News Corporation Reports First Quarter Results for Fiscal 2018

  News Corporation Reports First Quarter Results for Fiscal 2018

FISCAL 2018 FIRST QUARTER KEY FINANCIAL HIGHLIGHTS

  * Revenues of $2.06 billion, a 5% increase compared to $1.97 billion in the
    prior year
  * Net income was $87 million compared to nil in the prior year
  * Total Segment EBITDA was $249 million compared to $130 million in the
    prior year
  * Reported revenue and Segment EBITDA growth in every segment
  * Reported EPS were $0.12 compared to ($0.03) in the prior year – Adjusted
    EPS were $0.07 compared to ($0.01) in the prior year
  * Digital revenues represented 27% of News and Information Services segment
    revenues, compared to 24% in the prior year

Business Wire

NEW YORK -- November 9, 2017

News Corporation (“News Corp” or the “Company”) (NASDAQ:NWS) (NASDAQ:NWSA)
(ASX:NWS) (ASX:NWSLV) today reported financial results for the three months
ended September 30, 2017.

Commenting on the results, Chief Executive Robert Thomson said:

“In the first quarter, revenues and Segment EBITDA increased across every
segment of our business, in particular, in digital real estate services, which
have become core to our character and are on track for significant growth in
coming quarters. Total reported revenues this quarter increased 5% to $2.1
billion, net income increased to $87 million and Total Segment EBITDA rose 92%
to $249 million. Excluding one-time items and foreign currency impacts, our
underlying Total Adjusted Segment EBITDA grew 46%.

We have reason for optimism about the future of our premium media businesses,
in light of the profound changes agreed by Google in the ranking of news
content. These changes follow almost a decade of campaigning by News Corp,
which led the world in understanding the threat to and the opportunities for
quality journalism in the digital age. We are continuing our discussions with
both Google and Facebook about further facilitating subscriptions and the
sharing of permissioned personal data. And we look forward to serving our
advertisers with data that is reliable, not risible.

In August, we and Telstra announced a non-binding agreement to combine Foxtel
and FOX SPORTS Australia, with News Corp owning 65% of the new company.
Pending definitive documentation and regulatory approval, we expect to close
in the first half of calendar year 2018. The combined company, with majority
control by News Corp, is expected to fundamentally transform our revenue and
EBITDA profile, and increase the relative share of digital subscription
businesses.”

FIRST QUARTER RESULTS

The Company reported fiscal 2018 first quarter total revenues of $2.06
billion, a 5% increase compared to $1.97 billion in the prior year period,
reflecting continued growth in the Digital Real Estate Services segment, the
acquisitions of Australian Regional Media (“ARM”) and Wireless Group plc
(“Wireless Group”) and a $26 million positive impact from foreign currency
fluctuations. Growth was partially offset by lower print advertising revenues
at the News and Information Services segment. Adjusted Revenues (which exclude
the foreign currency impact, acquisitions and divestitures as defined in Note
1) increased 1%.

Net income for the quarter was $87 million as compared to nil in the prior
year. The increase was primarily driven by higher Total Segment EBITDA, as
discussed below, and lower depreciation and amortization expense, partially
offset by higher income tax expense associated with higher pre-tax income.

The Company reported first quarter Total Segment EBITDA of $249 million, a 92%
increase compared to $130 million in the prior year. The increase was
primarily due to strong performances across all segments as well as a one-time
$46 million benefit from the reversal of certain previously accrued net
liabilities related to certain employment taxes in the U.K. Operational
improvement was driven by the continued growth in the Digital Real Estate
Services segment, as well as lower costs at the News and Information Services
segment and at FOX SPORTS Australia. Adjusted Total Segment EBITDA (as defined
in Note 1) increased 46%.

Income (loss) per share available to News Corporation stockholders was $0.12
as compared to ($0.03) in the prior year.

Adjusted EPS (as defined in Note 3) were $0.07 compared to ($0.01) in the
prior year.

