News Corp Misses Expectations

• Revenues of $2.06 billion compared to $2.08 billion in the prior year
• Reported Total Segment EBITDA of $163 million compared to $175 million in the prior year

News Corporation Tuesday reported financial results for the three months ended March 31, 2015.

Commenting on the results, Chief Executive Robert Thomson said:

“The new News Corp continues to build a firm foundation for digital growth. We see that most clearly in the successful integration of realtor.com, which grew audience and revenue at record levels in the third quarter. News Corp is now a global leader in digital real estate, which we believe will underpin long-term expansion and complement our expertise in news and financial analysis, both of which have been important ingredients in realtor.com’s accelerated growth. 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. We believe the company is firmly on track and the signs are positive for year-over-year EBITDA growth in the fourth quarter.”

Third Quarter Results

• The Company reported fiscal 2015 third quarter total revenues of $2.06 billion, a 1% decline as compared to prior year third quarter revenues of $2.08 billion. The majority of the revenue decline reflects negative foreign currency fluctuations and lower advertising revenues at the News and Information Services segment, offset in large part by growth in the Book Publishing and Digital Real Estate Services segments as a result of the acquisition of Harlequin Enterprises Limited (“Harlequin”) and Move, Inc. (“Move”), respectively. Adjusted revenues
• The Company reported third quarter Total Segment EBITDA of $163 million, a 7% decline as compared to $175 million in the prior year. These results include $15 million and $20 million in fees and costs – net of indemnification – related to the U.K. Newspaper Matters (as defined below) in the three months ended March 31, 2015 and 2014, respectively. Declines at the News and Information Services segment, including higher legal costs at News America Marketing, negative foreign currency fluctuations and increased stock-based compensation expense resulting from the acquisition of Move were partially offset by lower expenses at Amplify and increased revenues in the Book Publishing segment due to the inclusion of Harlequin results. Adjusted Total Segment EBITDA (as defined in Note 1) declined 1% compared to the prior year.
• Net income available to News Corporation stockholders was $23 million as compared to $48 million in the prior year, due to lower Total Segment EBITDA as well as a higher effective tax rate, lower equity earnings of affiliates, and lower interest income. Adjusted net income available to News Corporation stockholders.