News Corp’s profit engine accelerates as Dow Jones subscriptions climb

News Corporation (NASDAQ:NWSA) began fiscal 2027 with a strong earnings burst, lifting first-quarter revenue 6% to US$2.28 billion and net income 43% to US$215 million. Total Segment EBITDA, a non-GAAP measure, rose 19% to US$403 million, while reported diluted earnings per share increased to US$0.29 from US$0.20 a year earlier.

The headline performance was broad, but not uniform. Dow Jones, Digital Real Estate Services and Book Publishing all grew revenue and EBITDA, while News Media revenue slipped 1% and its Segment EBITDA fell 40%. News Corp also generated negative free cash flow of US$89 million, compared with positive free cash flow of US$4 million in the prior-year quarter.

Dow Jones subscriptions drive higher-quality growth

Dow Jones revenue rose 8% to US$630 million, with Segment EBITDA up 11% to US$160 million. Digital revenue accounted for 85% of the segment, up from 84% a year earlier, while total subscriptions to its news products increased 8% to more than 6.9 million.

The Wall Street Journal remained the largest subscription engine, with total average subscriptions up 9% to 5.0 million. Digital-only subscriptions rose 11% to nearly 4.7 million and represented 93% of the title’s total subscriptions. Dow Jones Risk & Compliance revenue increased 11% to US$104 million, while Dow Jones Energy grew 8% to US$79 million.

Real estate and publishing lift segment earnings

Digital Real Estate Services delivered the quarter’s largest EBITDA increase, with revenue up 10% to US$529 million and Segment EBITDA up 34% to US$212 million. REA Group revenue rose 13% to US$369 million, although US$27 million of that increase came from favourable foreign exchange. Australian national residential buy listing volumes declined 2%, with Sydney and Melbourne down 16%.

Move revenue increased 5% to US$160 million as RealPRO Select and other businesses lifted revenue per lead and annual contract value. Its average monthly unique users fell 8% to 66 million and lead volumes declined 11%, according to the company’s internal data, but the business still improved profitability through what News Corp described as operational efficiencies.

Book Publishing added another solid contribution, with revenue up 9% to US$582 million and Segment EBITDA up 29% to US$75 million. Growth came from physical and digital book sales, particularly General Books and Children’s Publishing, while audiobook sales helped digital revenue rise 6%.

News Media and cash conversion remain the pressure points

News Media was the clear laggard. Revenue fell to US$540 million and Segment EBITDA dropped to US$18 million from US$30 million, as lower print advertising and other revenue outweighed higher circulation and subscription revenue. Digital revenue improved to 41% of segment revenue from 38%, but audience trends were mixed: digital subscribers at News Corp Australia were broadly flat, while global monthly users at The Sun and the New York Post declined.

Cash generation was materially weaker than the profit result. Operating cash flow from continuing operations fell to US$13 million from US$85 million, partly because of working-capital movements and higher tax payments, while capital expenditure increased to US$102 million from US$81 million. News Corp repurchased US$166 million of shares and paid US$61 million in dividends during the quarter, reducing cash and cash equivalents to US$1.78 billion from US$2.10 billion at the end of June.

Reported revenue growth also included a US$43 million foreign-exchange benefit. On the company’s adjusted basis, which excludes currency effects and certain acquisitions and divestitures, revenue growth was 4% and Total Segment EBITDA growth was 13%. Chief executive Robert Thomson said News Corp remained focused on protecting its intellectual property as artificial-intelligence platforms expand, saying the company would “woo and we will sue”, but the release provided no numerical guidance for the rest of fiscal 2027.