News : FY2022 Second Quarter Earnings Release

NEWS CORPORATION REPORTS SECOND QUARTER RESULTS FOR FISCAL 2022

FISCAL 2022 SECOND QUARTER AND FIRST HALF KEY FINANCIAL HIGHLIGHTS

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• Revenues in the quarter were $2.72 billion, a 13% increase compared to $2.41 billion in the prior year and the highest quarterly revenue since separation. Revenues in the first half rose 15% year- over-year
• Net income in the quarter was $262 million, flat compared to $261 million in the prior year. Net income in the first half rose 72% year-over-year
• Total Segment EBITDA in the quarter was $586 million, an 18% increase compared to $497 million in the prior year. Total Segment EBITDA in the first half rose 30% year-over-year
• In the quarter, Reported EPS were $0.40 compared to $0.39 in the prior year - Adjusted EPS were $0.44 compared to $0.34 in the prior year. In the first half, Reported diluted EPS were $0.72 and Adjusted EPS were $0.67
• Digital Real Estate Services segment revenues grew 35% in the quarter, with continued traffic gains at Move, operator of realtor.com®, and strong listing volumes at REA Group
• Dow Jones again saw its highest quarterly profitability since its acquisition and highest revenue since fiscal 2011
• As of the end of December, Foxtel's total streaming subscribers grew 66% compared to the prior year with BINGE and Kayo each reaching more than 1 million total subscribers
• News Media Segment EBITDA in the quarter grew 68% as the businesses continued to benefit from the rebound in the advertising market, new content licensing revenues and strong digital subscriber gains

NEW YORK, NY - February 3, 2022 - News Corporation ("News Corp" or the "Company") (Nasdaq: NWS,

NWSA; ASX: NWS, NWSLV) today reported financial results for the three months ended December 31, 2021.

Commenting on the results, Chief Executive Robert Thomson said:

"For the first half of fiscal year 2022, News Corp's profitability reached nearly $1 billion, up 30% year-over-year, with the second quarter delivering record revenues and the highest profit of any quarter since the company was formed in 2013.

Our businesses are thriving, particularly at the Digital Real Estate Services, Dow Jones and Book Publishing segments, and there was a pronounced surge in profitability at our News Media segment. Meanwhile, Foxtel's streaming products flourished, with a 66 percent increase in total customers, and Kayo and BINGE both exceeding one million.

We are delighted with our planned acquisitions of the OPIS and Base Chemicals businesses, which we expect will close in the first half of calendar 2022 and bolster the highly profitable Dow Jones Professional Information Business.

The landmark agreements with Big Tech continued to benefit our journalism and our bottom line. In addition to the substantial deals with Google and Facebook, we expanded our multi-year global agreement with Apple, which is expected to be an important source of subscriptions and of advertising revenue for our news sites around the world.

Our increasing momentum has given us the ability to make opportunistic acquisitions and further our $1 billion share buyback program. News Corp is clearly going from strength to strength."

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SECOND QUARTER RESULTS

The Company reported fiscal 2022 second quarter total revenues of $2.72 billion, which was the highest quarterly revenue since separation and was also 13% higher compared to $2.41 billion in the prior year period. The increase reflects growth in all revenue lines, primarily in real estate and advertising, as well as recent acquisitions. Adjusted Revenues (which exclude the foreign currency impact, acquisitions and divestitures as defined in Note 2) increased 8%.

Net income for the quarter was $262 million, flat compared to $261 million in the prior year, reflecting higher Total Segment EBITDA, as discussed below, offset by lower Other, net, higher tax expense and higher interest expense.

The Company reported second quarter Total Segment EBITDA of $586 million, which was also the highest since separation. Total Segment EBITDA grew 18% compared to $497 million in the prior year, primarily due to higher revenues, as discussed above, partially offset by higher costs across all operating segments, including the impact of recent acquisitions. Adjusted Total Segment EBITDA (as defined in Note 2) increased 16%.

Net income per share attributable to News Corporation stockholders was $0.40 as compared to $0.39 in the prior year.

Adjusted EPS (as defined in Note 3) were $0.44 compared to $0.34 in the prior year.

