News Corp (ASX.NWS) 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 $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.

News Corp Reports an Impressive Fiscal 2026 Result

News Corp operates in an industry undergoing significant changes, with the traditional print-based publishing business model being dismantled by proliferating news and information outlets in the digital space. This is compounded by ever-expanding means for consumers to access them, driven by mobility and continuing device innovation. Consequently, News faces material structural headwinds, with consumers migrating from traditional newspapers to the digital arena and advertisers following suit.

Having said that, we believe News is better placed than peers in the publishing industry to transition its print business to the digital age. It has some of the most venerable masthead brands in the industry (The Wall Street Journal, The Times), and boasts significant editorial resources, especially compared with those of its rivals, which have been dwindling. The company’s financial position is solid. News boasts sufficient financial strength to transition the business to the digital age while also exploring opportunities to diversify away from the traditional newspaper business. Recent efforts to simplify the group is also positive.

The 62%-owned REA Group’s growth outlook remains robust in the online real estate classifieds space and Move (acquired in November 2014) is making progress in the US digital property advertising space. Critically, Dow Jones is bucking the trend in the newspaper industry, with increasing digital revenues and expanding B2B presence fueling solid earnings growth. Book publishing is becoming a dependable “quiet achiever,” with digitalization proving to be a rejuvenating tailwind.

The sale of Foxtel in April 2025 eliminates a unit where the earnings have been falling at a CAGR of 4% since fiscal 2019. It also reduces capital intensity and frees up the balance sheet.

Bulls Say

  • 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.

Bears Say

  • 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.

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