SEGMENT REVIEW

                                          For the three months ended
                                          September 30,
                                          2017      2016        % Change
                                                                Better/
                                          (in millions)
                                                                (Worse)
                                                                      
Revenues:
    News and Information Services         $ 1,241   $ 1,222     2    %
    Book Publishing                         401       389       3    %
    Digital Real Estate Services            271       226       20   %
    Cable Network Programming               145       128       13   %
    Other                                   -         -         **    
Total Revenues                            $ 2,058   $ 1,965     5    %
                                                                      
Segment EBITDA:
    News and Information Services^(a)     $ 73      $ 46        59   %
    Book Publishing                         50        48        4    %
    Digital Real Estate Services            95        67        42   %
    Cable Network Programming               27        14        93   %
    Other^(b)                               4         (45   )   **    
Total Segment EBITDA                      $ 249     $ 130       92   %
                                                                      
** - Not meaningful

      News and Information Services Segment EBITDA for the three months ended
(a)   September 30, 2016 included transaction related costs of $5 million
      associated with the acquisition of Wireless Group.
      Other Segment EBITDA for the three months ended September 30, 2017
      includes a $46 million benefit from the reversal of certain previously
      accrued net liabilities for the U.K. Newspaper Matters as a result of an
(b)   agreement reached with the relevant tax authority related to certain
      employment taxes. Other Segment EBITDA for the three months ended
      September 30, 2017 and 2016 included $3 million and $2 million,
      respectively, of fees and costs, net of indemnification, related to the
      U.K. Newspaper Matters.
       

News and Information Services

Revenues in the quarter increased $19 million, or 2%, compared to the prior
year. Within the segment, News Corp Australia and Dow Jones revenues grew 4%
and 2%, respectively, while revenues at News UK and News America Marketing
declined 6% and 4%, respectively. Adjusted Revenues were 3% lower compared to
the prior year.

Advertising revenues were flat compared to the prior year as the growth driven
by $23 million from the acquisition of Wireless Group, $21 million from the
acquisition of ARM, the positive impact from foreign currency fluctuations and
a modest increase in digital advertising revenue was offset by the weakness in
the print advertising market and lower free standing insert revenues at News
America Marketing.

Circulation and subscription revenues increased 3%, primarily due to healthy
contribution from Dow Jones, which saw an 11% increase in its circulation
revenues and growth in its professional information business, and higher
subscription pricing and selected cover price increases at News Corp Australia
and News UK, partially offset by lower print volume.

Segment EBITDA increased $27 million in the quarter, or 59%, as compared to
the prior year. The increase was due to revenue growth and lower expenses at
Dow Jones, lower investment spending at Checkout 51, the absence of
transaction costs associated with the acquisition of Wireless Group, as well
as lower expenses due to ongoing cost efficiencies. Adjusted Segment EBITDA
(as defined in Note 1) increased 33%.

Digital revenues represented 27% of segment revenues in the quarter, compared
to 24% in the prior year; for the quarter, digital revenues for Dow Jones and
the newspaper mastheads represented 31% of their revenues. Digital subscribers
and users across key properties within the News and Information Services
segment are summarized below:

  * The Wall Street Journal average daily digital subscribers in the three
    months ended September 30, 2017 were 1,318,000, compared to 967,000 in the
    prior year (Source: Internal data)
  * Closing digital subscribers at News Corp Australia’s mastheads as of
    September 30, 2017 were 375,400 (including ARM), compared to 283,100 in
    the prior year (Source: Internal data; adjusted for divested mastheads)
  * The Times and Sunday Times closing digital subscribers as of September 30,
    2017 were 212,000, compared to 181,000 in the prior year (Source: Internal
    data)
  * The Sun’s digital offering reached approximately 84 million global monthly
    unique users in September 2017, compared to 46 million in the prior year,
    based on ABCe (Source: Omniture)

Book Publishing

Revenues in the quarter increased $12 million, or 3%, compared to the prior
year, primarily due to the continued popularity of Hillbilly Elegy by J.D.
Vance and The Subtle Art of Not Giving a F*ck by Mark Manson, as well as the
success of frontlist titles such as Daniel Silva’s House of Spies and Karin
Slaughter’s The Good Daughter. Digital sales increased 6% compared to the
prior year and represented 21% of Consumer revenues for the quarter, driven by
growth in downloadable audio book sales. Segment EBITDA for the quarter
increased $2 million, or 4%, from the prior year due to the higher revenues
discussed above.

Digital Real Estate Services

Revenues in the quarter increased $45 million, or 20%, compared to the prior
year, primarily due to the continued growth at REA Group and Move. Segment
EBITDA in the quarter increased $28 million, or 42%, compared to the prior
year, primarily due to the higher revenues discussed above. Adjusted Revenues
and Adjusted Segment EBITDA increased 19% and 38%, respectively.

