News Corporation has released its second quarter financial results, revealing a mixed bag of volatile digital advertising revenues against strong results in its digital real estate services, Dow Jones and Book Publishing segments and largely flat results in subscription video services including Foxtel, Kayo and Binge.

News Corp's Q2 financial results for fiscal 2024 revealed a 3% increase in revenues to $2.59 billion, up from $2.52 billion in the prior year. The corporation's net income for the quarter was $183 million, marking a significant 95% increase compared to the net income of $94 million in the previous year. Total Segment EBITDA was reported at $473 million, a 16% increase from $409 million in the prior year.

Digital real estate was a bright spot in the results. In Australia and India, REA Group posted record quarterly revenues of $292 million, a 22% increase compared to the prior year. Another winner was book publishing, which saw revenues grow by 4%, while Segment EBITDA increased by 67%, driven by higher digital sales and improved return rates.

A third solid result was with Dow Jones, which achieved its highest quarterly revenues and Segment EBITDA since its acquisition in 2007, driven by strength in professional information business revenues, which rose 13% compared to the prior year.

Elsewhere, results were mixed. Subscription Video Services revenues hit $470 million in the quarter, increasing by $8 million, or 2%, compared to the prior year. This was driven by higher revenues from Kayo and BINGE from increases in both volume and pricing. News Corp said this was also despite a more difficult Summer sports season and inflationary pressures, partially offset by the impact from fewer residential broadcast subscribers and a $6 million, or 1%, negative impact from foreign currency fluctuations.

Foxtel Group streaming subscription revenues represented approximately 29% of total circulation and subscription revenues in the quarter, as compared to 26% in the prior year. As of December 31, 2023, Foxtel's total closing paid subscribers were over 4.3 million, flat compared to the prior year. Kayo had 1.18m paid subscribers, while Binge had 1.5m and Foxtel Now 150,000, a fall from 177,000 the year prior.

Broadcast subscriber churn in the quarter was flat compared to the prior year at 12.9%, despite the completion of Foxtel's migration project of subscribers off cable. Broadcast ARPU for the quarter increased 3% year-over-year to A$86 (US$56).

Segment EBITDA of $77 million in the quarter decreased $13 million, or 14%, compared with the prior year, which includes a $1 million, or 1%, negative impact from foreign currency fluctuations. Adjusted Segment EBITDA of $78 million decreased 13% compared to the prior year, which News said were due to higher sports programming rights costs driven mainly by contractual increases across AFL and NRL. There's also $10 million of costs related to the upcoming launch of Hubbl on 21 February in there.

News Media over the quarter was arguably the toughest area commercially, with revenues decreased by $16 million, or 3%, compared to the prior year. Digital revenues represented 38% of News Media segment revenues in the quarter, compared to 37% in the prior year. Closing digital subscribers at News Corp Australia as of December 31, 2023, were 1,051,000 (940,000 for news mastheads), compared to 1,011,000 (924,000 for news mastheads) in the prior year. Total subscriptions to The Wall Street Journal grew by 7% compared to the prior year, to over 4.0 million average subscriptions in the quarter.

"News Corp again saw growth in both revenue and profitability this quarter as we continue to realize the collective benefit of our strategic shift to digital and subscription revenues, and away from sometimes volatile advertising revenues," said Chief Executive Robert Thomson.

"Our net income rose to $183 million from $94 million in the same quarter last year and our reported EPS was 27 cents, compared to 12 cents for the same period last year, driven by a 16% surge in Total Segment EBITDA. We had particularly robust results across the three core pillars of our business - Dow Jones, Book Publishing and Digital Real Estate Services - and believe there are strong prospects for further growth as difficult macro conditions ease in some of our markets."

Thomson also addressed the company's stance on Generative AI companies and raised the growing impetus for companies to start paying for the content being consumed into these next-gen AI services. News Corp masthead, The New York Times, has taken OpenAI and Microsoft to court in the US for use of its copyright protected content in their gen AI services.

"We expect to be a core content provider for Generative AI companies, who need the highest quality, timely content to ensure the relevance and accuracy of their products. We patently prefer negotiation to litigation, courtship to courtrooms," he said. "But let's be clear, in my view those who repurpose without approval are stealing and are undermining the very act of creativity - counterfeiting is not creating, and the AI world is replete with content counterfeiters."