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News Corp: Revenues down; EBITDA up!

Revenues of $2.14 billion compared to $2.19 billion in the prior year; Reported Total Segment EBITDA of $191 million compared to $127 million in the prior year

News Corporation (“News Corp” or the “Company”) (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV) today reported financial results for the three months and fiscal year ended June 30, 2015.

Commenting on the results, Chief Executive Robert Thomson said:

“Thanks to solid performance across a number of our businesses, including the fast-growing realtor.com®, we had a strong fourth quarter finish to a good fiscal year. Despite an uneven global economy, very tough currency headwinds and the ongoing transformation of the media landscape, for fiscal 2015 we posted stable revenues, robust EBITDA growth and healthy free cash flow.

With disciplined internal investments, strategic acquisitions and ongoing product innovation, we have aggressively shifted the company to be more global and more digital. We have clearly emerged as an international leader in digital real estate, opened up new territories at HarperCollins, expanded digital subscriber penetration at our mastheads and successfully integrated our programmatic exchange, creating new digital and mobile advertising opportunities across News Corp.

We have begun to execute on a capital return program that signifies our confidence in the prospects of the company and the efficacy of its long-term strategy. The year ahead will be an opportunity to build on the sound and profitable platform we have collectively created.”

Full Year Results

The Company reported fiscal 2015 full year total revenues of $8.63 billion, a 1% increase as compared to the prior year revenues of $8.57 billion. The increase reflects growth in the Book Publishing and Digital Real Estate Services segments, primarily as a result of the acquisitions of Harlequin Enterprises Limited (“Harlequin”) and Move, Inc. (“Move”), respectively, which was partially offset by adverse foreign currency fluctuations and lower advertising revenues at the News and Information Services segment. Adjusted revenues (as defined in Note 1) were 1% lower than the prior year.

The Company reported full year Total Segment EBITDA of $852 million, an 11% increase as compared to $770 million in the prior year. These results include $50 million in fees and costs in fiscal 2015 and $72 million in fiscal 2014 – net of indemnification – related to the U.K. Newspaper Matters (as defined below). The improvement was driven by increased revenues in the Book Publishing segment due to the inclusion of Harlequin results and lower expenses, mainly due to the increased capitalization of software development costs, at the Digital Education segment; partially offset by adverse foreign currency fluctuations, declines at the News and Information Services segment, which includes higher legal costs at News America Marketing, and stock-based compensation expense in connection to the acquisition of Move. Adjusted Total Segment EBITDA (as defined in Note 1) increased 15% compared to the prior year.

Impairment and restructuring charges were $455 million and $94 million in the fiscal years ended June 30, 2015 and 2014, respectively. Included in impairment and restructuring charges for fiscal 2015 was a non-cash impairment charge of $371 million related to the Amplify business. In the fourth quarter of fiscal 2015, the Company determined it would cease actively marketing Amplify’s Access products to new customers; however, it will continue to provide service and support to its existing customers. Additionally, the Company is reviewing strategic alternatives with respect to Amplify’s remaining digital education businesses. This change in Amplify’s strategy and related outlook resulted in a reduction in expected future cash flows for the business. As a result, the Company determined that the fair value of Amplify declined below its carrying value and recorded an impairment charge.

Net loss available to News Corporation stockholders was $149 million as compared to net income available to News Corporation stockholders of $237 million in the prior year. Adjusted net income available to News Corporation stockholders (as defined in Note 3) was $272 million compared to $268 million in the prior year.

Net loss per share available to News Corporation stockholders was $0.26 as compared to net income per share available to News Corporation stockholders of $0.41 in the prior year. Adjusted EPS (as defined in Note 3) were $0.47 compared to $0.46 in the prior year.

Free cash flow available to News Corporation was $368 million in the fiscal year ended June 30, 2015, compared to $365 million in the prior year.

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