In the quarter, revenues at REA Group increased 22% to $158 million from $129
million in the prior year due to an increase in Australian residential depth
revenue, driven by favorable product mix and pricing increases, the
acquisition of Smartline and the positive impact from foreign currency
fluctuations. The growth was partially offset by the sale of its European
business in fiscal 2017.

Move’s revenues in the quarter increased 15% to $107 million from $93 million
in the prior year, primarily due to the continued growth in its Connections^SM
for Buyers product. The growth was partially offset by the $3 million decline
in revenue associated with the sale of TigerLead^®. Based on Move’s internal
data, average monthly unique users of realtor.com^®’s web and mobile sites for
the fiscal first quarter grew year-over-year to more than 55 million, with
mobile representing more than half of all unique users.

Cable Network Programming

Revenues in the quarter increased $17 million, or 13%, compared to the prior
year due to the acquisition of Australian News Channel Pty Ltd (“ANC”),
operator of Australia’s SKY NEWS network, higher affiliate revenues at FOX
SPORTS Australia and favorable foreign currency fluctuations, partially offset
by lower advertising revenues. Segment EBITDA in the quarter increased $13
million, or 93%, compared with the prior year, primarily due to the timing of
programming amortization related to the launch of a dedicated National Rugby
League channel, combined with lower other sports programming rights costs.
Adjusted Revenues and Adjusted Segment EBITDA, which exclude the impact from
favorable foreign currency fluctuations and the ANC acquisition as described
in Note 1, increased 2% and 107%, respectively.

REVIEW OF EQUITY LOSSES OF AFFILIATES’ RESULTS

Equity losses of affiliates for the first quarter were $10 million compared to
$15 million in the prior year.

                                        For the three months ended
                                        September 30,
                                        2017            2016
                                        (in millions)
                                                            
Foxtel^(a)                              $   (5    )     $  (11  )
Other equity affiliates, net^(b)            (5    )        (4   )
  Total equity losses of affiliates     $   (10   )     $  (15  )

      The Company amortized $17 million and $19 million related to excess cost
      over the Company’s proportionate share of its investment’s underlying
(a)   net assets allocated to finite-lived intangible assets during the three
      months ended September 30, 2017 and 2016, respectively. Such
      amortization is reflected in Equity losses of affiliates in the
      Statements of Operations.
      Other equity affiliates, net for the three months ended September 30,
(b)   2017 primarily includes losses from the Company’s interest in Elara
      Technologies, which owns PropTiger.
       

On a U.S. GAAP basis, Foxtel revenues for the first quarter increased $15
million, or 2%, to $633 million from $618 million in the prior year period. In
local currency, Foxtel revenues decreased 2% due to lower subscription
revenues, partially offset by higher pay-per-view revenue. Foxtel’s total
closing subscribers were more than 2.8 million as of September 30, 2017, which
was lower than the prior year, primarily due to the shutdown of Presto and the
winding down of Telstra’s T-box. Total subscribers improved compared to the
prior quarter due to the launch of Foxtel Now. In the first quarter, cable and
satellite churn was 12.7% compared to 15.5% in the prior year. Broadcast
residential ARPU for the first quarter was A$86, a 2% decline compared to the
prior year.

Foxtel’s net income of $24 million increased from $16 million in the prior
year period, primarily due to the absence of losses associated with Foxtel
management’s decision to cease Presto operations in January 2017 and lower
non-programming expenses, partially offset by planned increases in sports
rights costs. Equity losses of affiliates for Foxtel of $(5) million and $(11)
million for the three months ended September 30, 2017 and 2016, respectively,
reflect the Company's share of Foxtel's net income, less the Company's
amortization of $17 million and $19 million, respectively, related to the
Company's excess cost over its share of Foxtel's finite-lived intangible
assets.

Foxtel EBITDA declined $21 million to $122 million from $143 million in the
prior year. In local currency, Foxtel EBITDA decreased 18% due to planned
increases in sports programming costs of $24 million, primarily related to the
Australian Football League rights, partially offset by lower sales and
marketing and transmission costs. Foxtel operating income declined to $63
million from $91 million in the prior year, primarily as a result of the
increased programming spend noted above. Operating income includes
depreciation and amortization of $59 million compared to $52 million in the
prior year.