SEGMENT REVIEW
		For the three months ended		For the six months ended
			December 31,				December 31,
		2021			2020		Change		2021			2020		Change
		(in millions)	Better/		(in millions)	Better/
		(Worse)		(Worse)
Revenues:
Digital Real Estate Services	$	456	$	339		35 %	$	882	$	629		40 %
Subscription Video Services		498			511		(3)%		1,008			1,007		- %
Dow Jones		508			446		14 %		952			832		14 %
Book Publishing		617			544		13 %		1,163			1,002		16 %
News Media		638			573		11 %		1,214			1,060		15 %
Other		-			1		**		-			1		**
Total Revenues	$	2,717	$	2,414		13 %	$	5,219	$	4,531		15 %
Segment EBITDA:
Digital Real Estate Services	$	178	$	142		25 %	$	316	$	261		21 %
Subscription Video Services		86			124		(31)%		200			202		(1)%
Dow Jones		144			109		32 %		239			181		32 %
Book Publishing		107			104		3 %		192			175		10 %
News Media		111			66		68 %		145			44		**
Other		(40)		(48)		17 %		(96)		(98)		2 %
Total Segment EBITDA	$	586		$	497		18 % $	996	$	765		30 %

** - Not meaningful

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Digital Real Estate Services

Revenues in the quarter increased $117 million, or 35%, compared to the prior year, driven by strong underlying performances at REA Group and Move, as well as the acquisition of Mortgage Choice and REA India (rebranded from Elara). Segment EBITDA in the quarter increased $36 million, or 25%, compared to the prior year, primarily due to the higher revenues. The growth was partially offset by the increase in expenses associated with the acquisitions of Mortgage Choice and REA India, higher employee costs at both Move and REA Group and higher marketing costs at Move. Adjusted Revenues and Adjusted Segment EBITDA (as defined in Note 2) increased 22% and 29%, respectively.

In the quarter, revenues at REA Group increased $103 million, or 56%, to $287 million, driven by higher financial services revenues, primarily due to the $41 million contribution from the acquisition of Mortgage Choice, and higher Australian residential revenues due to price increases, strong national listings, and favorable depth penetration and product mix. The growth was also due in part to the $10 million contribution from the acquisition of REA India. Australian national residential buy listing volumes in the quarter increased 22% compared to the prior year, with listings in Sydney up 39% and Melbourne up 25%.

Move's revenues in the quarter increased $14 million, or 9%, to $169 million, primarily as a result of higher real estate revenues. Real estate revenues, which represented 86% of total Move revenues, increased $17 million, or 13%, due to growth in both the traditional lead generation product and the referral model. The improvement in the traditional lead generation product was driven by higher contribution from the Market VIP℠ product, as well as continued improvements in yield. The referral model benefited from record average home values and higher referral fees, partially offset by lower transaction volume. The referral model generated approximately 32% of total Move revenues in the quarter. Revenue growth was partially offset by a $4 million negative impact from the divestiture of Top Producer. Based on Move's internal data, average monthly unique users of realtor.com®'s web and mobile sites for the fiscal second quarter grew 6% year-over-year to 85 million. Lead volume declined 9%, an improvement from the trends seen in the first quarter, but reflecting a continued tough comparison to the prior year.

Subscription Video Services

Revenues in the quarter decreased $13 million, or 3%, compared with the prior year. Higher revenues from Kayo and BINGE were more than offset by the impact from fewer residential broadcast subscribers and lower commercial subscription revenues primarily resulting from restrictions related to the global COVID-19 pandemic during the quarter. Foxtel Group streaming subscription revenues represented approximately 19% of total circulation and subscription revenues in the quarter. Adjusted Revenues decreased 3% compared to the prior year.

As of December 31, 2021, Foxtel's total closing paid subscribers were over 3.9 million, a 19% increase compared to the prior year, primarily due to the growth in BINGE and Kayo subscribers, partially offset by lower residential broadcast subscribers. Approximately 1.8 million of the total closing paid subscribers were residential and commercial broadcast subscribers, and the remaining 2.1 million consisted largely of Kayo, BINGE and Foxtel Now subscribers. As of December 31, 2021, there were over 1 million Kayo subscribers (total and paying), compared to 648,000 subscribers (624,000 paying) in the prior year. BINGE had over 1 million subscribers (928,000 paying) as of December 31, 2021, compared to 468,000 (431,000 paying) in the prior year. As of December 31, 2021, there were 219,000 Foxtel Now subscribers (211,000 paying), compared to 265,000 subscribers (258,000 paying) in the prior year. Broadcast subscriber churn in the quarter improved to 13.0%, the lowest since the first quarter of fiscal 2019, from 17.5% in the prior year. Broadcast ARPU for the quarter increased 3% year-over-year to A$82 (US$60).

Segment EBITDA in the quarter decreased $38 million, or 31%, compared with the prior year. The decline was primarily driven by higher investment spending on technology and streaming products, as well as higher sports

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programming rights and production costs due to sporting events such as motorsports and cricket which did not occur during the prior year period. Adjusted Segment EBITDA decreased 31%.

Dow Jones

Revenues in the quarter increased $62 million, or 14%, compared to the prior year, primarily due to higher advertising revenues, growth in circulation and subscription revenues and an $18 million contribution from the acquisition of Investor's Business Daily ("IBD"). Digital revenues at Dow Jones in the quarter represented 72% of total revenues compared to 70% in the prior year. Adjusted Revenues increased 10% compared to the prior year.

