The share price of News Corporation Ltd [ASX:NWS] has set a fresh all-time high today upon releasing its second quarter earnings for FY2021.
The NWS share price is up 12.69%, or $3.19, at the time of writing to trade at $28.29 per share.
Source: Trading View
The positive result comes amid an ever-intensifying battle between the government and Google over a proposed new media bargaining code.
A code that would force digital platforms to pay media companies for news content, which would likely benefit NWS.
Cost-cutting paying off
Today the media giant reported a big financial recovery, posting US$261 million in net income during the second quarter, up from US$103 million in the previous corresponding period.
The result comes despite a flat contribution from its news businesses which struggled with weak print advertising. Second quarter total revenue was $2.41 billion, 3% lower compared to $2.48 billion in the prior year period.
The decline was mainly due to lower revenues at the News Media segment, primarily driven by a $191 million, or 8%, negative impact from the divestiture of News America Marketing.
Revenue from the segment slid 29% from $811 million to $573 million.
Earnings were kept stable at $66 million thanks to large-scale job cuts and the closure of many regional titles across its Australian publishing business.
This expert reveals how you can make profitable trades more often…even during volatile markets. Download your free report now.
CEO Robert Thomson commented on NWS’ historic results:
‘The second quarter of fiscal 2021 was the most profitable quarter since the new News Corp was launched more than seven years ago, reflecting the ongoing digital transformation of the business. We reported the largest profits for Dow Jones since the acquisition of the company in 2007, with Segment EBITDA increasing 43 percent and traffic across the Dow Jones digital network surging 48 percent.’
But is News Corp a competitive company in today’s world?
Despite NSW’s results, the company will keep its interim dividend at 10 US cents per share — no change from last year.
In my opinion, there are signs that NWS is successfully modernising its business.
Despite Foxtel slashing 300 jobs in the first quarter of calendar year 2020, Foxtel’s total paid subscribers were 3.314 million, up 12% thanks to the launch of Binge and the growth of Kayo.
Mr Thompson also seemed positive on this segment’s outlook:
‘There was also a 77% rise in segment EBITDA at the Subscription Video Services segment, where the exponential evolution at Foxtel continued apace, with streaming customers increasing over 90%, rights costs reset and audiences for summer sports at unprecedented levels.’
And with the battle between ‘big tech’ and publishers now raging globally, NSW said they expect changes to the relationship will benefit the company’s financial fortunes.
Regards,
Lachlann Tierney,
For Money Morning
PS: Check out these four well-positioned small-cap stocks — these innovative Aussie companies are well-placed to capitalise on post-lockdown megatrends. Click here to learn more.