CASH FLOW

The following table presents a reconciliation of net cash used in continuing
operating activities to free cash flow available to News Corporation:

                                                    For the three months ended
                                                   
                                                    September 30,
                                                    2017           2016
                                                    (in millions)
                                                                       
Net cash used in continuing operating               $   (4   )     $  (268  )
activities
Less: Capital expenditures                              (62  )        (49   )
                                                        (66  )        (317  )
Less: REA Group free cash flow                          (27  )        (28   )
Plus: Cash dividends received from REA Group            33            28     
   Free cash flow available to News Corporation     $   (60  )     $  (317  )

Net cash used in continuing operating activities improved $264 million for the
three months ended September 30, 2017 as compared to the prior year period,
primarily due to the absence of the NAM Group’s settlement payments of $250
million and higher Total Segment EBITDA, partially offset by higher working
capital.

Free cash flow available to News Corporation in the three months ended
September 30, 2017 was ($60) million compared to ($317) million in the prior
year period. The improvement was primarily due to the absence of the
settlement payments as discussed above, partially offset by higher capital
expenditures.

Free cash flow available to News Corporation is a non-GAAP financial measure
defined as net cash used in continuing operating activities, less capital
expenditures (“free cash flow”), less REA Group free cash flow, plus cash
dividends received from REA Group. Free cash flow available to News
Corporation excludes cash flows from discontinued operations.

The Company considers free cash flow available to News Corporation to provide
useful information to management and investors about the amount of cash that
is available to be used to strengthen the Company’s balance sheet and for
strategic opportunities including, among others, investing in the Company’s
business, strategic acquisitions, dividend payouts and repurchasing stock. A
limitation of free cash flow available to News Corporation is that it does not
represent the total increase or decrease in the cash balance for the period.
Management compensates for the limitation of free cash flow available to News
Corporation by also relying on the net change in cash and cash equivalents as
presented in the Company’s consolidated statements of cash flows prepared in
accordance with GAAP which incorporates all cash movements during the period.

COMPARISON OF ADJUSTED INFORMATION TO U.S. GAAP INFORMATION

Adjusted Revenues, Total Segment EBITDA, Adjusted Total Segment EBITDA,
Adjusted Segment EBITDA, adjusted net income available to News Corporation
stockholders, Adjusted EPS and free cash flow available to News Corporation
are non-GAAP financial measures contained in this earnings release. The
Company believes these measures are important tools for investors and analysts
to use in assessing the Company’s underlying business performance and to
provide for more meaningful comparisons of the Company’s operating performance
between periods. These measures also allow investors and analysts to view the
Company’s business from the same perspective as Company management. These
non-GAAP measures may be different than similar measures used by other
companies and should be considered in addition to, not as a substitute for,
measures of financial performance calculated in accordance with GAAP.
Reconciliations for the differences between non-GAAP measures used in this
earnings release and comparable financial measures calculated in accordance
with U.S. GAAP are included in Notes 1, 2 and 3 and the reconciliation of net
cash used in continuing operating activities to free cash flow available to
News Corporation is included above.

Conference call

News Corporation’s earnings conference call can be heard live at 5:30pm EST on
November 9, 2017. To listen to the call, please visit
http://investors.newscorp.com.

Annual Meeting of Stockholders

News Corporation will provide a live audio webcast of its 2017 Annual Meeting
of Stockholders to be held in Los Angeles, California on November 15, 2017,
beginning at 3:00pm PST. The webcast will be available via
http://newscorp.com/annual-meeting-information. A replay will be available at
the same location for a period of time following the meeting.

Cautionary Statement Concerning Forward-Looking Statements

This document contains certain “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements are
based on management’s views and assumptions regarding future events and
business performance as of the time the statements are made. Actual results
may differ materially from these expectations due to changes in global
economic, business, competitive market and regulatory factors. More detailed
information about these and other factors that could affect future results is
contained in our filings with the Securities and Exchange Commission. The
“forward-looking statements” included in this document are made only as of the
date of this document and we do not have any obligation to publicly update any
“forward-looking statements” to reflect subsequent events or circumstances,
except as required by law.

About News Corporation

News Corporation (NASDAQ:NWS) (NASDAQ:NWSA) (ASX:NWS) (ASX:NWSLV) is a global,
diversified media and information services company focused on creating and
distributing authoritative and engaging content to consumers throughout the
world. The company comprises businesses across a range of media, including:
news and information services, book publishing, digital real estate services,
cable network programming in Australia, and pay-TV distribution in
Australia. Headquartered in New York, the activities of News Corporation are
conducted primarily in the United States, Australia, and the United Kingdom.
More information is available at: www.newscorp.com.

