News Corp, with its latest March quarter results, is getting rave reviews from market analysts about its work to extract revenue from AI companies hungry for content.
The global media player lifted overall revenue 9% to $US2.19 billion in the March quarter, mainly driven by its digital real estate services, financial publisher and information provider Dow Jones and books.
News is positioning itself as an AI inputs company and is in discussions to license its content which should have a “positive impact” on revenue and profitability.
Macquarie upgraded its rating on News Corp to outperform from neutral, citing robust growth, and upside with Dow Jones and AI content deals.
“News Corp is executing on AI content licence deals, reinforcing the proprietary nature of its data, and providing earnings benefits,” the analysts said.
“We see content licensing deals with AI platforms as big opportunities, with a deal with Meta in March reported to be worth up to $US50 million a year in addition to deals with OpenAI and Amazon.
“Management is pursuing similar deals with other platforms, and although discussions are commercially sensitive, we see further agreements as key catalysts for both valuation and earnings.”
Investment bank UBS rates News Corp a buy with a 12 months price target of $58 per share.
Analysts at UBS described the results as strong, and ahead of market consensus, highlighting continued operating strength despite global macro uncertainty.
They said management commentary suggests more partnerships coming to the table, adding to the existing deals with OpenAI, Meta and Bloomberg.
Morgan Stanley has News as overweight, with the analysts saying they are “more bullish” than consensus.
“Ongoing revenue growth, increasing subscription + digital revenues as a percent of group revenues, and balance sheet strength provides optionality,” they said.
News Corp, fresh from success in getting AI players to pay for content, has opened a new front, this time content scrapers.
"We have these baleful bad boy bots in our sights and intend to pursue them vigorously," CEO Robert Thomson told analysts in a briefing.
The global media player has closed a number of successful deals including Meta, OpenAI and Bloomberg.
Thomson confirmed "advanced negotiations with several companies" beyond the existing partnerships.
However, he is now pursuing firms scraping content without permission, and warned that companies buying that content are also liable.
"We are tracking a number of dodgy digital firms scraping illicitly, illegally, our precious content and shamelessly reselling this purloined property,” he said when briefing analysts on March quarter results.
“Companies which willingly buy this stolen content from these nefarious fences are also culpable.”
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