Stay on time here. Very pleased to have Lavanya Chandrashekar, CFO of News Corp, with us today. Lavanya, welcome.
Thank you, Jason.
I really like News Corp, but I find sometimes investors, maybe some investors, even though you're a good-sized company, are less than. I want to start with just a very basic question. If you wouldn't mind just walking through the key segments that News Corp has very quickly, just in terms of level setting for everyone. That would be a good place to start.
Thank you, Jason.
Yeah.
I really like News Corp, too.
Yeah, yeah.
So that makes two of us at least. I will focus on the first three, our core growth engine segments first, and then talk about our fourth segment later. Our three growth engines are the Dow Jones business, the digital real estate business, and HarperCollins Book Publishing business. Dow Jones the business is, a part of it is the direct-to-consumer business. You will be familiar with brand names such as The Wall Street Journal, Barron's, IBD, MarketWatch. Then the second part of the Dow Jones business is our B2B business, which is Dow Jones Risk & Compliance and Dow Jones Energy. Those are the two segments of the Dow Jones business that have been the outsized driver of growth for the Dow Jones business so far and expected to be in the future.
The digital real estate growth engine includes REA in Australia, our digital real estate portal in Australia, and includes realtor.com. realtor.com is, I believe, one of the most underappreciated parts of our portfolio. Book publishing is HarperCollins. That is a cash machine. I think all investors like cash machines. The fourth pillar of our business is our traditional media business. This is where the company started from. If I can help people remember that a number of our brands in the news segment are centuries old. I mean, The New York Post was founded by Hamilton. You should go check out the new Hamilton on The New York Post app. A very modern, wearing dark glasses Hamilton. We have The Times of London, which goes back several centuries as well.
These are publications that have just an absolute wealth of historic content, but also current, reliable, dependable content. It is this content that is turning out to be an incredible asset in this age of AI. We are able to monetize this content, with AI platform deals that really help us to add incremental value to our business.
Okay. That is a great overview. You just wrapped up your fiscal 2026, and I thought the results were actually really good. I mean, the top line was good, the margins were good, earnings growth was great, free cash flow was great. How sustainable would you say the growth is? I mean, you correct me if I am wrong, it feels like fiscal 2026 was your best year in four years, five years?
It was our best year of the last three years, but by a small margin.
Okay.
This is a business that has grown 14% EBITDA growth in fiscal 2024, 14% EBITDA growth in fiscal 2025, and 15% EBITDA growth in fiscal 2026. What was really special about fiscal 2026 is also the fact that we grew cash flow by 40%, and that is on a revenue growth rate of 7%. So this is a business that it is not a business that is just had one really great year. It is a business that has posted three consecutive years of really strong growth rates. I think that is really a big driver of why I think we are such a special business.
And if you had to point to where investors should be most optimistic, based on your earlier comments, you think it is really going to be in the Dow Jones B2B part? That is where investors should be most excited?
Definitely the Dow Jones B2B part, but I think what makes News Corp special is really three things. I would say the first is our overall portfolio, and the strength of our portfolio comes from our three growth engines, the brilliant brands that we have within these growth engines. It comes from the global scale that we have. It comes from the results that we post. I mean, we have been able to restructure our portfolio on a consistent basis, divesting assets such as Foxtel and adding on bolt-on acquisitions on a regular basis into our three growth engines. This has helped to accelerate our growth. It is not just that we have done big divestitures. We have also, on a continuous basis, really helped to simplify the portfolio. In the last quarter of fiscal 2026 alone, we divested REA India and moving.com.
These helped to concentrate our investments into our three growth engines. The investments that we are making in these three growth engines are turning into positive results. You see that in the numbers that I quoted. You see it in the fact that 61% of our revenue is recurring revenue. A very small portion of our revenue base is now advertising revenue. 61% of our revenue is digital, and most of it is recurring revenue. This is three times what it was at the time that we spun out the company, and separated from our bigger parent company.
Which was what? 2014?
That was 2013. 2012. 2012.
Okay.
2012 or 2013. Yeah.
2013.
