News Corp share price tumbles lower following Q1 update

The News Corp (ASX:NWS) share price is dropping lower this morning following the release of its first quarter update…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In morning trade the News Corp (ASX: NWS) share price has tumbled lower following the release of its first quarter update.

At the time of writing the media giant's shares are down 3% to $19.81.

How did News Corp perform in the first quarter?

During the three months ended September 30, News Corp reported revenues of US$2.34 billion. This was a 7% decline on the prior corresponding period.

This softer result reflects the negative impact from currency headwinds and the absence of a one-time benefit in the prior year following the exit from its gaming partnership with Tabcorp Holdings Limited (ASX: TAH) for Sun Bets.

Lower subscription revenues at Foxtel and weaker revenues from REA Group Limited (ASX: REA) also contributed to the decline.

On the bottom line the company posted a net loss of US$211 million. This compares to a profit of US$128 million a year earlier and is due to non-cash impairment charges of US$273 million. These impairment charges relate primarily to its News America Marketing business.

On the chart below you can see a breakdown of how its various segments performed.

News Corp share price

Management commentary.

Chief Executive Robert Thomson explained: "In the first quarter of Fiscal Year 2020, News Corp showed strong growth at Dow Jones and higher revenues at Move, the operator of realtor.com, but the results were affected by pronounced currency headwinds, a particularly sluggish Australian economy and property market, and comparisons with a prior year in which there was a significant one-time revenue item."

Mr Thomson appears optimistic on the future, especially given recent industry trends.

"We are pleased to note tangible progress in our efforts to secure payment for our high-quality content from digital platforms, a global cause which News Corp has led for more than a decade. With the dominant platforms under intense regulatory scrutiny, there has been a fundamental shift in the content landscape, highlighted by Facebook's decision to pay a significant premium for our premium journalism. This development establishes a precedent that changes the terms of trade and we expect a positive financial impact at our News and Information Services segment, beginning this fiscal year," he added.

He also spoke positively about News Corp's focus on simplifying the business.

He said: "Our efforts to simplify the company continue apace. We are in active discussions about a sale of News America Marketing and also are reviewing the potential sale of Unruly. We are taking steps to reduce our sum of the parts discount, while investing in our digital businesses, to the benefit of all shareholders."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

Why Domino's, Lynas, Paladin Energy, and St Barbara shares are sinking today

These shares are having a tough session. What's going on?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Amcor, Boss Energy, Brickworks, and Mineral Resources shares are tumbling today

These shares are starting the week in the red. But why?

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

The worst 3 ASX 200 stocks to buy and hold in October unmasked

You would have done well to avoid these three ASX 200 stocks in October.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why AFT, Amcor, Corporate Travel, and Macquarie shares are falling today

These shares are ending the week in the red. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why AGL, Imugene, Star, and Woolworths shares are dropping today

These shares are dropping on Thursday. Let's see why investors are selling them.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Fallers

Why Corporate Travel Management, JB Hi-Fi, Mineral Resources, and Syrah shares are rising

These shares are having a strong session. Why are investors buying their shares?

Read more »

A guys points his fingers down.
Share Fallers

Why Brainchip, Cettire, Star, and Woolworths shares are being sold off today

These shares are having a difficult time on hump day. But why?

Read more »

Three guys in shirts and ties give the thumbs down.
Share Fallers

Why Black Cat, BlueScope, Cettire, and Coronado shares are falling today

These shares are missing out on the good times on Tuesday. But why?

Read more »