News Corp., a mass media corporation founded by Rupert Murdoch, announced its quarterly earnings Tuesday. The report was not what most were expecting and actually was quite disappointing. Thomas Reuters came up with an estimate of $2.12 billion in revenue and earnings of seven cents per share. The real results, however, were much less than expected. The revenue reported in the third quarter ended up being $2.06 billion and earnings were only four cents per share.
According to the Wall Street Journal, net income dropped from $48 million in the previous year to only $23 million this quarter. That is a 52 percent decrease in profit that the company attributes mostly to international trends in currency. It claims that foreign currency has negatively impacted it, being that it is a global company.
Another problem the company points out is that its ad sales in its news and information services segment were very weak. According to the Wall Street Journal, this segment accounts for almost two-thirds of its total revenue, which means a decline in this segment can have a severe impact on the rest of the company. Not all of its segments are down, however. The company reported that its book publishing segment and digital real estate services segment are up 14 percent to $402 million and 67 percent to $170 million, respectively.
Other factors to explain this decrease in profit include the phone hacking scandal that News Corp. and 21st Century Fox have been dealing with over the past few years. The Wall Street Journal reports that News Corp. estimates it has spent almost $15 million to deal with this scandal, which could have negatively impacted its profit as well. Despite all of this, according to The Wall Street Journal, Chief Executive Robert Thomas believes “News Corp is well set on its trajectory of digital and global growth.”
Finally, the company’s earnings before interest, taxes, depreciation and amortization or estimated cash flow, or EBITDA, went down 7 percent to $163 million, which again the company attributes to legal costs and foreign currency fluctuations. However, its adjusted EBITDA only decreased by 1 percent and the company believes that with an increase in ad sales, which it saw at the end of the previous quarter, it can start increasing its EBITDA again.