News Corp. Profit Tops Estimates Even as Ad Revenue Slips

Photographer: Ron Antonelli/Bloomberg

News Corp. shares climbed in late trading after the earnings report was released. The stock had risen 1.4 percent since June, when the business was spun off. Close

News Corp. shares climbed in late trading after the earnings report was released. The... Read More

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Photographer: Ron Antonelli/Bloomberg

News Corp. shares climbed in late trading after the earnings report was released. The stock had risen 1.4 percent since June, when the business was spun off.

News Corp., the newspaper publisher trying to rebound from an advertising slump, rose 8.7 percent after earnings beat estimates and the company posted gains in areas like real-estate services and book publishing.

Excluding one-time items, second-quarter profit was 31 cents a share, surpassing the 19-cent average of analysts’ estimates compiled by Bloomberg. While sluggish ad demand continued to drag down sales, the company’s $2.24 billion in revenue also topped analysts’ predictions.

Like many publishers, Chief Executive Officer Robert Thomson is working to transform the company’s newspapers into a digital business. The challenge is online audiences don’t command the same advertising rates as print readers. To improve its results, the company has tried to keep a lid on expenses and is seeking online acquisitions, such as its purchase of digital-news startup Storyful last year.

“The earnings report demonstrates a measure of progress as we navigate a challenging advertising market,” Thomson said in a statement. “We are continuing to be disciplined on costs, while making opportunistic investments that will extend our revenue reach.”

Shares of News Corp. (NWSA), which owns the Wall Street Journal and the New York Post, climbed $1.39 to $17.41, marking the biggest one-day gain since the New York-based company was spun off from 21st Century Fox Inc. last year. The stock has declined 3.4 percent this year.

Dow Jones

News Corp. faces a management transition after pushing out Lex Fenwick, the head of its Dow Jones & Co. unit. He left the company after slow adoption of DJX -- a new higher-priced service aimed at professional and corporate customers.

The company plans a “fundamental review” of that institutional sales strategy, Thomson said on a conference call.

“There’s no doubt the original concept of DJX had a lot of merit, but to be quite frank the execution was not quite right,” he said.

Chairman Rupert Murdoch broke off News Corp. from Fox at the end of June, creating a new business focused mostly on publishing. In addition to owning newspapers, News Corp. held on to an Australian TV business, which includes a 50 percent stake in pay-TV company Foxtel. It also owns education startup Amplify and a controlling stake in REA Group (REA), an online real estate firm in Australia.

News-publishing revenue, which declined 9 percent last quarter, still accounts for more than 70 percent of the company’s total sales. Digital real-estate services were the fastest-growing major division, with sales climbing 18 percent to $103 million. Book-publishing revenue increased 4 percent to $391 million in the period, which ended Dec. 31.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. in providing financial news and services.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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