News Corp. Q3 Net Income Falls 29% As News Media Advertising Revenue Declines

News Corp. reported about flat revenue and a 29% drop in net income for the third fiscal quarter of 2024, which the company attributed to lower advertising revenues in the news media segment, lower physical book sales, and a challenging housing market in the U.S. 

Here are the top-line results:

Net income: $42 million, a 29% drop compared to $59 million in 2023

Revenue: $2.42 billion vs. $2.48 billion estimated by Zacks Analysts and an adjusted 11 cents per share vs. 10 cents estimated by Zacks

Subscriptions: 322,000 net additional digital subscriptions for Dow Jones, reaching over 5 million digital subscriptions in the quarter, a 17% increase year-over-year

Total average subscriptions to Dow Jones products were over 5.7 million, a 12% increase compared to 2023. The Wall Street Journal’s total subscriptions grew 8% year-over-year, to over 4.2 million average subscriptions in the quarter, while digital-only subscriptions grew 13% to 3.7 million.

While subscriptions continue to climb in the Dow Jones segment, the Wall Street Journal specifically, advertising revenues in the news media segment decreased $28 million, or 13% compared to 2023. The company attributed the decline to lower print advertising revenue at News Corp Australia and lower digital advertising spurred by traffic falls at some outlets resulting from platform alterations. 

“News Corp has again made substantial progress on our strategic imperative to transform the company and increase value for all shareholders,” News Corp. CEO Robert Thomson said in a statement.

In the third quarter, revenues for the Dow Jones segment of the company increased 3% year-over-year, or $15 million, which News Corp. attributed to growth in circulation, subscription revenues, and the company’s personal information business. Digital revenues for Dow Jones represented 81% of the segment’s returns. Circulation and subscription revenues for Dow Jones products rose $19 million, or 4% compared to 2023. Digital circulation revenues accounted for 70% of circulation revenues for the quarter, as print circulation continues to decline industry-wide.

The New York-based News Corp. which owns The Wall Street Journal, New York Post, HarperCollins and a host of Australian and British newspapers, started the first half of 2024 on a financial high. The company broke records for quarterly revenues in Q2 for Dow Jones and REA Group, driven by Dow Jones’ professional information business, as well as by strong results at the company’s book publishing arm and its digital real estate services. News Corp. also touted continued subscription growth, rising 10% to 5.4 million for The Wall Street Journal and Barron’s Group in Q2.

“News Corp’s profitability rose slightly in the third quarter as compared to the prior year, continuing our growth this fiscal year — and that increase, which gathered pace in April, follows the three most profitable years since the company was reincarnated in 2013,” Thomson said in a statement. 

For the news media segment of the company, however, revenues in Q3 decreased by 6% compared to 2023, primarily driven by the segment’s lower advertising revenues. News Corp’s news media segment saw advertising revenues drop by $28 million, or 13% year-over-year, attributed to declining print advertising at News Corp Australia. Meanwhile, circulation and subscription revenues increased by $1 million compared to 2023. 

In the book publishing segment of the company, revenues in the quarter decreased by $9 million, or 2% year-over-year driven primarily by lower physical book sales. However, digital book sales increased 5% compared to 2023, attributed to market growth or downloadable audiobook sales. News Corp.’s publishing segment also benefited from a continued partnership with Spotify, which allows the audio streamer access to the HarperCollins portfolio. 

Thomson praised Spotify on Wednesday, as a company that has “transformed audiobook streaming revenue,” adding “We’re proud to partner with [Spotify CEO] Daniel Ek and his talented team as they roll out streaming globally.”

“We are in the midst of an exponential digital revolution, and our own company has continued to change significantly and profitably,” Thomson continued. “Importantly, we are working to promote our quality journalism in the age of Generative AI and are gratified that the most enlightened leaders in the industry appreciate the commercial and social value of that content.”

While News Corp. was initially hesitant of AI technology’s encroach on the media industry, Thomson has since changed his tune, making it clear in February that the company intends to be a “core content provider for generative AI companies who need the highest quality timely content to ensure the relevance of their products.”

However, on Wednesday, Thomson signaled caution as AI technology continues to demonstrate the capacity to generate and circulate misinformation, penetrating the journalism industry.

“Our trusted premium intellectual property resonates in an era of polarization and amidst a rising tide of AI-fueled falsehoods,” the News Corp. CEO said on Wednesday’s shareholders call. “AI stands for authentic and authenticated intelligence, not artificial intelligence or the artifice of intelligence.”

As media organizations grapple with whether to litigate AI companies who have utilized copyrighted material in training chatbots or to partner with them, Thomson said “Courtship is preferable to courtrooms,” a jab pointed toward the New York Times’ blockbuster lawsuit. 

The New York Times filed an ambitious lawsuit in December against Microsoft and OpenAI, accusing the tech giants of copyright infringement.

The Times’ lawsuit marked the first blockbuster case from news publishers over generative AI capabilities and how chatbots were trained, as the technology begins to embed itself in the media industry. However, many other media organizations have followed suit in launching lawsuits against the AI tech giants, including eight Alden Global Capital-owned newsrooms, and digital outlets Raw Story, Alternet, and The Intercept.

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