10-Q: News Corp Q3 FY26 Earnings: Revenue Up, Profit Down

News Corporation reported a 9% increase in Q3 revenue driven by digital real estate and Dow Jones, but net income attributable to stockholders decreased by 14% year-over-year.

Summary

• Total revenues for the third quarter ended March 31, 2026, increased by 9% to $2.185 billion compared to $2.009 billion in the prior year period.
• For the nine-month period, revenues grew 5% to $6.691 billion from $6.343 billion.
• Net income attributable to News Corporation stockholders decreased by 14% to $89 million for the third quarter, compared to $103 million in the prior year.
• For the nine-month period, net income attributable to stockholders fell 10% to $394 million from $437 million.
• The Digital Real Estate Services segment saw a 17% revenue increase in Q3, driven by REA Group and Move.
• Dow Jones segment revenues grew 8% in Q3, with strong performance in circulation and subscription revenues.
• Book Publishing segment revenues increased 8% in Q3, boosted by physical and digital book sales.
• News Media segment revenues rose 5% in Q3, benefiting from foreign currency fluctuations and digital subscriber growth.
• Operating expenses increased by 5% in Q3, and selling, general, and administrative expenses rose by 9%, impacting profitability.
• The company repurchased $193 million of its stock in Q3 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a slightly negative sentiment due to the decrease in net income despite revenue growth, driven by increased operating and administrative costs and a significant decline in the News Media segment's profitability.

Positives

• Total revenues increased by 9% to $2.185 billion in Q3 2026.
• Digital Real Estate Services segment revenue grew 17% in Q3, with REA Group up 20% and Move up 10%.
• Dow Jones segment revenue increased 8% in Q3, driven by circulation and subscription growth.
• Book Publishing segment revenue increased 8% in Q3, with digital sales up 11%.
• News Media segment revenue increased 5% in Q3, aided by foreign currency fluctuations.
• The company refinanced its credit facilities with a new $1.5 billion agreement, extending maturities to March 2031.
• Free cash flow for the nine months ended March 31, 2026, was $535 million, a slight decrease from $539 million in the prior year, with expectations of strong full-year growth.

Negatives

• Net income attributable to News Corporation stockholders decreased by 14% to $89 million in Q3 2026.
• For the nine-month period, net income attributable to stockholders decreased by 10% to $394 million.
• Operating expenses increased by 5% in Q3 2026.
• Selling, general and administrative expenses increased by 9% in Q3 2026.
• News Media segment EBITDA decreased by 55% in Q3 2026, primarily due to lower contribution from News UK and new costs.
• Book Publishing segment EBITDA decreased by 7% for the nine-month period, impacted by inventory write-offs and customer receivable write-offs.

Risks

• Ongoing geopolitical tensions and conflicts, particularly in Iran, could heighten inflationary pressures, disrupt global supply chains, and adversely impact consumer spending.
• The company is subject to various legal proceedings, including antitrust allegations related to PVC pipe and class action lawsuits against HarperCollins, the outcomes of which are uncertain and could adversely affect results.
• The U.K. Newspaper Matters litigation continues, with potential for reputational damage and adverse effects on operations and financial condition.
• The company's access to financing on acceptable terms in the future is subject to various factors, including financial performance, credit ratings, and overall market conditions.

Future Outlook

News Corp expects strong growth in free cash flow for the full fiscal year despite moderately higher capital expenditures. The company expects its liquidity, including cash on hand and available credit facilities, to be sufficient for at least the next twelve months.

Management Comments

• The Company calculates the impact of foreign currency fluctuations for businesses reporting in currencies other than the U.S. dollar by multiplying the results for each quarter in the current period by the difference between the average exchange rate for that quarter and the average exchange rate in effect during the corresponding quarter of the prior year and totaling the impact for all quarters in the current period.
• The Company believes that by excluding certain one-time or non-cash items such as impairment and restructuring charges and depreciation and amortization, as well as potential distortions between periods caused by factors such as financing and capital structures and changes in tax positions or regimes, the Company provides users of its consolidated financial statements with insight into both its core operations as well as the factors that affect reported results between periods but which the Company believes are not representative of its core business.
• News Corp expects strong growth in free cash flow for the full fiscal year despite moderately higher capital expenditures.

Industry Context

StockSavvy.ai notes that News Corporation's Q3 results reflect a mixed performance across its diverse media and information services segments. The growth in digital real estate and subscription revenues at Dow Jones highlights the ongoing shift towards digital platforms, while the decline in profitability, particularly within the News Media segment, underscores the persistent challenges in traditional media advertising and operational cost pressures.

Comparison to Industry Standards

• The Digital Real Estate Services segment's revenue growth of 17% in Q3 is strong compared to the broader digital advertising market, which has seen more moderate growth.
• REA Group's 20% revenue increase in Q3 is a positive indicator within the global online real estate classifieds market, outperforming many regional competitors.
• Dow Jones's 8% revenue growth in Q3, driven by subscriptions, aligns with industry trends of increasing reliance on recurring revenue models for news and information services, a strategy also pursued by competitors like Bloomberg and Refinitiv.
• The Book Publishing segment's 8% revenue growth in Q3, including contributions from acquisitions, is a solid performance in a competitive publishing landscape where companies like Penguin Random House and Hachette Livre also focus on diversifying revenue streams.

Legal Proceedings

• Class action complaints filed against Dow Jones subsidiary, Oil Price Information Service, LLC (OPIS), alleging violations of federal and state antitrust laws regarding PVC pipe.
• A class action lawsuit filed in British Columbia against OPIS alleging violations of Canadian law.
• OPIS received a grand jury subpoena and a civil investigative demand (CID) related to PVC pipe and the publication of the PVC and Pipe Weekly Report.
• Class action complaints filed against HarperCollins Publishers, L.L.C. and other publishers alleging violations of antitrust and competition laws related to Amazon.
• A class action lawsuit against Anthropic PBC, in which HarperCollins is a class member, received preliminary court approval for settlement.
• Civil claims brought against the Company regarding voicemail interception and inappropriate payments at former publication 'The News of the World' and 'The Sun'.

Stakeholder Impact

• Shareholders: Decreased net income attributable to stockholders and ongoing stock repurchase programs may influence share value and dividends.
• Employees: Increased employee costs are noted across several segments, potentially impacting compensation and staffing levels.
• Suppliers: Increased operating expenses may reflect higher costs from suppliers.
• Creditors: The company has a new $1.5 billion credit facility, indicating ongoing reliance on debt financing.

Next Steps

• Continue to monitor geopolitical tensions and their potential impact on business operations and consumer spending.
• Evaluate the evolving macroeconomic environment and seek to mitigate impacts where possible.
• Continue to evaluate possible future acquisitions and dispositions of certain businesses.
• The Board of Directors will continue to assess factors for future dividend payments.

Key Dates

Recommendation

News Corporation's Q3 results show revenue growth driven by digital segments, but a decline in net income due to rising costs and weakness in the News Media segment. While the company has a strong liquidity position and a new credit facility, the profitability decline and ongoing legal risks warrant a cautious 'hold' stance until operational improvements and cost management become more evident.

Keywords

News Corporation, 10-Q, Quarterly Report, Financial Results, Dow Jones, Digital Real Estate Services, Book Publishing, News Media, Revenue, Net Income, EBITDA, Stock Repurchase