News Corp (NASDAQ: NWSA) reported Q2 EPS of $0.34, $0.24 better than the analyst estimate of $0.10. Revenue for the quarter came in at $2.41 billion versus the consensus estimate of $2.24 billion.

FISCAL 2021 SECOND QUARTER KEY FINANCIAL HIGHLIGHTS

• Revenues were $2.41 billion, a 3% decline compared to $2.48 billion in the prior year – Adjusted Revenues increased 2% compared to the prior year
• Net income of $261 million compared to $103 million in the prior year
• Total Segment EBITDA was $497 million compared to $355 million in the prior year
• Reported diluted EPS were $0.39 compared to $0.14 in the prior year – Adjusted EPS were $0.34 compared to $0.18 in the prior year
• Book Publishing Segment EBITDA increased 65% compared to the prior year, driven by strong revenue growth across every category
• Move, operator of realtor.com®, reported 28% revenue growth and was a key driver of Segment EBITDA growth at the Digital Real Estate Services segment
• Dow Jones reported 43% Segment EBITDA growth, driven by record digital advertising revenues and continued growth in digital subscriptions
• Subscription Video Services Segment EBITDA grew 77% as Foxtel benefited from lower costs while reaching a record of more than 1.3 million paying OTT subscribers as of the quarter end

“The second quarter of fiscal 2021 was the most profitable quarter since the new News Corp was launched more than seven years ago, reflecting the ongoing digital transformation of the business. We reported the largest profits for Dow Jones since the acquisition of the company in 2007, with Segment EBITDA increasing 43 percent and traffic across the Dow Jones digital network surging 48 percent.

There was also a 77 percent rise in Segment EBITDA at the Subscription Video Services segment, where the exponential evolution at Foxtel continued apace, with streaming customers increasing over 90 percent, rights costs reset and audiences for summer sports at unprecedented levels.

Rapid expansion continued at Move, which accounted for about 80 percent of Segment EBITDA growth in the Digital Real Estate Services segment, while revenue grew 28 percent compared to a year earlier. Realtor.com®’s traffic growth has now outpaced that of Zillow for the last 11 months in a row, according to Comscore, and monthly average unique users were 37 percent higher during the quarter compared to the prior year.

In the Book Publishing segment, HarperCollins’ revenues rose 23 percent, with double digit growth across every category, and a 65 percent burgeoning of Segment EBITDA. And history was also made at the New York Post, which reported its first profit in modern times – a notable feat for what had been a chronic loss-making masthead founded in 1801 by Alexander Hamilton.”

COVID-19 Impact and Outlook

The ongoing impact of the COVID-19 pandemic and measures to prevent its spread continue to create significant economic volatility, uncertainty and disruption, affecting the Company’s businesses in a number of ways. The discussion below summarizes the effects on the Company’s businesses during the six months ended December 31, 2020 and through the date of this filing, as well as expected trends for the second half of fiscal 2021:

Digital Real Estate Services: The real estate markets in Australia, Asia and the U.S. have been, and may continue to be, impacted as a result of social distancing measures, business closures and economic uncertainty resulting from COVID-19. In January, national residential listings in Australia were flat compared to the prior year with a 12% increase in Melbourne and a 1% decline in Sydney. Consumer confidence is improving as COVID-19 cases remain extremely low in Australia. Based on the current market outlook and excluding the impact of acquisitions, REA Group expects core operating costs for fiscal 2021 to be broadly in-line with the prior year. Second half results will be impacted by the consolidation of Elara. In the U.S., Move is benefiting from strong consumer demand, with unique users and leads at all-time highs, despite active listings across the industry remaining at historically low levels. Unique users at realtor.com® in January grew 37% year-over-year to a record 94 million. Higher expected revenues driven by growth in traffic and lead volumes will fund reinvestment in the second half of fiscal 2021. The Company expects to invest an additional $40 million in brand marketing and product development compared to the prior year to drive further market share and expand into adjacent verticals.

Subscription Video Services: Foxtel’s revenue trends have been better than anticipated in the first half of fiscal 2021, with higher ARPU offsetting higher churn, resulting in lower year-over-year revenue declines in residential broadcast. Broadcast churn is expected to remain elevated due to the suspension of government stimulus payments and Foxtel’s ongoing emphasis on ARPU. In addition, higher average OTT subscribers through January should result in higher than expected OTT revenue for the full year. The ongoing disruption in operations at pubs and clubs from government imposed occupancy restrictions and lower occupancy at hotels throughout Australia due to the domestic travel restrictions are expected to continue to adversely impact commercial subscription revenue. Given Foxtel’s continued investment in its OTT products as well as higher costs from the higher revenue, the Company now expects the full year overall net cost reductions to be less than $73 million (A$100 million), compared to the previous estimate of net A$160 million ($117 million), inclusive of approximately $58 million (A$80 million) of higher sports costs in the second half of fiscal 2021, particularly in the fourth quarter, compared to the prior year. U.S. dollar amounts are converted by using the fiscal 2021 second quarter average exchange rate (See Note 2).

Dow Jones and News Media: COVID-19 continues to exacerbate print advertising weakness and negatively impact weekday print volumes due to increased economic uncertainty and lower demand for single copy and amenity newspapers driven by decreased foot traffic resulting from remote working, social distancing measures and other government restrictions. The latest national lockdown in the U.K., the continuation of remote working in the U.S. and, to a lesser extent, the current domestic travel restrictions in Australia are expected to continue to negatively impact these revenue streams in the second half of the fiscal year. However, the Company has seen increases in digital paid subscriptions and digital audience gains at online versions of many of its news properties. Additionally, the Company implemented strict and immediate discretionary cost controls towards the end of fiscal 2020 in response to COVID-19 and related uncertainty. At the News Media segment, cost declines in the second half are expected to moderate from the rate of decline in the first half as the Company laps these COVID-19 related cost savings as well as the sale of News America Marketing. At Dow Jones, given the performance in the first half of fiscal 2021, the Company expects expenses to increase modestly in the second half compared to the prior year period as the Company reinvests in its digital assets to drive longer-term growth.

Book Publishing: While the Company has benefited from changing consumer behavior as a consequence of COVID-19, such as the increase in free time for consumers to read and the increase in the average number of books purchased, the Company continues to monitor the sustainability of these recent consumer patterns. Currently the Company is expecting performance to moderate in the second half of fiscal 2021, particularly in the fourth quarter, in part due to the strong performance in the prior year, which benefited from increased consumer demand at the onset of COVID-19 lockdowns and restrictions.

Other: The Company expects costs to increase by at least $50 million in the second half of fiscal 2021, primarily due to higher employee costs related to stock price performance, the absence of the bonus reductions for certain employees, including the senior executive team, implemented in the prior year in response to COVID-19, as well as initial investment spending as the Company ramps up the global shared services initiative.

For earnings history and earnings-related data on News Corp (NWSA) click here.