NEWS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)
                                                   
                                                    For the three months ended
                                                    September 30,
                                                    2017            2016
                                                                       
Revenues:
   Advertising                                      $  670          $ 670
   Circulation and subscription                        651            621
   Consumer                                            386            374
   Real estate                                         203            172
   Other                                               148            128     
                                                                       
Total Revenues                                         2,058          1,965
                                                                       
Operating expenses                                     (1,149  )      (1,157 )
Selling, general and administrative                    (660    )      (678   )
Depreciation and amortization                          (97     )      (120   )
Restructuring charges                                  (15     )      (20    )
Equity losses of affiliates                            (10     )      (15    )
Interest, net                                          6              7
Other, net                                             8              17      
Income (loss) before income tax (expense)              141            (1     )
benefit
     Income tax (expense) benefit                      (54     )      1       
Net income                                             87             -
     Less: Net income attributable to                  (19     )      (15    )
     noncontrolling interests
Net income (loss) available to News Corporation     $  68           $ (15    )
stockholders
                                                                       
Weighted average shares outstanding:
     Basic                                             582            581
     Diluted                                           583            581
                                                                       
     Net income (loss) available to News
     Corporation stockholders per share - basic     $  0.12         $ (0.03  )
     and diluted
                                                                              

NEWS CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions)
                                                          
                                As of September 30, 2017   As of June 30, 2017
ASSETS                          (unaudited)                (audited)
Current assets:
  Cash and cash equivalents     $      1,877               $    2,016
  Receivables, net                     1,365                    1,276
  Other current assets                 526                      523        
Total current assets                   3,768                    3,815      
                                                                 
Non-current assets:
Investments                            2,044                    2,027
Property, plant and                    1,636                    1,624
equipment, net
Intangible assets, net                 2,301                    2,281
Goodwill                               3,922                    3,838
Deferred income tax assets             553                      525
Other non-current assets               438                      442        
Total assets                    $      14,662              $    14,552     
                                                                 
                                                                 
LIABILITIES AND EQUITY
Current liabilities:
  Accounts payable              $      235                 $    222
  Accrued expenses                     1,146                    1,204
  Deferred revenue                     448                      426
  Other current liabilities            588                      600        
Total current liabilities              2,417                    2,452      
                                                                 
Non-current liabilities:
Borrowings                             281                      276
Retirement benefit                     313                      319
obligations
Deferred income tax                    73                       61
liabilities
Other non-current                      362                      351
liabilities
                                                                 
Commitments and
contingencies
                                                                 
Redeemable preferred stock             20                       20
                                                                 
Equity:
  Class A common stock                 4                        4
  Class B common stock                 2                        2
  Additional paid-in                   12,340                   12,395
  capital
  Accumulated deficit                  (581        )            (648      )
  Accumulated other                    (852        )            (964      )
  comprehensive loss
     Total News Corporation            10,913                   10,789
     stockholders' equity
  Noncontrolling interests             283                      284        
Total equity                           11,196                   11,073     
Total liabilities and           $      14,662              $    14,552     
equity
                                                                           

NEWS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)
                                                   
                                                    For the three months ended
                                                    September 30,
                                                    2017            2016
Operating activities:
Net income                                          $  87           $  -
Less: Income from discontinued operations, net         -               -      
of tax
Income from continuing operations                      87              -
                                                                        
Adjustments to reconcile income from continuing
operations to cash used in operating
activities:
      Depreciation and amortization                    97              120
      Equity losses of affiliates                      10              15
      Other, net                                       (8     )        (17   )
      Deferred income taxes and taxes payable          6               (35   )
      Changes in operating assets and
      liabilities, net of acquisitions:
              Receivables and other assets             (73    )        (64   )
              Inventories, net                         (16    )        (16   )
              Accounts payable and other               (107   )        (21   )
              liabilities
              NAM Group settlement                     -               (250  )
      Net cash used in operating activities            (4     )        (268  )
      from continuing operations
      Net cash used in operating activities            -               (3    )
      from discontinued operations
Net cash used in operating activities                  (4     )        (271  )
                                                                        
Investing activities:
      Capital expenditures                             (62    )        (49   )
      Changes in restricted cash for Wireless          -      )        315
      Group acquisition
      Acquisitions, net of cash acquired               (54    )        (283  )
      Investments in equity affiliates and             (12    )        -
      other
      Proceeds from property, plant and                -               24
      equipment and other asset dispositions
      Other, net                                       7               (18   )
      Net cash used in investing activities            (121   )        (11   )
      from continuing operations
      Net cash used in investing activities            -               -      
      from discontinued operations
Net cash used in investing activities                  (121   )        (11   )
                                                                        
