$ AAPL

$ ABBV

$ ABNB

$ ACGL

$ ADI

$ ADM

$ ADP

$ ADSK

$ AEE

$ AEP

$ AES

$ AFL

$ AIG

$ AIZ

$ AJG

$ AKAM

$ ALB

$ ALGN

$ ALL

$ AMAT

$ AMCR

$ AMD

$ AME

$ AMGN

$ AMP

$ AMT

$ AMZN

$ ANET

$ AOS

$ APA

$ APD

$ APO

$ APTV

$ ARE

$ ATO

$ AVB

$ AWK

$ AXON

$ BA

$ BALL

$ BAX

$ BBY

$ BDX

$ BEN

$ BG

$ BIIB

$ BKNG

$ BLDR

$ BMY

$ BR

$ BRO

$ BXP

$ CAG

$ CAH

$ CARR

$ CAT

$ CBOE

$ CBRE

$ CCL

$ CDNS

$ CDW

$ CEG

$ CF

$ CHD

$ CHRW

$ CI

$ CINF

$ CL

$ CLX

$ CMCSA

$ CMG

$ CMI

$ CMS

$ COIN

$ COO

$ COP

$ COR

$ CPAY

$ CPT

$ CRL

$ CRWD

$ CSCO

$ CTRA

$ CTSH

$ CTVA

$ CVS

$ CVX

$ CZR

$ DAL

$ DASH

$ DAY

$ DD

$ DDOG

$ DE

$ DELL

$ DG

$ DGX

$ DIS

$ DOC

News Corp Class B posts record profitability in FY2025 Q4, driven by high-margin B2B and digital segments, with a new $1B buyback and ongoing margin expansion, despite lingering risks in traditional media.

# News Corp Class B Delivers Record Profitability in FY2025 Q4, Driven by B2B and Digital Segments

---

## Executive Summary

- **News Corp Class B (NWS) reported FY2025 revenue of $8.5B, up 2% YoY, with net income from continuing operations surging 71% to $648M.** The company delivered a clear beat on profitability and margin expansion, even as topline growth remained modest.
- **Margin quality was a standout,** with profit margin expanding 170bps to 16.7%, reflecting the success of aggressive cost controls and a strategic shift toward higher-margin B2B and professional information services. Dow Jones and Digital Real Estate segments were key outperformers.
- **Management’s tone was bullish,** emphasizing record profitability, a new $1B share buyback authorization, and continued portfolio simplification (notably the Foxtel sale). Guidance points to sustained margin expansion, with a focus on digital innovation and cost discipline.
- **Risks remain in the underperforming Book Publishing and News Media segments,** as well as from cyclical advertising trends and regulatory uncertainty in digital and AI domains. However, the market may be underestimating the structural benefits of the company’s digital and B2B transformation.
- **Catalyst watch:** Execution of the new buyback program, further margin expansion in Dow Jones, and stabilization in Book Publishing and News Media will be key for near-term sentiment.

---

## Performance Snapshot

| Metric                | Reported   | Consensus | Surprise | YoY Change |
|-----------------------|------------|-----------|----------|------------|
| Revenue               | $8.5B      | N/A       | N/A      | +2%        |
| Net Income (Cont. Ops)| $648M      | N/A       | N/A      | +71%       |
| Profit Margin         | 16.7%      | N/A       | +170bps  | +170bps    |
| Dow Jones Revenue %   | 39%        | N/A       | N/A      | +          |
| Dow Jones Profit %    | ~50%       | N/A       | N/A      | +          |

*Note: EPS and consensus figures not explicitly provided in the release.*

---

## Earnings Quality

News Corp’s earnings quality in FY2025 Q4 was robust, underpinned by a favorable revenue mix shift toward higher-margin B2B and professional information services. The Dow Jones and Digital Real Estate segments delivered outsized contributions to both revenue and profit, offsetting softness in Book Publishing and News Media. Margin expansion was driven by disciplined cost controls, particularly in News Media, and ongoing portfolio simplification. The company’s ability to grow profits faster than revenue highlights improved operational leverage and a structurally higher earnings base.

---

## Management Commentary & Guidance

Management struck a **confident and bullish tone** throughout the earnings call, celebrating record profitability and the successful execution of cost initiatives. The announcement of a new $1B share buyback program underscores their commitment to capital returns. Forward guidance calls for continued margin expansion, especially in Dow Jones, and further digital innovation in Real Estate. Management also highlighted proactive steps to protect intellectual property amid AI disruption, signaling a defensive and forward-looking posture.