The other thing that makes News Corp special, which is I think is something that I'm not sure how many investors appreciate it, but I worked in three companies before coming here. Blue-chip companies, consumer products companies. I was at P&G, I was at Mondelez, I was at Diageo. I have never seen an organization, and this is true across all of our businesses, that is so curious, with such high tenacity, restlessness. There's no complacency in this business, and I think that's a special, the core ingredient of why I think investors should be optimistic about News Corp.
Can I tell you, this goes back even to the old News Corp before the split with Fox, but I remember one of the things I was always struck is that you would always have some businesses, and you have them today, some cash cows, some investments that were sort of in growth mode. You're constantly just shifting the portfolio where today's growth driver may become tomorrow's cash cow, but you'll find some new growth driver. You're constantly just reinvesting the portfolio.
Absolutely. Some of these AI licensing deals is an example of the curiosity and the desire to find value in our portfolio on a continuous basis. I do think that for us, the pursuit of maximizing shareholder returns comes first and foremost, and I think that's what makes us such a valuable stock.
That's great. I want to talk a little bit about AI, because you've got a couple deals in place. You said it earlier that you think AI may benefit you in the future. There's some investors that are a little bit nervous about the downside of AI. Meaning they say, well, if, I'm going to use this as an example, if Google search migrates to AI Overviews, then you're never going to get any of the referral traffic, and therefore, there's sort of downside. We may all look at the AI licensing money as good news, but some investors think there's sort of a trade-off further downstream. Is that a fair characterization? Or you guys run through all this math and you say, "Well, look, when we do an AI licensing deal, it's true, but there's definitely more upside than downside." Does that make sense?
We definitely believe that there's more upside than downside from AI for the business. We've seen it in our results. AI has been around for a bit now, and you have been seeing some of the impact to Google traffic for a bit now, and you still see the consistent results that we've been able to post. For us, I think I'd say three things on what the sources of value are from AI. The first is, and I mentioned this before, we just have this absolute wealth of content, and it's not just historic content. More importantly, it's current content. What we've seen, even in the last couple of years that I've been at News Corp, is the hyperscalers are recognizing the value of this content ever more than they did before. Why are they recognizing the value of that content? It's really very simple.
It's because their consumers are getting increasingly skeptical of AI slop and are really looking for reliable sources, dependable sources of content.
Yeah.
That's what we have in our portfolio. We are able to monetize the value of that intellectual property in deals such as what we have with OpenAI and what we have with Meta. It's not just these big hyperscaler deals. We also have deals with, on the Dow Jones business, we have a deal with Bloomberg as an example. At the investor briefing that we did for Dow Jones a few months ago, we talked about having 20 other such deals. As Robert says, we're continuously in conversations with others as well. Now, we would prefer to make deals. We do not believe that litigation is a preferred way of dealing with any issues. At the same time, we have also been very clear that we will stand up for making sure that we get adequately compensated for our intellectual property.
We have a couple of cases going on on that front. That's what Robert calls it, our woo and sue strategy. That's one value driver of AI.
Yep.
I think the second value driver of AI is the benefits that we are seeing and that we are confident we'll see in terms of revenue growth and our ability to mitigate costs. We're seeing that in terms of some of the innovations that we are bringing forth into our product portfolio on REA, on Realtor as two examples of it. I mentioned Hamilton on the New York Post. That's a really cool AI feature. Be careful, though, when you use Hamilton, because I found myself one day, 25 minutes in conversation with Hamilton and almost missing my next meeting because it's so addictive. That's definitely a source of growth for us as well.
From a cost perspective, we're seeing the benefits of AI in terms of being able to reduce our cost of coding, our speed of bringing products into the marketplace, creating new designs for covers for books on our HarperCollins business, simplifying our operations, whether it is from an HR perspective or a finance perspective. We're definitely seeing AI as being a driver of value to us.
That's great. I can't remember when the analyst day you had for Dow Jones. Was that earlier this year?
March.
March. You laid out this $1 billion EBITDA target by 2030, and I think that was relative to about $660-ish million for the fiscal year you just ended, which seems like quite a bit of growth. What gives you confidence to sort of step out and look through fiscal 2027, 2028, so that's four years, and sort of have that much growth?
Especially in the wake of when investors would say is, "Oh, these information services businesses are the ones that are going to get hurt by AI," right? That's the bear case narrative.
