News Corporation (NWSA), a diversified media conglomerate and an S&P 500 company, will report its second-quarter 2012 financial results on Wednesday, February 8, 2012.
The current Zacks Consensus Estimate for the quarter is 34 cents a share that reflects a growth of 17.2% from the prior-year quarter’s earnings. The estimates in the current Zacks Consensus range between 31 cents and 36 cents a share. The Zacks Consensus estimates revenue to be $8,927 million for the quarter under discussion.
Recap of First-Quarter 2012
News Corporation’s first-quarter 2012 financial results toppled the Zacks’ expectations on both the counters, i.e., earnings and revenues. The quarterly earnings of 32 cents a share came ahead of the Zacks Consensus Estimate of 29 cents, and rose 23% from 26 cents earned in the year-ago quarter.
News Corporation reported that total revenue jumped 7% year over year to $7,959 million, reflecting growth across Cable Network Programming (up 13%), Filmed Entertainment (up 18%), Television (up 8%), Direct Broadcast Satellite Television (up 8%) and Publishing (up 1%). However, the Other segment’s revenue plunged 51%. Total revenue also handily beat the Zacks Consensus Estimate of $7,645 million.
Zacks Agreement & Magnitude
Of the 20 analysts following the stock, three analysts revised their estimates up and one analyst lowered the same in the last 30 days. In the last 7 days, none of the analysts changed their estimates. However, no movement was witnessed in the Zacks Consensus Estimate in the last 7 or 30 days, and remained constant at 34 cents.
Mixed Earnings Surprise History
With respect to earnings surprises, News Corporation has missed as well as topped the Zacks Consensus Estimate over the last four quarters in the range of negative 3.7% to positive 20.7%. The average remained at positive 7.7%. This suggests that News Corporation has beaten the Zacks Consensus Estimate by an average of positive 7.7% in the previous four quarters.
Price Stats
Since its last earnings release on November 2, 2011, News Corporation’s market price has increased 15.7% to $19.56 as of February 6, 2012. During trading hours on February 6, the stock price reached an intra-daylow of $19.22 and an intra-dayhigh of $19.57. Currently, the stock price is within its 52-week low-high range of $13.38 (attained on August 9, 2011) and $19.79 (achieved on January 20, 2012). Over the period from November 2, 2011 to February 6, 2012, the stock dropped to a low of $15.93 on November 25, 2011 and rose to a high of $19.79 on January 20, 2012.
Neutral on News Corporation
Despite economic turbulence and losing sheen in the stock market on account of the phone hacking scandal that resulted in the closure of the publication of The News of the World and abstinence from acquiring the remaining 61% stake in the British Sky Broadcasting Group, News Corporation posted first-quarter 2012 financial results that beat the Zacks expectations. The quarter also highlights the growing worldwide channel business on the back of a widening subscriber base and an improved advertising market place. Notably, News Corporation is striving to add diverse revenue streams to hedge against economic cycles. These include retransmission and affiliate fees as well as online subscription-based model for news content.
News Corporation has also taken a leap towards an online subscription-based model for general news content. News International, a subsidiary of News Corporation, has started charging readers for online content for The Times of London and Sunday Times of London with effect from June 2010.
Another media conglomerate, The New York Times Company (NYT) launched a pricing system for NYTimes.com on March 28, 2011.
The publishing industry has long been grappling with sinking advertising revenue. This comes in the wake of a longer-term secular decline as more readers choose free online news, thereby making the print-advertising model increasingly irrelevant. To curb shrinking advertising revenue and seeking new revenue avenues, the publishing companies contemplated charging readers for online content.
Currently, we have a long-term ‘Neutral’ rating on News Corporation. Moreover, the stock holds a Zacks #3 Rank that translates into a short-term ‘Hold’ recommendation.
NEWS CORP INC-A (NWSA): Free Stock Analysis Report
NY TIMES A (NYT): Free Stock Analysis Report
