NEWS CORP - Quarter Report: 2024 September (Form 10-Q)

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Income Statement

Classification

()$()) ) $ ))))) ) $ $ Digital Real Estate Services Book Publishing Subscription Video Services News Media

Other(a)

Investments Total assets$ $

(a)The Other segment primarily includes Cash and cash equivalents.

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

$ Digital Real Estate Services Book Publishing Subscription Video Services News Media Total Goodwill and intangible assets, net$ $

$ Less: allowances()()Receivables, net$ $

Other Non-Current Assets

$ Retirement benefit assets

Inventory(a)

Other Total Other non-current assets$ $

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

$ Current operating lease liabilities Allowance for sales returns

Programming rights payable

140 $122 $18 15 %92 $93 $(1)(1)%

For the three months ended September 30, 2024, revenues at the Subscription Video Services segment increased $15 million, or 3%, as compared to the corresponding period of fiscal 2024. The increase was driven by higher streaming revenues of $16 million, due to increased volume and pricing at Kayo and BINGE, and the positive impact of foreign currency fluctuations, partially offset by lower residential subscription revenues resulting from fewer residential broadcast subscribers. Foxtel Group streaming subscription revenues represented approximately 34% of total segment circulation and subscription revenues for the three months ended September 30, 2024, as compared to 30% in the corresponding period of fiscal 2024. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue increase of $11 million, or 2%, for the three months ended September 30, 2024 as compared to the corresponding period of fiscal 2024.

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For the three months ended September 30, 2024, Segment EBITDA decreased $1 million, or 1%, as compared to the corresponding period of fiscal 2024, driven by $11 million of costs related to the Hubbl product, higher sports programming rights costs due to contractual increases and higher production costs, partially offset by declines in other costs, including marketing and entertainment programming costs, the revenue drivers discussed above and the $2 million, or 2%, positive impact of foreign currency fluctuations.

The following tables provide information regarding certain key performance indicators for the Foxtel Group, the primary reporting unit within the Subscription Video Services segment, as of and for the three months ended September 30, 2024 and 2023 (see the Company’s 2024 Form 10-K for further detail regarding these performance indicators):


	As of September 30,
	2024			2023
	(in 000s)
Broadcast Subscribers
Residential(a)	1,185			1,310
Commercial(b)	237			233
Streaming Subscribers - Total (Paid)(c)
Kayo	1,511 (1,499)			1,411 (1,403)
BINGE	1,571 (1,552)			1,506 (1,449)
Foxtel Now	134 (131)			167 (161)
16		$	14		$	2	14	%

Revenues at the News Media segment decreased $27 million, or 5%, for the three months ended September 30, 2024 as compared to the corresponding period of fiscal 2024. Other revenues decreased $13 million, or 19%, primarily driven by the transfer of third-party printing revenue contracts to News UK’s joint venture with DMG Media in fiscal 2024. Advertising revenues decreased $10 million, or 5%, as compared to the corresponding period of fiscal 2024, due to lower print advertising revenues, primarily at News Corp Australia, and lower digital advertising revenues at News UK, mainly due to a decline in traffic at some mastheads due to algorithm changes at certain platforms, partially offset by the $5 million, or 2%, positive impact of foreign currency fluctuations. Circulation and subscription revenues decreased $4 million, or 1%, as compared to the corresponding period of fiscal 2024, driven by print volume declines, partially offset by cover price increases and the $6 million, or 3%, positive impact of foreign currency fluctuation. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue increase of $12 million, or 2%, for the three months ended September 30, 2024 as compared to the corresponding period of fiscal 2024.

Segment EBITDA at the News Media segment increased by $2 million, or 14%, for the three months ended September 30, 2024 as compared to the corresponding period of fiscal 2024. The increase was driven by cost savings from the combination of News UK’s printing operations with those of DMG Media and other cost savings initiatives, including lower Talk costs, largely offset by the lower revenues discussed above.

News Corp Australia

Revenues were $234 million for the three months ended September 30, 2024, a decrease of $4 million, or 2%, compared to revenues of $238 million in the corresponding period of fiscal 2024. Circulation and subscription revenues decreased $4 million, or 4%, driven by print volume declines and lower content licensing revenues, partially offset by cover price increases. Advertising revenues decreased $3 million, or 3%, due to lower print advertising revenues. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue increase of $5 million, or 2%, for the three months ended September 30, 2024 as compared to the corresponding period of fiscal 2024.

