News Corp-A

News Corp delivered adjusted EBITDA of USD 421 million for the fourth quarter of fiscal 2026. The result was up 31% from a year ago, driven primarily by digital real estate and Dow Jones. Full-year EBITDA grew 16% to USD 1,637 million, and a final unfranked DPS of USD 0.10 was declared.

Why it matters: The fourth-quarter EBITDA exceeded our expectations by 15%, and the composition of the outperformance is impressive. The two biggest and most digital-centric units are shining bright, with digital real estate earnings up almost 50% and Dow Jones' EBITDA growth accelerating to 20%. Accounting for 75% of group earnings, the stellar momentum of these two units offsets any vagaries in other areas. The effects of continuing News Media decline, bumpy economic conditions, the Middle East conflict, and artificial intelligence disruptions are indiscernible. Free cash flow for fiscal 2026 grew 42% to USD 811 million. This equates to 50% EBITDA conversion, the highest in four years, and helped fund USD 641 million in buybacks in fiscal 2026. These metrics are rare in the challenged media industry from which News Corp is keen to distance itself.

The bottom line: We raise our fair value estimate on no-moat News Corp by 3% to USD 32, or AUD 45 at current exchange rates. It reflects the average 3% increase in our EBITDA estimates, giving greater credit to digital real estate and Dow Jones' maintaining earnings power. Shares are trading broadly in line with our intrinsic assessment. We have long highlighted News Corp's metamorphosis, from a cyclically charged group with 48% of revenue from advertising in fiscal 2014, to a more structurally stable one with 36% of revenue from circulation and subscription. But News Corp is still hostage to the advertising cycle (15% of revenue) and consumer spending (24%). Critically, its share price sways to that of 62%-owned REA Group, which we believe is overvalued. At current prices, we believe the risk/reward proposition is evenly balanced.

In contrast, like for almost all companies listed on stock exchanges anywhere, management remains vocal about how undervalued News Corp shares are. However, the pace of the share repurchase program does not quite reflect the vocal intensity. The company first announced a USD 1 billion buyback in September 2021. It bought back around USD 700 million from then until the end of fiscal 2025, at a rate of just USD 175 million per year. In July 2025, it announced another USD 1 billion buyback. It bought back USD 643 million since then, but the accelerated pace was greatly facilitated by redeploying the USD 380 million shareholder loan repaid by Foxtel (divested April 2025). We will watch with interest whether the accelerated buyback pace continues if the stock price remains at current levels.

Segmentally, digital real estate performed strongly despite continued weakness in the US housing market and the recent slowdown in the Australian market. Revenue grew 19% in the fourth quarter to USD 553 million and 12% for the fiscal year to USD 2,046 million. Narrow-moat REA Group in Australia benefited from higher Australian residential revenues due to listing price increases, fourth-quarter listings growth, expansion of add-on products, and positive currency movements. In the US, Realtor.com is continuing to gain audience share, to 33% of total visits to all US real estate portals. 

Dow Jones fiscal 2026 fourth-quarter revenue was up 7% to USD 644 million, totaling USD 2,497 million for the fiscal year. Wall Street Journal delivered 6% subscription growth to 4.8 million subscribers. Segment EBITDA for fiscal 2026 was strong at USD 663 million, up 13%. EBITDA margins improved to a record 26.6% for the year, from 25.2% in fiscal 2025. This is being aided by the ballooning size of the various subscription-centric B2B products, which now account for half of Dow Jones' earnings, with recent content-licensing deals with AI firms also likely contributing.

Management continues to view its content as a key input for AI firms' outputs, pointing to its current agreements with Meta and OpenAI, while highlighting the continuation of its "Woo or Sue" strategy against the “crass kleptomaniacs.” This includes its ongoing lawsuit against Perplexity and the likelihood that it will, through HarperCollins, receive its portion of the USD 1.5 billion copyright settlement against Anthropic later in the year.

Our US dollar fair value estimate for News Corporation is USD 32 per share. This implies a forward fiscal year enterprise value/EBITDA of 8.6 times.

We forecast average revenue growth of 3.6% for the next three years. On the profitability front, we expect EBITDA margin to average 18.0% during the next three years, above the 16.7% achieved in the past three years, mainly due to the impact of cost-cutting measures and improving digital and subscription business economics at Dow Jones.

Longer term, our top-line growth assumption is around 3%, and we estimate that midcycle EBITDA margin will be 18.1%. This is based on our view that management will succeed in re-engineering its cost base to adapt to the digital environment, with benign top-line performance accompanied by a step-down in printing and distribution costs, along with some savings reinvested in marketing and technology costs.

On balance, we view News Corporation as lacking an economic moat.

