Global media and publishing company News Corp (NASDAQ:NWSA) reported Q4 CY2024 results topping the market’s revenue expectations, but sales fell by 13.5% year on year to $2.24 billion. Its non-GAAP profit of $0.33 per share was 5.7% above analysts’ consensus estimates.
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News Corp (NWSA) Q4 CY2024 Highlights:
- Revenue: $2.24 billion vs analyst estimates of $2.17 billion (13.5% year-on-year decline, 3.1% beat)
- Adjusted EPS: $0.33 vs analyst estimates of $0.31 (5.7% beat)
- Adjusted EBITDA: $478 million vs analyst estimates of $425.3 million (21.4% margin, 12.4% beat)
- Operating Margin: 21.4%, up from 11.4% in the same quarter last year
- Free Cash Flow Margin: 6.8%, down from 9.6% in the same quarter last year (miss)
- Market Capitalization: $17.01 billion
Company Overview
Established in 2013 after a restructuring, News Corp (NASDAQ:NWSA) is a multinational conglomerate known for its news publishing, broadcasting, digital media, and book publishing.
Media
The advent of the internet changed how shows, films, music, and overall information flow. As a result, many media companies now face secular headwinds as attention shifts online. Some have made concerted efforts to adapt by introducing digital subscriptions, podcasts, and streaming platforms. Time will tell if their strategies succeed and which companies will emerge as the long-term winners.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, News Corp struggled to consistently increase demand as its $9.82 billion of sales for the trailing 12 months was close to its revenue five years ago. This fell short of our benchmarks and signals it’s a low quality business.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. News Corp’s recent history shows its demand has stayed suppressed as its revenue has declined by 1.7% annually over the last two years. 
We can dig further into the company’s revenue dynamics by analyzing its three most important segments: Dow Jones, News Media, and Book Publishing, which are 26.8%, 25.5%, and 26.6% of revenue. Over the last two years, News Corp’s Dow Jones (media subsidiary) and Book Publishing (general publishing) revenues averaged year-on-year growth of 3.2% and 2.9%. On the other hand, its News Media revenue (general media) averaged 3.7% declines.
This quarter, News Corp’s revenue fell by 13.5% year on year to $2.24 billion but beat Wall Street’s estimates by 3.1%.
Looking ahead, sell-side analysts expect revenue to decline by 13.6% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds.
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Cash Is King
Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.
News Corp has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 6.9%, subpar for a consumer discretionary business.
News Corp’s free cash flow clocked in at $152 million in Q4, equivalent to a 6.8% margin. The company’s cash profitability regressed as it was 2.8 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.
Over the next year, analysts predict News Corp’s cash conversion will improve. Their consensus estimates imply its free cash flow margin of 6.7% for the last 12 months will increase to 9%, giving it more flexibility for investments, share buybacks, and dividends.
Key Takeaways from News Corp’s Q4 Results
It was encouraging to see News Corp beat analysts’ EBITDA expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, free cash flow missed significantly and margin was down meaningfully year on year. Overall, this quarter was mixed. The stock traded down 2.2% to $28.20 immediately after reporting.
Is News Corp an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.