Financing activities:
      Repayment of borrowings acquired in the          -               (23   )
      Wireless Group acquisition
      Dividends paid                                   (21    )        (18   )
      Other, net                                       (10    )        (18   )
      Net cash used in financing activities            (31    )        (59   )
      from continuing operations
      Net cash used in financing activities            -               -      
      from discontinued operations
Net cash used in financing activities                  (31    )        (59   )
                                                                        
Net decrease in cash and cash equivalents              (156   )        (341  )
Cash and cash equivalents, beginning of period         2,016           1,832
Exchange movement on opening cash balance              17              8      
Cash and cash equivalents, end of period            $  1,877        $  1,499  
                                                                              

NOTE 1 – ADJUSTED REVENUES, ADJUSTED TOTAL SEGMENT EBITDA AND ADJUSTED SEGMENT
EBITDA

The Company uses revenues, Total Segment EBITDA and Segment EBITDA excluding
the impact of acquisitions, divestitures, costs associated with the U.K.
Newspaper Matters and foreign currency fluctuations (“Adjusted Revenues,
Adjusted Total Segment EBITDA and Adjusted Segment EBITDA,” respectively) to
evaluate the performance of the Company’s core business operations exclusive
of certain items that impact the comparability of results from period to
period such as the unpredictability and volatility of currency fluctuations.
The Company calculates the impact of foreign currency fluctuations for
businesses reporting in currencies other than the U.S. dollar by multiplying
the results for each quarter in the current period by the difference between
the average exchange rate for that quarter and the average exchange rate in
effect during the corresponding quarter of the prior year and totaling the
impact for all quarters in the current period.

The calculation of Adjusted Revenues, Adjusted Total Segment EBITDA and
Adjusted Segment EBITDA may not be comparable to similarly titled measures
reported by other companies, since companies and investors may differ as to
what type of events warrant adjustment. Adjusted Revenues, Adjusted Total
Segment EBITDA and Adjusted Segment EBITDA are not measures of performance
under generally accepted accounting principles and should not be construed as
substitutes for amounts determined under GAAP as measures of performance.
However, management uses these measures in comparing the Company’s historical
performance and believes that they provide meaningful and comparable
information to investors to assist in their analysis of our performance
relative to prior periods and our competitors.

The following table reconciles reported revenues and reported Total Segment
EBITDA to Adjusted Revenues and Adjusted Total Segment EBITDA for the three
months ended September 30, 2017 and 2016.

                 Revenues                               Total Segment EBITDA
                 For the three months ended             For the three months ended
                 September 30,                          September 30,
                 2017        2016        Difference     2017      2016    Difference
                 (in millions)                          (in millions)
                                                                              
As reported      $ 2,058     $ 1,965     $  93          $ 249     $ 130   $  119
                                                                              
Impact of          (76   )     -            (76  )        (2  )     5        (7   )
acquisitions
                                                                              
Impact of          -           (25   )      25            -         -        -
divestitures
                                                                              
Impact of
foreign            (26   )     -            (26  )        (4  )     -        (4   )
currency
fluctuations
                                                                              
Net impact
of U.K.            -           -            -             (43 )     2        (45  )
Newspaper
Matters
                                                                              
As adjusted      $ 1,956     $ 1,940     $  16          $ 200     $ 137   $  63    
                                                                                   

Adjusted Revenues and Adjusted Segment EBITDA by segment for the three months
ended September 30, 2017 and 2016 are as follows:

                                      For the three months ended September 30,
                                      2017          2016        % Change
                                      (in millions)             Better/(Worse)
                                                                          
Adjusted Revenues:
    News and Information Services     $  1,172      $ 1,209     (3       )%
    Book Publishing                      399          389       3         %
    Digital Real Estate Services         255          214       19        %
    Cable Network Programming            130          128       2         %
    Other                                -            -         **        
Total Adjusted Revenues               $  1,956      $ 1,940     1         %
                                                                          
Adjusted Segment EBITDA:
    News and Information Services     $  69         $ 52        33        %
    Book Publishing                      50           48        4         %
    Digital Real Estate Services         91           66        38        %
    Cable Network Programming            29           14        107       %
    Other                                (39    )     (43   )   9         %
Total Adjusted Segment EBITDA         $  200        $ 137       46        %
                                                                          
** - Not meaningful
                                                                          

The following tables reconcile reported revenues and Segment EBITDA by segment
to Adjusted Revenues and Adjusted Segment EBITDA by segment for the three
months ended September 30, 2017 and 2016.