Dow Jones, accounting for 36% of our forecast midcycle group EBITDA, has no durable competitive advantage to warrant a moat. It has some moaty characteristics, based on intangible assets. The Wall Street Journal is a venerable brand name in the world of global finance, Barron's similarly well-recognized in the world of investments. Dow Jones also has a suite of professional information products and services businesses such as Dow Jones Risk and Compliance, Dow Jones Energy, and Factiva. Dow Jones earnings have also grown strongly, since it was separated disclosure-wise from the news media division in fiscal 2020. However, News Corporation has also invested significantly in Dow Jones during recent years, including acquisition of Base Chemicals (USD 295 million in 2022, or 10 times EBITDA), OPIS (USD 1.2 billion in 2022, or 17 times EBITDA) and Investor's Business Daily (USD 275 million in 2021, or 25 times EBITDA) – all on ritzy multiples. Consequently, Dow Jones' return on capital in recent years is not as impressive. We believe Dow Jones' return on capital is unlikely to durably exceed the cost of capital. Information and data continue to proliferate in the current digital era, and advancing technologies such as artificial intelligence are likely to gradually erode the intangible power of Dow Jones mastheads and products. Furthermore, while digital subscriptions have grown strongly in recent years, there are factors mitigating the moatiness of Dow Jones. Dow Jones' digital subscription growth has come at the expense of falling print subscriptions, and has also been boosted by acquisitions such as Investor's Daily in 2021. Importantly, average revenue per subscription has declined from USD 17.74 per month in fiscal 2019, the first year of Dow Jones disclosure, to USD 14.77 in fiscal 2023. This suggests an absence of pricing power to warrant assigning an economic moat to Dow Jones overall. The professional information services businesses within Dow Jones may have some competitive advantages, given their subscription-nature in various information-critical niches such as risk and compliance, energy and chemical market data and financial data. However, recent revenue growth has been boosted by acquisitions at ritzy multiples. Furthermore, there is insufficient information on renewal rates and subscription metrics to gauge the stickiness or pricing power of these products.

The company owns 61% of REA Group which accounts for almost 40% of our forecast midcycle group EBITDA and we view this business as having a wide moat. It is the number-one digital player in the lucrative Australian property listing and advertising space. The business is listed on the Australian Securities Exchange and is rated wide moat, based on well-entrenched network effects and cost advantages in its online listings platform for Australian residential real estate. However, accounting for less than 40% of our forecast midcycle group earnings, we do not believe it is significant enough to warrant assigning a moat to the entire News company. It established a moat in its initial years, thanks to the marketing and promotional power of News Corp media properties in Australia. But it does not provide any significant reciprocal operating or competitive benefits to News' other businesses and is, for all intents and purposes, a self-maintaining, stand-alone company.

Book publishing accounts for 17% of our forecast midcycle group EBITDA and we view this business as having no moat. It operates in a tough industry with Harper Collins and other News Corporation publishing stables competing with a variety of other players. Covid-19 and the rise of audio books have led to a renaissance in book sales and back-catalogue titles in various formats. However, book sales are still subject to fickle tastes and structural uncertainties, with digital entertainment alternatives aplenty and monetization on audio streaming platforms still in flux. The abrupt halving of earnings in fiscal 2023 shows the dependence of the division on Amazon's distribution platform (a significant cut in book inventory post-covid), while digital-enabled self-publishing and marketing through social media pose a disintermediation threat to traditional publishers.

News media accounts for 8% of our forecast midcycle group EBITDA and we view this business as having no moat. The business operates in the newspaper and digital publishing market. With increasing disintermediation from digital technology, the internet, and mobile devices, the industry's traditional consumer stranglehold is waning. With dwindling print audiences, advertisers are also following the eyeballs to the digital arena.

US digital real estate services division accounts for 3% of our forecast midcycle group EBITDA and we view this business as having no moat. It mainly operates in the fiercely competitive US residential property listings space. It is a marketplace that has yet to reach competitive equilibrium and still in the midst of consolidation. A relatively new entrant, wide-moat CoStar, has spearheaded recent consolidation activities and is now the second largest real estate website. Move's average monthly unique visitors have been falling in recent years, showing no signs of any durable competitive advantage, either from network effects or intangible assets.

News Corporation's strong financial position and solid free cash generation separate the company from its peers.

The solid balance sheet provides management with flexibility, as it attempts to navigate the treacherous structural landscape and transition the company into the brave new world of digital media.

News Corporation boasts a number of resilient online property classified assets in Australia and the US that add to its cash flow profile and provide a template for the kind of businesses that management wishes to acquire as part of a diversification strategy.

The structural headwinds that have decimated the industry during the past decade may accelerate in the future, as technology and innovation provide consumers with even more

Management's efforts to change the legacy publishing model, charge for content in the digital arena, and convince advertisers of the value of its online audience may be overwhelmed by technological and behavioral forces beyond the company's control.

The balance sheet may not be utilized in accretive fashion, with attractive assets that diversify News Corporation's earnings likely to demand high valuation multiples.