News UK

Revenues were $207 million for the three months ended September 30, 2024, a decrease of $21 million, or 9%, as compared to revenues of $228 million in the corresponding period of fiscal 2024. Other revenues decreased $14 million, or 56%, primarily driven by the transfer of third-party printing revenue contracts to its joint venture with DMG Media in fiscal 2024. Advertising revenues decreased $9 million, or 15%, driven by lower digital advertising revenues mainly due to algorithm changes at certain platforms and lower print advertising revenues. Circulation and subscription revenues increased $2 million, or 1%, due to the positive impact of foreign currency fluctuations, as cover price increases and higher content licensing revenues were more than offset by print volume declines. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue increase of $6 million, or 3%, for the three months ended September 30, 2024 as compared to the corresponding period of fiscal 2024.

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LIQUIDITY AND CAPITAL RESOURCES

Current Financial Condition

The Company’s principal source of liquidity is internally generated funds and cash and cash equivalents on hand. As of September 30, 2024, the Company’s cash and cash equivalents were $1.8 billion. The Company also has available borrowing capacity under its revolving credit facility (the “Revolving Facility”) and certain other facilities, as described below, and expects to have access to the worldwide credit and capital markets, subject to market conditions, in order to issue additional debt if needed or desired. The Company currently expects these elements of liquidity will enable it to meet its liquidity needs for at least the next twelve months, including repayment of indebtedness. Although the Company believes that its cash on hand and future cash from operations, together with its access to the credit and capital markets, will provide adequate resources to fund its operating and financing needs for at least the next twelve months, its access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) the financial and operational performance of the Company and/or its operating subsidiaries, as applicable, (ii) the Company’s credit ratings and/or the credit rating of its operating subsidiaries, as applicable, (iii) the provisions of any relevant debt instruments, credit agreements, indentures and similar or associated documents, (iv) the liquidity of the overall credit and capital markets and (v) the state of the economy. There can be no assurances that the Company will continue to have access to the credit and capital markets on acceptable terms.

As of September 30, 2024, the Company’s consolidated assets included $859 million in cash and cash equivalents that were held by its foreign subsidiaries. Of this amount, approximately $100 million is cash not readily accessible by the Company as it is held by REA Group, a majority owned but separately listed public company. REA Group must declare a dividend in order for the Company to have access to its share of REA Group’s cash balance.

The principal uses of cash that affect the Company’s liquidity position include the following: operational expenditures including employee costs, paper purchases and programming costs; capital expenditures; income tax payments; investments in associated entities; acquisitions; the repurchase of shares; dividends; and the repayment of debt and related interest. In addition to the acquisitions and dispositions disclosed elsewhere, the Company has evaluated, and expects to continue to evaluate, possible future acquisitions and dispositions of certain businesses. Such transactions may be material and may involve cash, the issuance of the Company’s securities or the assumption of indebtedness.

Issuer Purchases of Equity Securities

The Company’s Board of Directors (the “Board of Directors”) has authorized a repurchase program to purchase up to $1 billion in the aggregate of the Company’s outstanding Class A Common Stock and Class B Common Stock (the “Repurchase Program”). The manner, timing, number and share price of any repurchases will be determined by the Company at its discretion and will depend upon such factors as the market price of the stock, general market conditions, applicable securities laws, alternative investment opportunities and other factors. The Repurchase Program has no time limit and may be modified, suspended or discontinued at any time. As of September 30, 2024, the remaining authorized amount under the Repurchase Program was approximately $422 million.

Stock repurchases under the Repurchase Program commenced on November 9, 2021. The following table summarizes the shares repurchased and subsequently retired and the related consideration paid during the three months ended September 30, 2024 and 2023:


	For the three months ended September 30,
	2024			2023
	Shares	Amount		Shares	Amount
	(in millions)
Class A Common Stock	0.9	$	25	1.0	$	20
Class B Common Stock	0.4	13		0.4	9
Total	1.3	$	38	1.4	$	29

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Dividends

In August 2024, the Board of Directors declared a semi-annual cash dividend of $0.10 per share for Class A Common Stock and Class B Common Stock. The dividend was paid on October 9, 2024 to stockholders of record as of September 11, 2024. The timing, declaration, amount and payment of future dividends to stockholders, if any, is within the discretion of the Board of Directors. The Board of Directors’ decisions regarding the payment of future dividends will depend on many factors, including the Company’s financial condition, earnings, capital requirements and debt facility covenants, other contractual restrictions, as well as legal requirements, regulatory constraints, industry practice, market volatility and other factors that the Board of Directors deems relevant.

Sources and Uses of Cash—For the three months ended September 30, 2024 versus the three months ended September 30, 2023

Net cash provided by (used in) operating activities for the three months ended September 30, 2024 and 2023 was as follows (in millions):


	For the three months ended September 30,
	2024		2023
Net cash provided by (used in) operating activities	$	64	$	(55)

Net cash provided by (used in) operating activities improved by $119 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was primarily due to lower working capital and higher Total Segment EBITDA, partially offset by higher tax payments.