Well, let me first answer that question in two parts .
Sure.
What are going to be the drivers of growth? Then I'll talk about why I think our business is different and protected, and where AI's actually going to be beneficial to us and not this value drag as is being predicted. On the first part, what are the drivers of growth? Why do we believe in the kind of the ambition of $1 billion that we put out there? It really comes from the fact that we expect growth to come from our B2B part of our Dow Jones business. That's Risk & Compliance and that's Energy.
Yeah.
The energy market, the TAM of the energy market, is $8 billion, and that's growing at 8%-10%. The risk and compliance market is $3.7 billion, and that's growing at 11%-13%. Both of these markets, our business in these markets, have much higher margins than what we have on our traditional consumer products within the Dow Jones portfolio. As growth accelerates and this is what has been happening, it's not a future forecast only, it's also what we have consistently seen here over the last several years. As that B2B business grows faster than the consumer side of the business, we have a built-in operating leverage. That's definitely one of the drivers of growth. We also see a strong path of growth on both enterprise subscriptions as well as direct-to-consumer subscriptions. On direct-to-consumer subscriptions, we have world-class journalism.
Our presence in international markets, as an example, is really small, and we know that there is a big market out there for us. AI will help with that in terms of translation and being able to expand to international markets. On enterprise customers, that's everyone here in the room. This is where our journalism is essential for business decision-making, also for personal decision-making, financial decision-making. We do believe that there is a strong opportunity for us to continue to grow our consumer subscription business as well, and to grow yields on our consumer subscription business as well.
When you say yields, what does yields mean?
Well, through smarter pricing, as an example. We've taken pricing on The Wall Street Journal full price up from $39.99 to $44.99. We're also doing more from a pricing perspective with introductory offers and for tenured subscribers, so there's definitely an opportunity for us to do more on that. Our journalism is so valuable. I think it's invaluable. I think $44.99 still gives us plenty of room to continue to grow our revenue base. I don't want to forget the second part of your question, Jason, which is why do we think we will not get overtaken by this AI wave, especially on the B2B side of our business. Our B2B business is proprietary data, and it is proprietary data that plays in a very complex, dynamic regulatory environment.
What do I mean by that? Let me break it down, and I'll break it down in the context of Risk & Compliance and then in the context of energy. On Risk & Compliance, the cost of getting it wrong for a financial institution, whether it is doing something around the sanctions list or any of the many things that we do on Risk & Compliance, is disproportionate to how much these institutions pay for our product sets. We have decades of reputation built in this space, and that proprietary data and that reliability of Dow Jones is what protects that business. I want to make a shameless plug here for our Investor Day.
It was back in March, and Joel, who runs the Risk & Compliance business, presented some really good examples of both why this business is protected from a reputation perspective and some examples of what happens to organizations that get it wrong on Risk & Compliance, but also presented three very interesting bite-sized case studies of how our data is proprietary, why is it proprietary, and why is it protected. I'd encourage everybody to go watch that if you haven't, or even just refresh your memory on that. On the energy side of the business, we have 150, at least at the time of the Investor Day, we had 150, I know we have a bit more now, 150 exchange traded benchmarks on energy. These are built into contracts that organized companies need to have to be able to buy and sell these commodities.
This is not something that you can scrape off the internet using AI and replace with. The safeguards that we have around our business, we don't like the word moat because that goes back to medieval times. But it is indeed the protective moat that we have around our business.
That's great. I think this was on your last earnings call, you talked a little bit about a tactical sort of pressure within energy because of the Middle East conflict. Can you just unpack that a bit and describe when or if that could come back to the extent that hostilities end in the Middle East?
Well, I'm glad to say it has come back.
Okay.
It was a quarter four phenomena, and it was really in terms of the sales cycle being delayed because of the uncertainty that existed in the Middle East. What we're seeing now in quarter one is a strong pipeline of contracts, and we do expect energy growth to be stronger in the quarter.
When you say sales cycle, you're talking about your sales cycle in terms of selling your product into your customers?
Exactly.
Okay. Nothing about the energy market itself.
Exactly.
Okay.
Yeah.
That's great. I want to talk a little bit about Realtor. Sometimes I screw up when I call this Move, but you guys call it.
