The increase in revenue was attributed to growth in the Digital Real Estate Services segment, the acquisitions of Australian Regional Media and the Wireless Group, alongside a $26 million foreign currency gain.
Digital Real Estate Services revenue remains the fastest growing and most profitable part of the business with revenue rising 20% to US$271 million and segment EBITDA increasing 42% to US$95 million.
The growth in revenue was due to the continued success of digital real estate subsidiaries REA Group Limited (ASX: REA) and the US equivalent Move.
The company's News and Information Services segment, the traditional core of the business, continues to exhibit weak top line growth of 2% but was buoyed by lower expenses due to ongoing cost efficiencies.
Despite circulation and subscription numbers rising 3%, advertising revenue in this segment was flat with the small increase in revenue only due to the acquisitions of Australian Regional Media, the Wireless Group and foreign currency gains.
Group earnings were also boosted from a one off US$46 million benefit from the reversal of previously accrued net liabilities for the U.K. Newspaper Matters.
Foolish takeaway
This was an unexpectedly positive quarter for News Corp and the market has responded accordingly. With estimated FY 2018 earnings at 66.6 cents a share the stock now trades at a pricey forward p/e of about 29.
A lot of expectation is being built into the digital real estate services component of the business and the degree to which it can offset the weak growth in the other traditional segments. Despite only constituting 13% of group revenue, digital real estate services is now delivering about 46% of the group's overall EBITDA.