Net cash used in investing activities for the three months ended September 30, 2024 and 2023 was as follows (in millions):


	For the three months ended September 30,
	2024		2023
Net cash used in investing activities	$	(136)	$	(159)

Net cash used in investing activities decreased by $23 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, driven by $29 million of lower capital expenditures, primarily at Foxtel, partially offset by the $6 million increase in cash used for acquisitions and investments.

Net cash used in financing activities for the three months ended September 30, 2024 and 2023 was as follows (in millions):


	For the three months ended September 30,
	2024		2023
Net cash used in financing activities	$	(147)	$	(65)

Net cash used in financing activities was $147 million for the three months ended September 30, 2024, as compared to $65 million for the three months ended September 30, 2023.

During the three months ended September 30, 2024, the Company had $185 million of borrowing repayments, $38 million of stock repurchases of outstanding Class A and Class B Common Stock under the Repurchase Program and dividend payments of $35 million to REA Group minority stockholders. The net cash used in financing activities was partially offset by new borrowings of $153 million.

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During the three months ended September 30, 2023, the Company had $933 million of borrowing repayments, primarily related to the refinancing of Foxtel and REA Groups’ debt portfolios, $29 million of stock repurchases of outstanding Class A and Class B Common Stock under the Repurchase Program and dividend payments of $28 million to REA Group minority stockholders. The net cash used in financing activities was partially offset by new borrowings of $925 million primarily related to the refinancings at Foxtel and REA Group and $53 million related to the net settlement of certain hedges which were terminated in connection with the refinancing at Foxtel.

Reconciliation of Free Cash Flow

Free cash flow is a non-GAAP financial measure. Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures. Free cash flow may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what items should be included in the calculation of free cash flow.

Free cash flow does not represent the total increase or decrease in the cash balance for the period and should be considered in addition to, not as a substitute for, the net change in cash and cash equivalents as presented in the Company’s consolidated Statements of Cash Flows prepared in accordance with GAAP, which incorporates all cash movements during the period.

The Company believes free cash flow provides useful information to management and investors about the Company’s liquidity and cash flow trends.

The following table presents a reconciliation of net cash provided by (used in) operating activities to free cash flow:


	For the three months ended September 30,
	2024		2023
	(in millions)
Net cash provided by (used in) operating activities	$	64	$	(55)
Less: Capital expenditures	(95)		(124)
Free cash flow	(31)		(179)

Free cash flow in the three months ended September 30, 2024 was $(31) million compared to $(179) million in the corresponding period of fiscal 2024. Free cash flow improved primarily due to higher cash provided by operating activities and lower capital expenditures.

Borrowings

As of September 30, 2024, the Company, certain subsidiaries of NXE Australia Pty Limited (the “Foxtel Group” and together with such subsidiaries, the “Foxtel Debt Group”) and REA Group and certain of its subsidiaries (REA Group and certain of its subsidiaries, the “REA Debt Group”) had total borrowings of $2.9 billion, including the current portion. Both the Foxtel Group and REA Group are consolidated but non wholly-owned subsidiaries of News Corp, and their indebtedness is only guaranteed by members of the Foxtel Debt Group and REA Debt Group, respectively, and is non-recourse to News Corp.

News Corporation Borrowings

As of September 30, 2024, the Company had (i) borrowings of $1,969 million, consisting of its outstanding 2021 Senior Notes, 2022 Senior Notes and Term A Loans, and (ii) $750 million of undrawn commitments available under the Revolving Facility.

Foxtel Group Borrowings

As of September 30, 2024, the Foxtel Debt Group had (i) borrowings of approximately $777 million, including the amounts outstanding under the 2024 Foxtel Credit Facility, the 2017 Working Capital Facility and the Telstra Facility (described below), and (ii) total undrawn commitments of A$203 million available under the 2024 Foxtel Credit Facility and 2017 Working Capital Facility.

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In addition to third-party indebtedness, the Foxtel Debt Group has related party indebtedness consisting of A$545 million of outstanding principal (excluding capitalized interest) of subordinated shareholder loans as of September 30, 2024. The shareholder loans bear interest at a variable rate of the Australian BBSY plus an applicable margin ranging from 6.30% to 7.75% and mature in December 2027. Amounts outstanding under the shareholder loans are permitted to be repaid if (i) no actual or potential event of default exists both before and immediately after repayment and (ii) the net debt to EBITDA ratio of the Foxtel Debt Group was on the most recent covenant calculation date, and would be immediately after the cash repayment, less than or equal to 2.25 to 1.0. In the three months ended September 30, 2024, the Foxtel Debt Group repaid A$51 million of outstanding principal of shareholder loans. Additionally, the Foxtel Debt Group has an A$170 million subordinated shareholder loan facility with Telstra which can be used to finance cable transmission costs due to Telstra. The Telstra Facility bears interest at a variable rate of the Australian BBSY plus an applicable margin of 7.75% and matures in December 2027. The Company excludes the utilization of the Telstra Facility from the Statements of Cash Flows because it is non-cash.

