REA Group and Realtor.com owner News Corp has reported revenues of $1.9 billion for the 2016 Fiscal third quarter compared to $2.0 billion in the prior year, impacted by a decline in advertising, currency fluctuations an a $280 million legal settlement.
Total segment EBITDA was $122 million including a $280 million legal settlement charge at News America Marketing with loss from continuing operations amounting to $128 million.
The company states its loss comprises the one-time, settlement charge and net tax compared to income from continuing operations of $56 million in the prior year.
The group's reported 7 per cent decline in total revenues also includes a negative impact from foreign currency fluctuations of $72 million with an associated a hit to EBITDA of $9 million.
Adjusted revenues declined 5 per cent compared to the prior year, with growth in the Digital Real Estate Services segment was more than offsetting lower advertising revenues at the company's News and Information Services segment.
The latter was primarily the result of a decline at News America Marketing and lower consumer revenues in the Book Publishing segment.
Adjusted EPS was $0.04 compared to $0.09 in the prior year, with reported EPS from continuing operations hitting $0.26 compared to $0.08 in the prior year.
News Corp says revenue growth was driven by Realtor.com®, which achieved record traffic with 50 million average monthly unique users this quarter, up 30 per cent versus the prior year.
Another highlight was the completion of REA Group's the iProperty acquisition which bolstered the group's Digital Real Estate Services segment.
Chief Executive Robert Thomson says excluding legal costs and 'currency headwinds' third quarter revenues and EBITDA declined 5 per cent and 8 per cent respectively, which was disappointing
"We believe, however, that the company is on track to see improvements in the fourth quarter, with the expansion of our digital real estate business, foreign currency comparisons hopefully beginning to ease, and cost saving initiatives taking firmer root," Thompson says.
He says News Corp's pursuit of digital growth continues, recently enhanced by REA’s completion of the iProperty acquisition in Southeast Asia.
"Meanwhile, traffic and revenue growth remained robust at REA and realtor.com®. We are particularly focused on driving mobile revenue growth, and are pleased with the results at realtor.com®, where the mobile audience grew close to 50 per cent this quarter, and now represents 60 per cent of page views and the majority of leads."
Despite the difficult conditions for advertising, both Dow Jones and News Corp Australia contributed to Segment EBITDA growth, thanks to an increase in paid digital subscribers, digital advertising growth and ongoing cost reduction to improve efficiency.
"While we believe in the strength of our print properties, we are also investing energetically in the rapid pursuit of digital which is clearly evident in the transition at Dow Jones," Thompson says.
"At Dow Jones this quarter, digital accounted for more than 50 per cent of total revenues for the first time, and digital-only subscribers at the Wall Street Journal grew to 893,000, representing nearly 45 per cent of the base.
"We are building a strong digital platform on top of the WSJ print circulation which today is double the size of its nearest competitor."
Thompson adds the advertising market is in the midst of upheaval, with advertisers and agencies experimenting with their spend as a result.
"We believe that premium mastheads and audiences are currently undervalued by agencies, some of which are more focused on fashion than function," he says.
"With Silicon Valley’s demand for quality content more voracious than ever, and advertisers seeking greater digital accountability, we believe News Corp is ideally positioned to capitalize on these macro-trends through the power of its global mastheads and large and growing premium audiences.”