News Corp Stock Rises as Surge in Digital Subs Offsets Weak Ad Revenue—Key Level to Watch

News Corporation

News Corp (NWS) shares moved higher ahead of Thursday’s opening bell after The Wall Street Journal parent surpassed quarterly earnings and sales estimates, spearheaded by growth in the company’s Dow Jones business information arm.

The New York-based company synonymous with Australian media mogul Rupert Murdoch posted fiscal second quarter adjusted earnings of 26 cents per share compared to analysts’ average estimate of 21 cents a share. Net revenue for the period also came in better than expected, growing 3% to $2.59 billion, ahead of the $2.55 billion consensus mark.

The media conglomerate’s Dow Jones segment, which houses leading financial publications such as The Wall Street Journal, Barron’s, and Market Watch booked $584 million in revenue for the December quarter, representing a 4% increase from the same quarter in 2022 as customers sought the unit’s bundled subscription options.

News Corp’s digital real-estate services group also performed strongly, recording fiscal second-quarter revenue of $419 million, up 9% year-over-year (YOY). In somewhat of a surprise, the company’s book publishing segment, which owns prominent publisher HarperCollins, also performed well during the quarter, posting revenue growth of 4% to $550 million.

However, News Corp’s advertising revenues fell by 5.6% to $438 million from the corresponding year’s quarter.

CEO Robert Thomson said the company continued to benefit from its “strategic shift to digital and subscription revenues, and away from sometimes volatile advertising revenues.” On the artificial intelligence (AI) front, Thomson said that the media giant intends to be “a core content provider for generative AI companies who need the highest quality timely content to ensure the relevance of their products.”

Since forming three distinct lows around $15.50 between June 2022 and March last year, NWS shares have trended steadily higher. In the lead-up to this week’s earnings report, the price has consolidated within a narrow range just below the stock’s record high at $26.21 set in May 2021, suggesting investors were taking a wait-and-see approach. Today, it’s worth monitoring if the stock can close above its record high on significant trading volume, which could potentially indicate the beginning of a new cyclical uptrend.

News Corp shares were up 3.3% at $25.06 about three hours before Thursday’s opening bell.

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As of the date this article was written, the author does not own any of the above securities.