Circulation and subscription revenues increased $37 million, or 12%. Circulation revenue grew 13%, reflecting the acquisition of IBD and continued strong growth in digital-only subscriptions. Professional information business revenues grew 9%, primarily driven by 17% growth in Risk & Compliance products as well as modest improvements in the Newswires product. Digital circulation revenues accounted for 67% of circulation revenues for the quarter, compared to 63% in the prior year.

During the second quarter, total average subscriptions to Dow Jones' consumer products reached over 4.7 million, a 17% increase compared to the prior year, and includes 126,000 IBD subscriptions, the majority being digital-only.Digital-only subscriptions to Dow Jones' consumer products grew 23%. Total subscriptions to The Wall Street Journal grew 12% compared to the prior year, to over 3.6 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 19% to over 2.9 million average subscriptions in the quarter, and represented 81% of total Wall Street Journal subscriptions.

Advertising revenues increased $26 million, or 23%, primarily due to 29% growth in print advertising revenues, which recovered strongly from the COVID-19 related weakness in the prior year, and 18% growth in digital advertising revenues, driven by improvement across major categories, most notably in B2C and financial services, and benefiting from higher yield. Digital advertising accounted for 56% of total advertising revenues in the quarter, compared to 58% in the prior year, due to the recovery of print advertising.

Segment EBITDA for the quarter increased $35 million, or 32%, including a $4 million contribution from the acquisition of IBD, primarily due to higher revenues, as discussed above, partially offset by higher professional services fees. Adjusted Segment EBITDA increased 29%.

Book Publishing

Revenues in the quarter increased $73 million, or 13%, compared to the prior year, reflecting a $50 million contribution from the acquisition of Houghton Mifflin Harcourt's Books and Media segment ("HMH") and continued strong consumption trends, driven by higher frontlist sales in General books, including Twelve and a Half by Gary Vaynerchuk, The Pioneer Woman Cooks: Super Easy! by Ree Drummond and The Storyteller by Dave Grohl. The growth was also driven by the U.K. division and the Christian books category, partially offset by lower sales of Childrens books. Adjusted Revenues increased 4%. Digital sales increased 8% compared to the prior year, driven by growth in downloadable audiobooks. Digital sales represented 17% of Consumer revenues for the quarter.

Segment EBITDA for the quarter increased $3 million, or 3%, compared to the prior year, driven by a $10 million contribution from the HMH acquisition, partially offset by higher costs related to increased sales volumes and mix of titles, as well as the increase in manufacturing and freight costs exacerbated by supply chain pressures.

Adjusted Segment EBITDA decreased 7%.

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News Media

Revenues in the quarter increased $65 million, or 11%, as compared to the prior year, driven by the continued recovery of the advertising market from COVID-19 related market weakness in the prior year and higher circulation and subscription revenues. The results also reflect a $6 million, or 1%, positive impact from foreign currency fluctuations. Within the segment, revenues at News Corp Australia and News UK increased 14% and 7%, respectively. The New York Post and Wireless Group also saw higher revenues in the quarter. Adjusted Revenues for the segment increased 10% compared to the prior year.

Circulation and subscription revenues increased $23 million, or 9%, compared to the prior year, primarily due to higher content licensing revenues, digital subscriber growth, cover price increases and a $3 million, or 1%, positive impact from foreign currency fluctuations, partially offset by a decline in print volumes.

Advertising revenues increased $42 million, or 17%, compared to the prior year, driven by growth in digital advertising across the businesses due to improved yields and higher impressions, the recovery of print advertising at News UK (primarily at The Times and Sunday Times) and a $2 million, or 1%, positive impact from foreign currency fluctuations.

In the quarter, Segment EBITDA increased $45 million, or 68%, compared to the prior year, reflecting higher revenues, as discussed above. News Corp Australia and News UK contributed $35 million and $6 million, respectively, to the Segment EBITDA growth. The New York Post and Wireless Group were also positive contributors to the growth, which was partially offset by costs related to News UK's TV project. Adjusted Segment EBITDA increased 65%.

Digital revenues represented 34% of News Media segment revenues in the quarter, compared to 31% in the prior year, and represented 32% of the combined revenues of the newspaper mastheads. Digital subscribers and users across key properties within the News Media segment are summarized below:

• Closing digital subscribers at News Corp Australia as of December 31, 2021 were 909,000 (861,000 for news mastheads), compared to 779,000 (738,000 for news mastheads) in the prior year (Source: Internal data)
• The Times and Sunday Times closing digital subscribers, including the Times Literary Supplement, as of December 31, 2021 were 399,000, compared to 340,000 in the prior year (Source: Internal data)
• The Sun's digital offering reached 163 million global monthly unique users in December 2021, compared to 130 million in the prior year (Source: Google Analytics)
• New York Post's digital network reached 160 million unique users in December 2021, compared to 141 million in the prior year (Source: Google Analytics)

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