6% but Segment EBITDA decreased 2% for the three months, impacted by a $16 million inventory write-off.
• News Media segment revenues were flat, and Segment EBITDA decreased 5% for the three months, affected by lower print advertising and launch costs for the California Post.
• The company repurchased $172 million of stock during the three months and $266 million during the six months under its stock repurchase programs.
• A new $1 billion stock repurchase program was announced on July 15, 2025, with approximately $1.04 billion remaining authorized as of December 31, 2025.
• Cash and cash equivalents decreased to $2.05 billion as of December 31, 2025, from $2.40 billion at June 30, 2025.
• Free cash flow improved to $136 million for the six months ended December 31, 2025, compared to $121 million in the prior year.
• The sale of Foxtel Group on April 2, 2025, resulted in no net loss from discontinued operations in the current period, compared to a loss of $23 million in the prior year's three-month period.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a mixed report. While revenue growth in key digital segments is positive, the decline in overall net income and EPS from continuing operations, coupled with increased impairment charges, indicates challenges in profitability and cost management.

Positives

• Total revenues increased by 6% for the three months and 4% for the six months ended December 31, 2025, demonstrating overall business growth.
• Dow Jones segment showed strong performance with an 8% revenue increase and a 10% Segment EBITDA increase for the three months, driven by digital circulation, subscriptions, and advertising.
• Digital Real Estate Services segment revenues grew 8% and Segment EBITDA increased 11% for the three months, with REA Group and Move contributing significantly.
• Digital-only subscriptions for The Wall Street Journal increased by 13% to 4.29 million, and total subscriptions rose 11% to 4.68 million for the three months.
• Risk & Compliance and Dow Jones Energy revenues increased by 20% and 10% respectively, driven by price increases, new customers, and new products.
• Book Publishing revenues increased 6% for the three months, benefiting from recent acquisitions ($15 million impact) and higher physical book sales, particularly in Christian Publishing and frontlist titles.
• Digital sales in Book Publishing increased by 2% for the three months, driven by e-book growth.
• Net loss from discontinued operations was nil for the current periods, an improvement from losses of $23 million and $28 million in the prior year's three and six-month periods, respectively, following the Foxtel sale.
• Interest income (expense), net, improved significantly to $9 million income for the three months, compared to a $3 million expense in the prior year.
• Free cash flow improved to $136 million for the six months ended December 31, 2025, from $121 million in the prior year.
• The company announced a new $1 billion stock repurchase program on July 15, 2025, in addition to the existing program, demonstrating a commitment to shareholder returns.
• A semi-annual cash dividend of $0.10 per share was declared in August 2025 and again in February 2026.

Negatives

• Net income attributable to News Corporation stockholders decreased by 10% to $193 million for the three months and by 9% to $305 million for the six months ended December 31, 2025.
• Net income from continuing operations decreased by 21% to $242 million for the three months and by 14% to $392 million for the six months.
• Basic and diluted EPS from continuing operations declined for both the three and six-month periods.
• Impairment and restructuring charges increased significantly by 88% to $30 million for the three months and by 29% to $49 million for the six months.
• "Other, net" recorded a loss of $13 million for the three months and $9 million for the six months, a substantial decrease from gains of $92 million and $114 million in the prior year, primarily due to the absence of the gain on the sale of PropertyGuru.
• Book Publishing Segment EBITDA decreased by 2% for the three months and 14% for the six months, primarily due to a $16 million one-time write-off related to inventory at HarperCollins international operations and a $13 million write-off of a customer receivable.
• News Media segment advertising revenues decreased by 6% for the three months and 5% for the six months, primarily due to lower print advertising.
• News Media Segment EBITDA decreased by 5% for the three months, impacted by lower contribution from News Corp Australia and launch costs for the California Post.
• Cash and cash equivalents decreased by $352 million from June 30, 2025, to December 31, 2025.
• Net cash used in investing activities from continuing operations increased by $195 million for the six months, driven by lower proceeds from sales of investments and an $84 million increase in net cash used for acquisitions.
• Net cash used in financing activities from continuing operations increased by $77 million for the six months, primarily due to higher stock repurchases.

Risks

• The outcome of various legal proceedings, claims, and governmental investigations is subject to significant uncertainty, and the company cannot predict the eventual outcome or timing of resolution.
• Fees, expenses, fines, penalties, judgments, or settlement costs from legal proceedings 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 where there is at least a reasonable possibility that a loss may be incurred.
• Ongoing antitrust class action complaints against Oil Price Information Service, LLC (OPIS) in the U.S. and Canada, and investigations by the U.S. Department of Justice and a state attorney general, could result in treble damages, injunctive relief, and legal costs.
• Antitrust and competition law complaints against HarperCollins and other publishers, though dismissed, are subject to appeal.
• U.K. Newspaper Matters continue to incur net expenses, and the ultimate outcome or cost of civil claims is not predictable, potentially damaging reputation and business.
• Access to, and availability of, financing on acceptable terms in the future is affected by factors including financial performance, credit ratings, debt instrument provisions, liquidity of credit markets, and the state of the economy.
• Foreign currency fluctuations can impact revenues and expenses.
• The company's tax returns are subject to ongoing review and examination by various tax authorities, and the outcome can be unpredictable, potentially requiring additional income tax expense.
• The company has established valuation allowances against certain deferred tax assets, indicating uncertainty about their realization.

Future Outlook

The company expects to continue evaluating possible future acquisitions and dispositions. It anticipates that its cash on hand, future cash from operations, and access to credit and capital markets will provide adequate resources to fund operating and financing needs for at least the next twelve months. The recently enacted H.R. 1 One Big Beautiful Bill Act (OBBBA) and the OECD's global minimum tax (Pillar 2) are not expected to materially impact the effective tax rate, but the company continues to assess their full impact.