                  For the three months ended September 30, 2017
                                            Impact of      Net        
                                                           Impact of
                                            Foreign        U.K.
                             Impact of      Currency       Newspaper
                  As         Acquisitions   Fluctuations   Matters     As
                  Reported                                             Adjusted
                  (in millions)
                                                                          
Revenues:
  News and
  Information     $  1,241   $   (55   )    $   (14   )    $  -        $ 1,172
  Services
  Book               401         -              (2    )       -          399
  Publishing
  Digital
  Real Estate        271         (10   )        (6    )       -          255
  Services
  Cable
  Network            145         (11   )        (4    )       -          130
  Programming
  Other              -           -              -             -          -      
Total             $  2,058   $   (76   )    $   (26   )    $  -        $ 1,956  
Revenues
                                                                          
Segment
EBITDA:
  News and
  Information     $  73      $   (3    )    $   (1    )    $  -        $ 69
  Services
  Book               50          -              -             -          50
  Publishing
  Digital
  Real Estate        95          (1    )        (3    )       -          91
  Services
  Cable
  Network            27          2              -             -          29
  Programming
  Other              4           -              -             (43  )     (39   )
Total Segment     $  249     $   (2    )    $   (4    )    $  (43  )   $ 200    
EBITDA
                                                                                
                                                                                

                For the three months ended September 30, 2016
                                                          Net        
                                                          Impact of
                                                          U.K.
                            Impact of      Impact of      Newspaper
                As          Acquisitions   Divestitures   Matters     As
                Reported                                              Adjusted
                (in millions)
                                                                         
Revenues:
  News and
  Information   $ 1,222     $      -       $   (13   )    $    -      $ 1,209
  Services
  Book            389              -           -               -        389
  Publishing
  Digital
  Real Estate     226              -           (12   )         -        214
  Services
  Cable
  Network         128              -           -               -        128
  Programming
  Other           -                -           -               -        -      
Total           $ 1,965     $      -       $   (25   )    $    -      $ 1,940  
Revenues
                                                                         
Segment
EBITDA:
  News and
  Information   $ 46        $      5       $   1          $    -      $ 52
  Services
  Book            48               -           -               -        48
  Publishing
  Digital
  Real Estate     67               -           (1    )         -        66
  Services
  Cable
  Network         14               -           -               -        14
  Programming
  Other           (45   )          -           -               2        (43   )
Total Segment   $ 130       $      5       $   -          $    2      $ 137    
EBITDA
                                                                               

NOTE 2 – TOTAL SEGMENT EBITDA

Segment EBITDA is defined as revenues less operating expenses and selling,
general and administrative expenses. Segment EBITDA does not include:
Depreciation and amortization, impairment and restructuring charges, equity
losses of affiliates, interest, net, other, net, income tax (expense) benefit
and net income attributable to noncontrolling interests. Management believes
that Segment EBITDA is an appropriate measure for evaluating the operating
performance of the Company’s business segments because it is the primary
measure used by the Company’s chief operating decision maker to evaluate the
performance of and allocate resources within the Company’s businesses. Segment
EBITDA provides management, investors and equity analysts with a measure to
analyze the operating performance of each of the Company’s business segments
and its enterprise value against historical data and competitors’ data,
although historical results may not be indicative of future results (as
operating performance is highly contingent on many factors, including customer
tastes and preferences).

Total Segment EBITDA is a non-GAAP measure and should be considered in
addition to, not as a substitute for, net income (loss), cash flow and other
measures of financial performance reported in accordance with GAAP. In
addition, this measure does not reflect cash available to fund requirements
and excludes items, such as depreciation and amortization and impairment and
restructuring charges, which are significant components in assessing the
Company’s financial performance. The Company believes that the presentation of
Total Segment EBITDA provides useful information regarding the Company’s
operations and other factors that affect the Company’s reported results.
Specifically, the Company believes that by excluding certain one-time or
non-cash items such as impairment and restructuring charges and depreciation
and amortization, as well as potential distortions between periods caused by
factors such as financing and capital structures and changes in tax positions
or regimes, the Company provides users of its consolidated financial
statements with insight into both its core operations as well as the factors
that affect reported results between periods but which the Company believes
are not representative of its core business. As a result, users of the
Company’s consolidated financial statements are better able to evaluate
changes in the core operating results of the Company across different periods.
The following table reconciles Total Segment EBITDA to net income (loss).