---

## Key Risks

- **Cost inflation and margin pressures** could re-emerge, particularly if cost controls in News Media and Book Publishing falter.
- **Regulatory and competitive risks** in digital and AI-related domains may impact future growth, especially as the company leans further into digital revenue streams.
- **Demand-side risks** persist in the Book Publishing segment and cyclical advertising markets, which could weigh on overall performance if macro conditions deteriorate.

---

## Expected Market Reaction

Analysts and investors are likely to respond positively to News Corp’s record profitability, margin expansion, and the new buyback program. The market may reward the company’s strategic focus on high-margin B2B and digital segments. However, caution may linger due to ongoing challenges in Book Publishing and News Media, as well as broader cyclical and regulatory uncertainties.

---

## Final Takeaway

**News Corp Class B delivered a strong and high-quality quarter,** with clear evidence of structural improvement in profitability and capital allocation discipline. The market may be underappreciating the long-term benefits of the company’s digital and B2B transformation, while risks in traditional media and cyclical segments remain. 

**Upcoming catalysts:**  
- Execution and pace of the $1B share buyback  
- Further margin expansion in Dow Jones and Digital Real Estate  
- Signs of stabilization or turnaround in Book Publishing and News Media

Overall, News Corp is well-positioned for continued value creation, but investors should monitor execution risks and evolving industry headwinds closely.

News Corp (NWS): Record Margins, Digital-Led Growth

News Corp’s accelerating digital growth and new AI/content licensing deals with OpenAI and Google are set to drive Q4 FY2025 upside, with margin expansion and buybacks signaling management confidence despite ad market and legal risks.

# News Corp (NWS): Digital Momentum and AI Partnerships Set the Stage for Q4 FY2025 Upside

## Executive Summary

We maintain a **Bullish** outlook for News Corp (NWS) heading into Q4 FY2025, driven by sustained digital revenue growth and incremental upside from new AI/content licensing partnerships. **Q3 FY2025 revenue of $2.01B (+2% YoY)** and **operating margin of 7.5%** highlight the company’s successful digital transformation, with the Dow Jones segment now **82% digital** and EBITDA up **12% YoY**. The market may be underestimating the near-term revenue impact of the multiyear OpenAI deal (potentially worth **$250M+**) and the ongoing Google partnership, both of which could accelerate digital monetization and margin expansion in Q4. However, investors should monitor ongoing legal risks and advertising market volatility, which could temper upside if macro headwinds intensify.

## Recent Trends Signal What’s Next

News Corp’s last two quarters have demonstrated a clear pivot toward digital-led growth and margin improvement. **Q3 FY2025 revenue reached $2.01B** (up from $1.98B in Q2), with **operating margin expanding to 7.5%** (from 7.2% in Q2). The Dow Jones segment continues to outperform, with **6% YoY revenue growth** and digital revenues now comprising **82%** of the segment. EPS has also trended positively, with **Q3 Adj. EPS of $0.17** beating consensus by $0.03.

### Quarterly Financial Trend Table

| Quarter      | Revenue ($B) | Gross Margin (%) | Operating Margin (%) | Net Margin (%) | Adj. EPS ($) |
|--------------|--------------|------------------|----------------------|----------------|--------------|
| Q4 FY2024    | 2.05         | 38.0             | 7.0                  | 4.2            | 0.15         |
| Q1 FY2025    | 2.02         | 38.5             | 7.1                  | 4.3            | 0.16         |
| Q2 FY2025    | 1.98         | 38.7             | 7.2                  | 4.4            | 0.14         |
| Q3 FY2025    | 2.01         | 39.0             | 7.5                  | 4.6            | 0.17         |

**Trend:** Revenue and margins are steadily improving, with digital mix and cost discipline driving both top- and bottom-line growth.

## Management’s Forward Tone and Positioning

Management’s recent commentary has shifted to a more confident and forward-looking stance. In the Q3 FY2025 call, CEO Robert Thomson stated, **“We’re seeing early signs of normalization in demand and robust digital and B2B growth.”** The company’s accelerated $1B buyback authorization and CEO contract extension through 2030 further signal long-term confidence. Compared to prior quarters, the tone has moved from cautious optimism to a more assertive focus on digital expansion and cost leverage, with repeated references to “margin expansion” and “resilient performance.”

## KPI Trends & Upcoming Quarter Drivers

The most relevant KPIs for Q4 FY2025 are:

- **Digital Revenue Mix:** Now at **82%** for Dow Jones, up from 78% YoY.
- **Digital Circulation:** Represents **75%** of total, up from 72% YoY.
- **EBITDA Growth (Dow Jones):** **+12% YoY** in Q3.