REA Group Borrowings

As of September 30, 2024, REA Group had (i) borrowings of approximately $138 million, consisting of amounts outstanding under the 2024 REA Credit Facility, and (ii) A$400 million of undrawn commitments available under the 2024 REA Credit Facility. During the three months ended September 30, 2024, REA Group terminated its A$83 million 2024 Subsidiary Facility and repaid the amount outstanding using capacity available under the 2024 REA Credit Facility.

All of the Company’s borrowings contain customary representations, covenants and events of default. The Company was in compliance with all such covenants at September 30, 2024.

See Note 5—Borrowings in the accompanying Consolidated Financial Statements for further details regarding the Company’s outstanding debt, including additional information about interest rates, amortization (if any), maturities and covenants related to such debt arrangements.

Commitments

The Company has commitments under certain firm contractual arrangements to make future payments. These firm commitments secure the current and future rights to various assets and services to be used in the normal course of operations. The Company’s commitments as of September 30, 2024 have not changed significantly from the disclosures included in the 2024 Form 10-K.

Contingencies

The Company routinely is involved in various legal proceedings, claims and governmental inspections or investigations, including those discussed in Note 9 to the Consolidated Financial Statements. The outcome of these matters and claims is subject to significant uncertainty, and the Company often cannot predict what the eventual outcome of pending matters will be or the timing of the ultimate resolution of these matters. Fees, expenses, fines, penalties, judgments or settlement costs which might be incurred by the Company in connection with the various proceedings could adversely affect its results of operations and financial condition.

The Company establishes an accrued liability for legal claims when it determines that a loss is probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. Legal fees associated with litigation and similar proceedings are expensed as incurred. The Company recognizes gain contingencies when the gain becomes realized or realizable. See Note 9—Commitments and Contingencies in the accompanying Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the Company’s 2024 Form 10-K.

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ITEM 4. CONTROLS AND PROCEDURES

(a)Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this quarterly report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the Company’s first quarter of fiscal 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

See Note 9—Commitments and Contingencies in the accompanying Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors described in the 2024 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On September 22, 2021, the Company announced a stock repurchase program authorizing the Company to purchase up to $1 billion in the aggregate of its outstanding Class A Common Stock and Class B Common Stock (the “Repurchase Program”). The manner, timing, number and share price of any repurchases will be determined by the Company at its discretion and will depend upon such factors as the market price of the stock, general market conditions, applicable securities laws, alternative investment opportunities and other factors. The Repurchase Program has no time limit and may be modified, suspended or discontinued at any time.

The following table details the Company’s monthly share repurchases during the three months ended September 30, 2024:


	Total Number of Shares Purchased(a)		Average Price Paid Per Share(b)				Total Number of Shares Purchased as Part of Publicly Announced Program	Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Program(b)
	Class A	Class B	Class A		Class B
	(in millions, except per share amounts)
July 1, 2024 - July 28, 2024	0.3	0.1	$	27.71	$	28.56	0.4	$	449
July 29, 2024 - September 1, 2024	0.3	0.2	$	27.36	$	28.37	0.5	$	434
September 2, 2024 - September 29, 2024	0.3	0.1	$	26.50	$	27.73	0.4	$	422
Total	0.9	0.4	$	27.19	$	28.22	1.3

(a) The Company has not made any repurchases of Common Stock other than in connection with the publicly announced stock repurchase program described above.

(b) Amounts exclude taxes, fees, commissions or other costs associated with the repurchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

Trading Plans

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ITEM 6. EXHIBITS



10.1						Amended and Restated Employment Agreement, dated February 13, 2024, between News Corporation and David Kline.*

10.2						Amended and Restated Employment Agreement, dated February 14, 2024, between News Corporation and Ruth Allen.*

31.1						Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.*

31.2						Chief Financial Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.*

32.1						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.**

101						The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 formatted in Inline XBRL: (i) Consolidated Statements of Operations for the three months ended September 30, 2024 and 2023 (unaudited); (ii) Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2024 and 2023 (unaudited); (iii) Consolidated Balance Sheets as of September 30, 2024 (unaudited) and June 30, 2024 (audited); (iv) Consolidated Statements of Cash Flows for the three months ended September 30, 2024 and 2023 (unaudited); and (v) Notes to the Unaudited Consolidated Financial Statements.*

104						The cover page from News Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL (included as Exhibit 101).*

* Filed herewith.

** Furnished herewith

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	NEWS CORPORATION (Registrant)

	By:	/s/ Susan Panuccio
		Susan Panuccio Chief Financial Officer

Date: November 8, 2024

NEWS CORP - Quarter Report: 2024 September (Form 10-Q)

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