News Corp swung to a net loss of $379 million in the most recent
quarter after it wrote down the value of its digital education
business. But reduced costs helped bolster its adjusted operating
earnings, and the media company said it would start paying a
dividend for the first time.
The company started a strategic review of its Amplify
digital-education division and said it would cease marketing
Amplify's Access products to new customers but continue to provide
service to existing customers. The impairment charge for the
division amounted to $371 million.
News Corp had invested heavily in its Amplify subsidiary, led by
former New York City Schools Chancellor Joel Klein. Launched in
2012, Amplify is built around a tablet-based learning platform and
digital curriculum. While it reviews options, News Corp said it
would cease production of the dedicated tablet product but continue
to develop the curriculum software.
Meanwhile, the overall company reported a 50% rise on the year
in earnings before interest, taxes, depreciation and amortization
to $191 million, largely due to lower expenses at the news and
information services and digital education segments. Ebitda for the
news and information services unit, which includes Dow Jones, rose
to $169 million from $131 million a year ago.
In June, Dow Jones, which publishes The Wall Street Journal,
began a reorganization, involving job cuts and the shifting of
resources into digital-media efforts.
On Wednesday, News Corp also declared its first dividend since
it was spun off from the entertainment and television units that
now make up 21st Century Fox. The semiannual cash dividend of 10
cents a share will be paid on Oct. 12 to shareholders of record as
of Sept. 16.
News Corp Class A shares were up 4.1% in after-hours
trading.
Overall, revenue fell 2% to $2.14 billion in the fiscal fourth
quarter that ended in June, driven by a 10% decline in revenue in
the news and information segment, which accounts for roughly
two-thirds of News Corp's total revenue. The company posted a loss
of $379 million, or 65 cents a share, compared with a profit of $12
million, or 2 cents, a year earlier.
Excluding the impairment charge and other items, News Corp
posted adjusted earnings of 7 cents a share. Analysts polled by
Thomson Reuters had expected total revenue of $2.19 billion in the
quarter and per-share earnings of 5 cents.
"Despite an uneven global economy, very tough currency headwinds
and the ongoing transformation of the media landscape, for fiscal
2015 we posted stable revenues, robust Ebitda growth and healthy
free cash flow," said News Corp Chief Executive Robert Thomson.
Cost cuts at the news division helped offset the negative impact
of foreign currency, a 13% decline in ad revenue and a 5% drop in
circulation.
Revenue in News Corp's book publishing segment rose 8% to $390
million, reflecting the inclusion of results of the
recently-acquired Harlequin imprint, but offset by lower revenues
from the "Divergent" series.
At the small but growing digital real estate services segment,
revenue climbed 67% to $189 million, thanks to the inclusion of the
results from U.S. property listing network Move Inc., which News
Corp acquired last year. It also benefited from greater listing
penetration and higher pricing at REA Group in Australia. But
Ebitda for the unit fell 27% to $45 million because of expenses at
Move and currency fluctuations.
News Corp said it spent around $8 million in the quarter in
costs related to the phone-hacking scandal at the now-defunct News
of the World tabloid in the U.K.
Write to Lukas I. Alpert at lukas.alpert@wsj.com
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