Management Comments

• The Company does not ordinarily make projections of its future operating results and undertakes no obligation (and expressly disclaims any obligation) to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
• The Company believes that the presentation of Total Segment EBITDA provides useful information regarding the Companys operations and other factors that affect the Companys reported results.
• 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

StockSavvy.ai notes that News Corporation's performance reflects broader trends in the media and information services industry, where digital transformation continues to drive revenue growth in segments like Dow Jones and Digital Real Estate Services. The decline in print advertising within News Media is consistent with industry-wide shifts away from traditional print formats. The company's strategic divestiture of Foxtel aligns with a focus on core digital assets, while increased investment in areas like HarperCollins' new warehouse and digital offerings indicates a commitment to operational efficiency and adapting to evolving consumer preferences in publishing. The ongoing legal challenges, particularly antitrust matters, highlight the regulatory scrutiny faced by large media and tech-adjacent companies.

Comparison to Industry Standards

• The filing does not provide specific comparable company data or industry benchmarks to assess performance against global standards.
• StockSavvy.ai observes that the growth in digital-only subscriptions for The Wall Street Journal (+13%) is a strong indicator of successful digital transition, potentially outperforming some legacy news organizations struggling with digital adoption.
• The Digital Real Estate Services segment's growth, particularly in Move's premium offerings and lead volumes (+13%), suggests a robust position in a competitive market, though direct comparisons to global leaders like Zillow or Rightmove are not detailed in the filing.
• The $16 million inventory write-off in Book Publishing, while a negative, could be an isolated event or reflect broader supply chain or market adjustments common in the publishing industry.

Management Changes

Corporate Governance

Legal Proceedings

• Ongoing purported class action complaints in the U.S. District Court for the Northern District of Illinois against Oil Price Information Service, LLC (OPIS) alleging antitrust violations, with a settlement receiving preliminary court approval in July 2025 but subject to final approval.
• A similar purported class action filed in the Supreme Court of British Columbia in September 2025 against OPIS, alleging violations of Canadian law.
• OPIS received a grand jury subpoena from the U.S. Department of Justice Antitrust Division in January 2025 and a civil investigative demand from a state attorney general in April 2025, both related to PVC pipe documents.
• Purported class action complaints filed in the U.S. District Court for the Southern District of New York against HarperCollins Publishers, L.L.C. and Amazon.com, Inc. alleging antitrust and competition law violations, with complaints against publishers dismissed with prejudice but subject to appeal.
• HarperCollins is a class member in a class action lawsuit against Anthropic PBC, which received preliminary court approval for settlement in September 2025.
• Ongoing civil claims related to U.K. Newspaper Matters, including voicemail interception and inappropriate payments, with an accrued liability of approximately $18 million and a corresponding receivable of approximately $26 million from FOX Corporation for indemnification.

Related Party Transactions

• The new stockholders agreement with LGC Holdco, LLC and certain Murdoch family trusts (collectively, the LGC Family Trusts) limits their collective voting power and provides the company with a right of first refusal for certain Class B Share offerings. This is a transaction involving significant shareholders.

Stakeholder Impact

• Shareholders: Impacted by decreased net income and EPS from continuing operations, but also by significant stock repurchases and consistent semi-annual dividends. The new stockholders agreement affects voting power dynamics for Class B shareholders.
• Employees: Affected by restructuring charges ($22 million for three months, $36 million for six months), which include one-time employee termination benefits. Management changes, such as the extended employment agreement for the CHRO, provide stability at the executive level.
• Customers: Benefit from new products and services, particularly in Dow Jones (Risk & Compliance, Dow Jones Energy) and Digital Real Estate Services (Move's premium offerings).
• Suppliers/Vendors: HarperCollins experienced a $13 million write-off of a customer receivable related to the closure of a book distributor, indicating potential impact on business partners.
• Creditors: The company remains in compliance with all debt covenants, and HarperCollins entered a new finance lease for warehouse equipment, indicating ongoing investment.

Next Steps

• The company will continue to evaluate possible future acquisitions and dispositions.
• The Board of Directors will determine the timing, declaration, amount, and payment of future dividends based on various factors.
• HarperCollins will commence lease payments for its new warehouse equipment after June 30, 2028.
• The company will continue to assess the impact of the OBBBA and OECD's Pillar 2 guidance on its effective tax rate.
• The IRS plans to commence an audit for the fiscal year ended June 30, 2024.
• The settlement for U.S. antitrust complaints against OPIS remains subject to final court approval.
• The company is evaluating the Canadian class action against OPIS.
• The appeal period for the HarperCollins antitrust case remains open until the Amazon case is finally determined.
• The dividend declared in February 2026 is payable on April 8, 2026, to stockholders of record as of March 11, 2026.

Key Dates

Recommendation

News Corporation presents a mixed financial picture. While revenue growth, particularly in its digital-focused Dow Jones and Digital Real Estate Services segments, is a positive indicator of strategic alignment with market trends, the decline in net income from continuing operations and EPS is concerning. This profitability dip is largely attributable to increased operating expenses, higher impairment and restructuring charges, and the absence of a significant one-time gain from the prior year. The substantial stock repurchase program and consistent dividends demonstrate a commitment to shareholder returns, which provides some support. However, ongoing legal proceedings and a decrease in cash reserves warrant caution. StockSavvy.ai recommends a "hold" as the company navigates these challenges, with strong digital segment performance balanced against profitability pressures and operational costs.

Keywords

Media, Information Services, Digital Real Estate, Book Publishing, News, SEC Filing, Earnings, Revenue, EBITDA, Stock Repurchase, Dividends, Dow Jones, REA Group, HarperCollins, News Media, Antitrust, Litigation, Corporate Governance, NWSA, NWS