News Corp on COVID-19 impact on publishing, sub TV & real estate

• Ad revenue and Kayo subscriptions down means cost cutting measures

News Corp head office in New York has released a statement regarding the impact of coronavirus disease 2019 on the company’s businesses. It has divided the statement into four sectors:

News and Information Services: News Corp expects advertising and single-copy sales revenues in the segment to be adversely affected as a result of widespread business closures, social distancing measures and economic uncertainty resulting from COVID-19. However, the company has seen increases in digital paid subscribers, including at The Wall Street Journal, The Times and The Sunday Times, as well as digital audience gains at online versions of its news properties, as people look to its quality journalism for reliable information. The Australian yesterday saw a doubling of its online audience in the March Nielsen data.

Subscription Video Services: News Corp expects the cancellation or postponement of sports events for which it has broadcast rights to adversely affect subscription revenue from broadcast and Kayo subscribers and, together with adverse economic conditions, to negatively impact advertising revenue. In addition, closures of pubs and clubs and lower occupancy at hotels throughout Australia are expected to adversely impact commercial subscription revenues.

Book Publishing: Sales are expected to be adversely affected by shipping restrictions and delays imposed by online retailers, as well as closures of brick-and-mortar retail stores. However, in recent weeks the company has seen an increase in sales of digital formats of its titles, which remain readily available from online retailers.

Digital Real Estate Services: The real estate markets in both Australia and the US have been negatively impacted as a result of social distancing measures, business closures and economic uncertainty resulting from COVID-19. Weakness in new listing volumes and other adverse effects, as well as measures the company has taken to support its customers in these challenging times, including re-list and re-upgrade offers for new listings and price concessions, are expected to adversely affect revenues.

The company is working proactively to offset a portion of anticipated revenue losses by reducing variable costs and implementing cost-savings initiatives across its businesses.

News Corp expects to provide a further update in its earnings release for the third quarter of fiscal 2020. Given the uncertainties described above, the company has advised investors not to rely on existing analyst earnings forecasts as they may not include any or all of the impacts that COVID-19 may have on the company’s businesses.

News Corp will report is third quarter earnings in early May.

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