Revenues and Profits Rise Sharply at HarperCollins Due to Divergent, Ebooks

While revenues at News Corp fell slightly and profits rose slightly in the third quarter (see release below), the story was much different at HarperCollins, one of the company’s divisions.

HarperCollins saw revenues in the quarter increase 14% to $354 million and profits increase 83% to $53 million, giving the publisher a 15% profit margin, enviable at any large publishing house.

The growth was due to the success of the Divergent series and ebooks in general. Divergent sold eight million units in the quarter. The series has perpetually been at or near the top of best-seller lists all year. Meanwhile, ebook revenues grew by 46% over a year ago and represented 26% of company revenues, up from 21% last year.

In the coming fiscal quarters, HarperCollins earnings will jump because of the addition of Harlequin, a deal that should close in the second half of calendar 2014.

[Earnings Release]

News Corp Reports Third Quarter Results for Fiscal 2014

FISCAL 2014 THIRD QUARTER KEY FINANCIAL HIGHLIGHTS

Revenues of $2.08 billion compared to $2.18 billion in the prior year
Reported Total Segment EBITDA of $175 million compared to $169 million in the prior year

Adjusted EPS were $0.11 compared to $0.13 in the prior year – Reported EPS were $0.08 compared to $0.56 in the prior year, which included a non-taxable gain on the SKY Network Television Ltd. transaction

 

News Corporation (“News Corp” or the “Company”) (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV) today reported financial results for the three months ended March 31, 2014.

Commenting on the results, Chief Executive Robert Thomson said:

“The past quarter marked another robust stride in the direction of expanding our digital and international businesses, which was the goal we articulated on our investor day last year. Through the planned acquisition of Harlequin we will extend the global reach not only of HarperCollins but of the broader News Corp, which will clearly benefit from that company’s commercial infrastructure. We are already reaping benefits from the acquisition of Storyful, which is powering a new social newswire and creating video content communities around our mastheads, whose digital transition is continuing apace. The improved results underscore the strength and diversity of our portfolio. It is also patent that we have been consistently disciplined on costs across the company and around the globe, leading to an improvement in our profitability.”

THIRD QUARTER RESULTS

The Company reported fiscal 2014 third quarter total revenues of $2.08 billion, a 5% decrease as compared to the prior year third quarter revenues of $2.18 billion. The majority of the revenue decline reflects foreign currency fluctuations, lower advertising revenues at the News and Information Services segment and the sale of the Dow Jones Local Media Group (“LMG”), partially offset by the strength in the Book Publishing and Digital Real Estate Services segments. Adjusted revenues (as defined in Note 1) were relatively flat with the prior year.

The Company reported third quarter Total Segment EBITDA of $175 million, a 4% increase as compared to $169 million in the prior year. This improvement was driven primarily by stronger performances in the Book Publishing and Digital Real Estate Services segments, partially offset by declines at the News and Information Services segment, adverse foreign currency fluctuations and slightly higher losses at Amplify compared to the prior year. Adjusted Total Segment EBITDA (as defined in Note 1) increased 3% compared to the prior year.

Net income available to News Corporation stockholders was $48 million as compared to $323 million in the prior year, which included a non-taxable gain on the SKY Network Television Ltd. transaction within Other, net. Adjusted net income available to News Corporation stockholders (as defined in Note 3) was $66 million compared to $73 million in the prior year. Impairment and restructuring charges were $10 million and $54 million in the three months ended March 31, 2014 and 2013, respectively.

Net income per share available to News Corporation stockholders was $0.08 as compared to $0.56 in the prior year. Adjusted EPS (as defined in Note 3) were $0.11 compared to $0.13 in the prior year.

Free cash flow available to News Corporation improved by $362 million in the nine months ended March 31, 2014 to $496 million, from $134 million in the prior year.

Please click here for the full Earnings Release information

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About News Corp

News Corporation (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV) is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content to consumers throughout the world. The company comprises businesses across a range of media, including: news and information services, cable network programming in Australia, digital real estate services, book publishing, digital education, and pay-TV distribution in Australia. Headquartered in New York, the activities of News Corporation are conducted primarily in the United States, Australia, and the United Kingdom. More information is available at: www.newscorp.com.

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