Foxtel Sale and AI Battles Pose New Challenges for News Corp’s Growth Strategy

Strong Financial Performance Amid Strategic Refocus

News Corporation delivered a solid second quarter for Fiscal 2025, reporting revenues of $2.24 billion, a 5% increase year-over-year. The company’s net income from continuing operations jumped an impressive 58% to $306 million, underscoring improved profitability across its core segments. Total Segment EBITDA rose 20% to $478 million, reflecting robust operational execution and disciplined cost management.

CEO Robert Thomson highlighted the company’s three growth pillars, Digital Real Estate Services, Dow Jones, and Book Publishing, as key drivers of this performance. Each segment posted meaningful gains, with REA Group and Dow Jones achieving record revenues. REA Group’s Australian residential market strength and Dow Jones’ subscription and professional information businesses were particularly notable contributors.

Segment Highlights: Subscription Growth and Digital Expansion

Dow Jones revenues increased 3% to $600 million, buoyed by a 9% rise in total consumer subscriptions to 5.9 million, with digital-only subscriptions growing 13%. The Wall Street Journal alone saw a 4% increase in total subscriptions, with digital-only subscribers making up 90% of the total. This digital momentum helped offset declines in print advertising, which fell 10%, while digital advertising remained flat.

REA Group’s revenues surged 17% to $343 million, driven by price increases, deeper market penetration, and an uptick in national listings. Move, the US-based real estate platform, also showed its first revenue growth in ten quarters, despite macroeconomic headwinds impacting lead and transaction volumes.

Book Publishing revenues grew 8%, supported by strong physical and digital sales of high-profile titles, including Cher’s memoir and popular UK releases. The News Media segment, while experiencing a slight 2% revenue decline, improved its EBITDA by 19% through cost savings and digital sales growth, including a 13% increase in audiobook sales aided by a Spotify partnership.

Foxtel Sale: Simplifying Focus and Unlocking Value

In a significant strategic move, News Corp announced an agreement to sell Foxtel to DAZN for an enterprise value of A$3.4 billion. This transaction, expected to close in the second half of fiscal 2025 pending regulatory approvals, reflects News Corp’s intent to simplify its portfolio and concentrate on its core growth areas. News Corp will retain a 6% minority equity stake in DAZN and a board seat, maintaining a strategic interest in the evolving sports streaming landscape.

The sale marks a major shift as Foxtel’s results are now classified as discontinued operations. The move is expected to enhance long-term shareholder value by allowing News Corp to focus resources on its expanding digital real estate, news, and publishing businesses.

Looking Ahead: Navigating AI and Market Dynamics

CEO Thomson also addressed News Corp’s engagement with generative AI, emphasizing the company’s commitment to providing trusted content amid the rise of AI-driven platforms. The company’s partnership with OpenAI and ongoing legal actions against competitors like Perplexity signal a proactive stance in protecting content integrity and market position.

With free cash flow improving to $121 million for the six months ended December 31, 2024, and a declared semi-annual dividend of $0.10 per share, News Corp appears well-positioned to navigate the evolving media landscape while delivering shareholder returns.