News Corp (NWSA), a global media and information services conglomerate, has demonstrated a 14% stock price increase since the start of 2024, reaching $28 per share in January. While this growth trails the broader S&P 500’s 27% rise and slightly outpaces its peer, the New York Times (NYT), with a 9% gain, News Corp’s recent performance and strategic initiatives suggest potential for further long-term gains. The company’s Q1 2025 results reveal a 3% year-over-year revenue increase to $2.6 billion, driven by robust growth in its Australian real estate business (REA Group), digital book sales, and professional information services (Dow Jones). These positive trends were partially offset by declining revenues in the News Media segment, a recurring challenge for traditional print media outlets navigating the digital landscape. Despite this, News Corp reported a significant jump in net income per share to $0.21 compared to $0.05 in the prior year, with adjusted EPS also rising by 31%.
A segment-by-segment analysis of News Corp’s performance reveals a mixed picture. While areas like Digital Real Estate, Book Publishing, and Dow Jones exhibit healthy growth, the Subscription Video Services and News Media segments face headwinds. Although Subscription Video Services saw a 3% revenue increase, its EBITDA declined by 1% due to higher costs associated with the launch of Hubbl and increased sports programming rights fees. The News Media segment grapples with the ongoing decline in print readership and the complex transition to digital platforms, particularly within its Australian division. These challenges underscore the pressures facing traditional media businesses as they adapt to evolving consumer preferences and the competitive digital landscape.
News Corp’s historical stock performance over the past four years has been marked by volatility, mirroring the fluctuations of the S&P 500. The stock witnessed returns of 25% in 2021, a decline of 18% in 2022, a rebound of 36% in 2023, and a 13% increase in 2024. This volatile performance contrasts with the more stable returns of diversified portfolios like the Trefis High Quality Portfolio, which has consistently outperformed the S&P 500 over the same period. This highlights the potential benefits of diversification in mitigating risk and achieving more consistent returns compared to investing in individual stocks.
A significant strategic move by News Corp is the divestiture of its Australian cable TV unit, Foxtel, to DAZN for AUD 3.4 billion (USD 2.1 billion). This sale, expected to close in the first half of 2025, represents a strategic exit from a business segment struggling to compete with the rise of streaming platforms. Foxtel’s profitability has been steadily eroding as subscribers migrate to more affordable streaming services like Netflix. Despite attempts to adapt through its own streaming offerings, Kayo and ESPN, Foxtel has faced escalating sports broadcasting rights fees and declining revenues, ultimately necessitating the sharing of broadcasting rights with free-to-air networks to mitigate costs. This divestiture allows News Corp to streamline its operations and focus on more profitable and growth-oriented segments.
Looking ahead, News Corp’s future growth prospects hinge on the performance of its key divisions. Dow Jones is expected to propel B2B growth through upselling and new product offerings in Risk & Compliance and Energy, with anticipated improvement in circulation revenue growth in the latter half of 2025. The Digital Real Estate segment, buoyed by a 14% increase in Australian residential listings in October, aims to leverage technology and content enhancements to capitalize on favorable interest rate conditions and explore adjacent growth opportunities. Book publishing profits are projected to continue their upward trajectory, albeit at a moderated pace, in 2025. Within Subscription Video Services, the strategic focus will shift towards scaling streaming products while retaining high-value customers, coupled with reduced investment in Hubbl. Finally, the News Media segment is anticipated to benefit from cost reductions, operational efficiencies, and a new U.K. printing joint venture, despite facing a challenging advertising market.
News Corp’s projected revenue for fiscal year 2025 is estimated at $10.4 billion, representing a 4% year-over-year increase. Earnings per share are forecasted at $0.90. Based on these projections and a price-to-earnings (P/E) multiple of 34.5x, the company’s estimated valuation stands at $31 per share, indicating an 11% upside from its current market price. This suggests that News Corp’s stock may be undervalued at its current trading level. A comparative analysis with its peers provides further context for evaluating News Corp’s performance and market positioning. Examining metrics such as revenue growth, profitability, and valuation multiples relative to its competitors offers valuable insights into the company’s competitive strengths and potential investment opportunities. This comparative analysis contributes to a more comprehensive understanding of News Corp’s position within the broader media and information services landscape.