                            For the three months ended September 30,
                            2017         2016         Change    % Change
                            (in millions)                       Better/(Worse)
                                                                 
Revenues                    $ 2,058      $ 1,965      $ 93      5         %
Operating expenses            (1,149 )     (1,157 )     8       1         %
Selling, general and          (660   )     (678   )     18      3         %
administrative
Total Segment EBITDA          249          130          119     92        %
Depreciation and              (97    )     (120   )     23      19        %
amortization
Restructuring charges         (15    )     (20    )     5       25        %
Equity losses of              (10    )     (15    )     5       33        %
affiliates
Interest, net                 6            7            (1  )   (14      )%
Other, net                    8            17           (9  )   (53      )%
Income (loss) before
income tax (expense)          141          (1     )     142     **
benefit
     Income tax               (54    )     1            (55 )   **
     (expense) benefit
Net income                  $ 87         $ -          $ 87      **
                                                                 
** - Not meaningful
                                                                 

NOTE 3 – ADJUSTED NET INCOME (LOSS) AVAILABLE TO NEWS CORPORATION STOCKHOLDERS
AND ADJUSTED EPS

The Company uses net income (loss) available to News Corporation stockholders
and diluted earnings per share (“EPS”) excluding expenses related to U.K.
Newspaper Matters, impairment and restructuring charges and “Other, net”, net
of tax, recognized by the Company or its equity investees (“adjusted net
income (loss) available to News Corporation stockholders and adjusted EPS,”
respectively), to evaluate the performance of the Company’s operations
exclusive of certain items that impact the comparability of results from
period to period. The calculation of adjusted net income (loss) available to
News Corporation stockholders and adjusted EPS may not be comparable to
similarly titled measures reported by other companies, since companies and
investors may differ as to what type of events warrant adjustment. Adjusted
net income (loss) available to News Corporation stockholders and adjusted EPS
are not measures of performance under generally accepted accounting principles
and should not be construed as substitutes for consolidated net income (loss)
available to News Corporation stockholders and net income (loss) per share as
determined under GAAP as a measure of performance.

However, management uses these measures in comparing the Company’s historical
performance and believes that they provide meaningful and comparable
information to investors to assist in their analysis of our performance
relative to prior periods and our competitors.

The following table reconciles reported net income (loss) available to News
Corporation stockholders and reported diluted EPS to adjusted net income
(loss) available to News Corporation stockholders and adjusted EPS for the
three months ended September 30, 2017 and 2016.

                    For the three months ended   For the three months ended
                    September 30, 2017           September 30, 2016
                    Net income                   Net income (loss)    
                    available to     EPS         available to        EPS
                    stockholders                 stockholders         
                    (in millions, except per share data)
                     
Net income          $     87         $           $    -              $
Less: Net
income
attributable to           (19    )                    (15      )        
noncontrolling
interests
Income (loss)
available to
News                $     68         $ 0.12      $    (15      )     $ (0.03 )
Corporation
stockholders
                                                       
U.K. Newspaper            (43    )     (0.07 )        2                -
Matters ^ (a)
                                                                        
Restructuring             15           0.02           20               0.04
charges
                                                                        
Other, net                (8     )     (0.01 )        (17      )       (0.03 )
                                                                        
Equity losses
of affiliates ^           -            -              11               0.02
(b)
                                                                        
Tax impact on             9            0.01           (7       )       (0.01 )
items above
                                                                        
As adjusted         $     41         $ 0.07      $    (6       )     $ (0.01 )

      The Company recorded a $46 million benefit from the reversal of certain
(a)   previously accrued net liabilities for the U.K. Newspaper Matters as a
      result of an agreement reached with the relevant tax authority related
      to certain employment taxes.
      Foxtel’s net income in the three months ended September 30, 2016
      included a $21 million loss resulting from Foxtel management’s decision
(b)   to cease Presto operations in January 2017. Equity losses of affiliates
      were negatively affected by $11 million, which represents the Company’s
      share of that loss.

View source version on businesswire.com:
http://www.businesswire.com/news/home/20171109006631/en/

Contact:

News Corporation
Michael Florin, 212-416-3363
Investor Relations
mflorin@newscorp.com
or
Jim Kennedy, 212-416-4064
Corporate Communications
jkennedy@newscorp.com
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