News Corp Earnings Decline 52%

News Corp's quarterly profit declined 52% as foreign-exchange fluctuations and lower advertising sales offset revenue gains in book publishing and the digital real-estate business.

Net income for the fiscal third quarter fell to $23 million, or 4 cents a share, from $48 million, or 8 cents, in the same period a year earlier, the company said Tuesday. Excluding some items, earnings were 5 cents a share.

Revenue slipped 1% to $2.06 billion, driven primarily by the negative impact of foreign currency and weak ad sales at the news and information services segment, which accounts for two-thirds of News Corp's total revenue.

Analysts polled by Thomson Reuters had expected total revenue of $2.12 billion in the quarter and per-share earnings of 7 cents.

Earnings before interest, taxes, depreciation and amortization fell 7% to $163 million, which the company attributed to legal costs, currency fluctuations and increased stock-based compensation expenses from the acquisition of Move Inc. Adjusted EBITDA, however, fell just 1%.

"While the quarter faced some revenue challenges, particularly at News and Information Services, including currency headwinds, our adjusted EBITDA was relatively stable, underscoring the strength of our assets and the diversification of our revenue base," News Corp Chief Executive Robert Thomson said. "We believe the company is firmly on track and the signs are positive for year-over-year EBITDA growth in the fourth quarter."

Revenue at the news and information unit, which comprises the newspaper holdings in Britain, Australia and the U.S., including The Wall Street Journal, fell 9% in the quarter as advertising revenue dropped 12% and circulation and subscription revenue fell 6%. The unit reported a 23% drop in EBITDA to $113 million.

Revenue in News Corp's book publishing segment rose 14% to $402 million, driven in part by continued strong sales of "American Sniper," the autobiography of slain Navy SEAL sniper Chris Kyle that is published by HarperCollins and was made into a movie. Still, declining sales of the "Divergent" series and a 3% drop in overall e-book sales partially offset gains.

At the small but growing digital real-estate services segment, revenue in the quarter jumped 67% to $170 million, bolstered by the inclusion for the first time of full results from Move Inc. News Corp acquired the network of property listings sites in the U.S. last year.

Revenue at Amplify Learning, the company's digital-education business, was flat at $21 million, and the unit posted a loss of $21 million compared with a loss of $45 million a year earlier.

News Corp said it spent around $15 million in the quarter in costs related to the phone-hacking scandal at the now-defunct News of the World tabloid in the U.K.

News Corp's Class A shares are down 7.9% in the past year. The stock was unchanged in late trading.

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