### KPI Movement Table

| KPI                        | Q3 FY2024 | Q2 FY2025 | Q3 FY2025 | YoY Change | QoQ Change |
|----------------------------|-----------|-----------|-----------|------------|------------|
| Digital Revenue Mix (%)    | 78        | 80        | 82        | +4 pts     | +2 pts     |
| Digital Circulation (%)    | 72        | 74        | 75        | +3 pts     | +1 pt      |
| Dow Jones EBITDA Growth %  | +8        | +10       | +12       | +4 pts     | +2 pts     |

**Implication:** Sustained digital growth and higher digital subscriber penetration are likely to drive further revenue and margin expansion in Q4, while EBITDA growth in Dow Jones signals continued operating leverage.

## Missed by the Street

A key overlooked signal is the **potential near-term revenue uplift from the OpenAI and Google partnerships**. Management’s brief mention of the “multiyear OpenAI deal ($250M+)” in the Q3 call suggests a material, but underappreciated, contribution to digital revenue in Q4 and beyond. Additionally, the company’s accelerated buyback program signals confidence in free cash flow generation, which may not be fully reflected in current consensus models.

## Scenarios for the Upcoming Quarter

### Q4 FY2025 Scenario Table

| Scenario | Revenue ($B) | EPS ($)   | Operating Margin (%) | Key Assumptions                                                      |
|----------|--------------|-----------|----------------------|-----------------------------------------------------------------------|
| Bull     | 2.07–2.11    | 0.19–0.21 | 7.8–8.2              | Accelerated digital/AI revenue, strong cost control, stable ad market |
| Base     | 2.03–2.06    | 0.16–0.18 | 7.5–7.8              | Steady digital growth, moderate ad headwinds, no major legal impact   |
| Bear     | 1.98–2.02    | 0.13–0.15 | <7.5                 | Ad market weakness, legal/regulatory drag, FX/macro pressure          |

**Most Likely:** The **Base case** is most probable, given current digital momentum and cost discipline, but with some caution warranted around advertising and legal risks.

## Appendix – Data Tables & Management Quotes

### Quarterly Financials Table

| Quarter      | Revenue ($B) | Adj. EPS ($) | Operating Margin (%) |
|--------------|--------------|--------------|----------------------|
| Q4 FY2024    | 2.05         | 0.15         | 7.0                  |
| Q1 FY2025    | 2.02         | 0.16         | 7.1                  |
| Q2 FY2025    | 1.98         | 0.14         | 7.2                  |
| Q3 FY2025    | 2.01         | 0.17         | 7.5                  |

### KPI Movement Table

| KPI                        | Q3 FY2024 | Q3 FY2025 | YoY Change |
|----------------------------|-----------|-----------|------------|
| Digital Revenue Mix (%)    | 78        | 82        | +4 pts     |
| Digital Circulation (%)    | 72        | 75        | +3 pts     |
| Dow Jones EBITDA Growth %  | +8        | +12       | +4 pts     |

### Key Management Quotes

1. **“We’re seeing early signs of normalization in demand and robust digital and B2B growth.”**  
   – Q3 FY2025 Earnings Call  
   *Signals confidence in digital-led recovery and B2B expansion.*

2. **“Margin expansion remains a core focus as we drive further efficiencies.”**  
   – Q3 FY2025 Earnings Call  
   *Highlights ongoing cost discipline and operating leverage.*

3. **“Our multiyear OpenAI deal is expected to deliver significant value.”**  
   – Q3 FY2025 Earnings Call  
   *Points to incremental digital revenue not yet fully modeled by the Street.*

4. **“We are accelerating our share repurchase program, reflecting confidence in our cash flow outlook.”**  
   – Q3 FY2025 Earnings Call  
   *Indicates strong free cash flow and management’s bullishness.*

5. **“Advertising markets remain volatile, and we are monitoring macroeconomic headwinds closely.”**  
   – Q3 FY2025 Earnings Call  
   *Acknowledges ongoing risk in traditional revenue streams.*

6. **“The board’s extension of my contract through 2030 underscores our long-term commitment to transformation.”**  
   – Q3 FY2025 Earnings Call  
   *Signals stability and continuity in leadership.*

7. **“We continue to face legal and regulatory challenges that could impact near-term results.”**  
   – Q3 FY2025 10-Q Filing  
   *Flags ongoing legal risk as a potential earnings swing factor.*

---

**In summary:** News Corp’s Q4 FY2025 is poised for continued digital-driven growth and margin expansion, with AI/content licensing deals offering underappreciated upside. The base case remains most likely, but investors should monitor advertising and legal risks as potential sources of volatility.

News Corp: Digital & AI Deals Drive Q4 Upside