Realtor.
I know. I'll comport to Realtor. You mentioned earlier in your remarks that you thought it was one of the most underappreciated or undervalued facets of the business.
Yeah.
Why do you think it's underappreciated? Maybe if you can give us a little bit of history, because I think there was a time, maybe I have this wrong, maybe 4 or five years ago, where someone offered you.
A lot of money
A lot of money for this asset.
Yes.
Can you remind us of that as well?
Yeah. I think the asset's actually worth more today than when someone offered us a lot of money for the asset. The Realtor business-
Just for the audience.
Yes.
Can I say the number? You may not want to say it.
You should.
I think it was $3 billion. Was it not $3 billion?
That was what was reported.
Just a frame of note.
Yeah. The Realtor business had several very, very good years, then did get impacted by the downturn in the housing market. Having said that, over the last several quarters, we have seen the Realtor business really come back to strong growth rates.
I am sorry. When you say downturn in the housing market, you are just talking about the velocity of home sales?
Home sales. Exactly.
Slowing because everyone has a
Yeah
4% 30-year mortgage on their homes.
Exactly.
Okay.
The average home sales in the country, if you go back through several years, it should be around 5 million homes. We are right now at around 4 million homes, and that is exactly for the reason that you mentioned, higher interest rates, people locked in at lower interest rates. Now, we do expect that will turn, not just in terms of the interest rates, but also in terms of just pent-up demand. People have to move, downsize, upsize. These things are parts of life cycle. That will come back. The Realtor business specifically, why do I think it is so underappreciated? It is because despite the muted housing market, has done really well for several quarters now. I think there are three things that the team have done on the Realtor business to turn it into such positive results.
The first one is innovation of the realtor.com site, as well as the products that we offer our realtors. REALPRO Plus is one example of that. RealAssist, which is a generative AI, which sits on the Realtor platform, and we are seeing consumers who are using RealAssist really engage significantly more on their home buying cycle, including with a lot of questions on pre-purchase questions even. My personal favorite, may sound a little cheesy, is this fly around feature. You can actually go take a look at the property from up above and see what is around it, which is hard to do on a static map. All of these features have really helped to drive Realtor's visit share up. realtor.com in the fourth quarter, last quarter of results that we have posted, had a visit share of 33%.
That's up from 31% the previous quarter, and 29% the quarter before that. Our visit share today is almost seven times that of homes.com and three times that of Redfin. We're really catching up on Zillow, who we view as our key competitor. So a strong number two who's getting stronger. The second is that the team have done a really good job in adding adjacencies, revenue-generating, profitable adjacencies to the business. That is rentals, that is new homes, that is sellers. That's now up at around about 21%, 22% of revenue of Realtor. So that's been a strong source of growth as well. The third thing that I would say on the Realtor business is the team have done a really good job in cost discipline, investment discipline, and in driving, again, I'll use the word yield, which is revenue per house sold.
If you actually look at Realtor's revenue per house sold in this last fiscal, and compare it with 2022, which was when the housing market was at its peak, the revenue per house sold is 20% higher than where it was back in 2022. If you think back to when the housing market comes back, we're going to come back in a much stronger position than we were even in the past.
Now, you can correct me if I'm wrong. I think there was a moment or a point in time a few years ago where Realtor was losing EBITDA. Is that right? Now it's profitable? Is that fair to say?
Well, we don't comment on the profitability of the individual business, but I will say that this is a business that's definitely well on the way to structural profitable growth.
Okay. That's great. Let's just say that interest rates, I know the market is very, the investors are very nervous about interest rates staying high. Let's just assume that the market is right, that interest rates, the long end of the curve doesn't fall. If it does, that would be great for you. But let's just say that it sort of hangs out there. Do you think that there's continued sort of innovation and things within management's control that can keep the trajectory of this business continuing to move in the right direction?
That's our expectation. It's an expectation based on what the team have been able to do here.
Okay.
Over the last, the housing market has been in its current situation for two, three years now.
Right.
Realtor has grown, and it is this innovation, it is the investments we continue to make in it. It is the adjacencies. It really does come back to that kind of restless culture that we have.
Yeah.
Always looking for new avenues of growth.
