The News Corporation (ASX: NWS) share price has fallen around 10% after delivering its FY23 first quarter.
News Corp owns a number of different media businesses including The Sun, the New York Post, The Times, The Wall Street Journal, HarperCollinsPublishers, The Australian, the Herald Sun and News.com.au. It also has stakes in businesses like Move and REA Group Limited (ASX: REA).
FY23 first quarter update
It reported that revenue for the quarter was $2.48 billion, a decrease of 1% compared to $2.5 billion last year. It blamed a $153 million, or 6%, negative impact from foreign currency fluctuations, as well as lower book publishing segment revenue.
Net income (meaning net profit) in the quarter was $66 million, compared to $267 million in the prior year.
Free cashflow available to News Corp was down from negative $25 million to negative $122 million.
Total segment EBITDA (EBITDA explained) was $350 million, down 15% from $10 million.
The only segment that saw growth was the Dow Jones division which benefited from recent acquisitions, continued strong growth in digital-only subscriptions, growth of advertising revenue and “momentum” in its risk and compliance products.
It noted that REA Group’s residential business continued to benefit from price increases, depth penetration and product mix, as well as growth in national listings.
In the subscription video services segment, Foxtel saw its streaming revenue from Kayo and Binge offset broadcast revenue declines.
Fox merger?
The company has formed a “special committee of independent and disinterested members of the board” after receiving letters from Rupert Murdoch and the Murdoch Family Trust.
News Corps’ board will evaluate the potential of a potential combination with Fox Corporation.
Final thoughts on the News Corporation share price
The News Corp CEO Robert Thomson said:
News Corp is building on a sturdy base. We have reported record profitability in each of the last two fiscal years and bolstered our fortunes through savvy investments and by streamlining the cost base.
I’m not sure how News Corp will perform from here. Logic might suggest that a slowing economy won’t be good for advertising spending. But, we could just as easily say that when times are tougher, businesses need to advertise even more to boost sales. It’s not doing as well as it was earlier this year.
There may be other ASX growth shares that can deliver better growth from here.
