Comprehensive Financial Analysis of News Corporation (NWS): Insights from Q3 2021 SEC Filing

Key Snapshot

• Company: News Corporation (Ticker: NWS)
• Reporting Period: Q3 FY 2021 (July 1, 2021 – September 30, 2021)
• Total Revenue: $2.502 billion (up from $2.117 billion in Q3 FY 2020)
• Net Income: $196 million (up from $34 million in Q3 FY 2020)
• Basic EPS: $0.33 (up from $0.06 in Q3 FY 2020)
• Total Assets: $44.56 billion
• Total Liabilities: $22.72 billion
• Recommendation: Buy - The positive growth trajectory coupled with strategic acquisitions and revenue diversification indicates substantial future potential.

Introduction

The latest quarterly financial report from News Corporation (NWS), covering the period from July 1 to September 30, 2021, provides compelling insights into the company's performance across its diversified segments. This analysis will delve into key metrics such as revenue growth, profit margins, and the impact of strategic acquisitions, while also comparing these results to previous quarters and competitors in the media landscape.

Revenue Breakdown and Growth

In Q3 FY 2021, News Corporation reported total revenues of $2.502 billion, reflecting an 18% increase from $2.117 billion in Q3 FY 2020. This growth can be attributed to strong performances across various segments:

• Digital Real Estate Services: Revenue surged to $426 million, up from $290 million in the prior year.
• Subscription Video Services: Increased to $510 million, showing stable growth compared to $496 million in 2020.
• Dow Jones: Recorded revenue of $444 million, up from $386 million.
• Book Publishing: Increased to $546 million, up from $458 million.
• News Media: Reported revenues of $576 million, growing from $487 million.

This diversified revenue stream underlines News Corporation’s resilience and adaptability in the changing media landscape, particularly in digital segments.

Profitability Metrics

The profitability indicators show significant improvement:

• Net Income: Increased to $196 million in Q3 FY 2021, compared to $34 million in the same quarter last year.
• Basic and Diluted EPS: Both rose to $0.33, showcasing strong earnings power relative to previous periods.

EBITDA Insights

While specific EBITDA figures were not detailed in the report, the overall growth in revenue coupled with reduced operational costs across segments provides a positive outlook for EBITDA improvement. The performance of segments like Digital Real Estate Services and Subscription Video Services suggests a healthy margin expansion potential.

Strategic Acquisitions

News Corporation has made noteworthy acquisitions during this period, including:

• Investor’s Business Daily for $275 million.
• Houghton Mifflin Harcourt Books and Media for $349 million.
• Mortgage Choice for A$244 million.

These acquisitions are expected to enhance market share and revenue streams, particularly in digital real estate and education sectors, further solidifying News Corp's diversified portfolio.

Debt and Liquidity Management

As of September 30, 2021, News Corporation reported total assets of $44.56 billion and total liabilities of $22.72 billion, indicating a healthy asset-to-liability ratio. The company's equity sits at approximately $21.84 billion, reflecting strong financial health.

The management of debt is particularly noteworthy, with various credit facilities and notes structured to support operational flexibility. This prudent financial management positions News Corp favorably against competitors who may face higher leverage ratios.

Competitive Landscape and Market Conditions

In the context of macroeconomic factors, the media industry is witnessing robust growth in digital advertising and subscription models, driven by increasing consumer demand for online content. News Corporation's investments in digital segments position it well against competitors like ViacomCBS and Comcast, who are also pivoting towards digital offerings.

Future Outlook

Given the current macroeconomic conditions and the company's strategic direction, we anticipate continued revenue growth and profitability improvements in the coming months. The strong performance in Q3 FY 2021 and the successful integration of recent acquisitions suggest that News Corporation is on a solid trajectory.

For the next 12 months, investors can expect:

• Continued revenue growth driven by digital expansion.
• Potential increases in EPS as operational efficiencies are realized post-acquisition.
• Strategic investments in technology and digital platforms to further enhance market positioning.

Conclusion and Recommendation

In summary, News Corporation's Q3 FY 2021 financial report reveals a strong performance marked by substantial revenue growth, improved profitability, and strategic acquisitions. Considering the positive trends and the company's ability to adapt to market changes, we recommend a Buy rating for NWS stock. This recommendation is based on the company's robust financial health, diversified revenue streams, and growth potential in a dynamic media landscape. Investors should monitor ongoing performance closely, especially in the digital segments, to capitalize on future opportunities.