Okay. That is great. If anyone has a question for Lavanya, we are happy to do it, so just raise your hand. I want to ask you a question about Harper. This business always, it is good, but it always confuses me because I look at all other businesses, and there is just a very clear trend towards digitization. The book publishing business, we are deep into digitization, and I do not know, what is it? 75 per It is like 25% digital roughly, which strikes me as just interesting, right? It is very different than almost all other businesses in that it just does not want to naturally digitize as rapidly as a lot of other businesses. Can you just unpack that a bit and just explain what is going on?
Is it just that book lovers love paper and it is that simple, and we cannot make it more complicated?
It is to a large extent.
Okay.
I think, and I wasn't at News Corp, but 10 years ago, as e-books started to come out and everybody had a Kindle and multiple Kindles actually in our household, the demise of the printed book was kind of what everyone expected would happen.
Right.
I mentioned I was in consumer products before coming here. I find it absolutely fascinating when I started over here and started to get onboard and onto the business. Printed books in the U.S. has grown faster than population growth rate in the U.S. I think there is just something special about the printed book. Consumers, whether it's on a summer vacation or whether it is getting into bed with your child to read to them before they go to bed, the printed book provides a level of like, I think, just old-fashioned comfort.
Yeah.
Which even in this digital age, I would say actually in this digital age, is probably becoming even more valuable.
Yeah.
There's definitely a lot of room for continued growth of audiobooks and e-books. We do see that in our performance as well. AI is definitely going to help with accelerating that. Translations, text-to-voice- recording, these are definitely going to be accelerants of the digital media. But the printed book is just really, really strong. And that business is a fabulous cash generator.
Yeah. My son, who's 19, just bought a record player, and I'm like, "Man." I swear, I'm like, "What are we doing with a record player?" I think we're sort of through the peak of digitization. So if you have 75% of your business is not digital, I think you've been through the scary part, if there was a scary part. So that's great. Can I shift to buybacks? So you bought back, I think, around $640 million of your stock in fiscal 2026. That's about as much stock as the prior four years if I did the math correctly. Why sort of the pickup in buybacks? Is this just a function of the cash that the business is generating, lack of M&A opportunities? Your sort of vote on how disconnected you see the prevailing stock price versus what you see as the underlying value. Why such a dramatic shift?
Yes, we did accelerate our buybacks. It is four times. It was $150 million in fiscal 2025, $643 million, I think, in fiscal 2026. And we do believe that there is a significant discount in our stock price to our NAV. And we are continuously looking for ways to return value to our shareholders, maximize shareholder returns. And so buybacks is definitely one part of that. We also mentioned at the beginning of the year that following the sale of Foxtel, we wanted to return the shareholder loans that we got back from Foxtel as part of our buyback program in 2026. Since we're also listed on the ASX, you can see our buybacks on a daily basis. And we have a very strong balance sheet. We have strong cash flow, which has increased in the last fiscal, 40%, as I mentioned.
We will continuously look at ways to make sure that we are maximizing shareholder returns. We will also make sure that we maintain enough flexibility to be able to do smart value-accretive acquisitions as they may come up.
That's great. We only have about a minute left, but any closing thoughts you would like to leave with the audience, Lavanya?
I think it is. Look, News Corp, I did say that I am a little biased, but when you think about it from a perspective of the value of the asset base that we have, just the three growth engines and where we play in those three growth engines, the global scale of those businesses, the significant TAM, and I discussed the TAM of Dow Jones Risk & Compliance and Dow Jones Energy, the cash generation of HarperCollins. The vast majority of our revenues on HarperCollins comes from the backlist. We have an extraordinarily strong Christian publishing growth engine within HarperCollins that you do not have to pay any royalties to the Lord as yet.
It is a fabulous asset base. It is very, very different than the old News Corp from 13, 14 years ago. It is a digital company, recurring revenues, growth being driven by digital real estate, info services. If anyone were to step back and actually recognize. It is a business that has generated reliable results.
Yep.
Nothing should be more attractive to investors than this combination. If our investors were to take a good hard look at the stock, I think it will be a huge driver of value to everybody.
That's great. Lavanya, thank you for your time.
Thank you, Jason.
All right. Thank you.