News Corporation (NWS) Cash Flow Statement

The wide swings in OCF/NI, from 0.54 in 2025Q1 to 17.97 in 2024Q3, suggest that net income is not a reliable proxy for cash generation on a quarterly basis. The gap is largely driven by working capital changes, which have been both positive and negative, and by depreciation and amortization that consistently exceed net income in some quarters. Investors should focus on the cumulative relationship rather than quarterly noise, as the overall trend appears stable but with high variability.

The FCF trajectory shows a clear seasonal pattern, with negative or minimal FCF in the March quarters (2025Q1 and 2026Q1) and strong positive FCF in the December quarters. The most recent quarter's FCF margin of 23.1% is among the highest in the period, suggesting improved cash generation, possibly due to better working capital management and lower capex intensity. However, the volatility in FCF margins, from -1.5% to 24.1%, highlights the cyclicality of the business and the need to assess on a trailing twelve-month basis.

Capex/Revenue has been relatively consistent, averaging around 4-5% with occasional spikes, such as 7.4% in 2025Q4. This suggests that News Corp is not in a heavy investment phase, and the moderate capital intensity supports healthy FCF generation. The consistency in capex relative to revenue implies that maintenance and growth capex are well-balanced, though the slight uptick in the most recent quarter may warrant monitoring for potential expansion initiatives.

The large swings in working capital, particularly the -$380M in 2026Q4 and +$264M in 2024Q3, suggest that News Corp's cash flow is heavily influenced by the timing of collections, payments, and possibly subscription or advertising receivables. These swings are not necessarily a sign of operational deterioration but rather reflect the seasonal nature of the business. Investors should monitor whether these changes are consistent with revenue trends and whether they indicate any structural shift in the company's cash conversion cycle.

The significant increase in buybacks, from $36M in 2025Q4 to $356M in 2026Q4, suggests that management is returning more capital to shareholders, possibly reflecting confidence in cash flow sustainability. Dividends have been relatively stable, ranging from $30M to $57M per quarter, indicating a consistent payout policy. The combination of buybacks and dividends, funded by strong operating cash flow, appears to be a deliberate capital allocation strategy, though the sustainability of the elevated buyback pace will depend on future cash generation.

The cumulative gap between operating cash flow and net income is substantial, with OCF totaling $3.4B versus net income of $1.1B. This divergence suggests that net income understates the company's cash-generating ability, likely due to significant non-cash charges such as depreciation and amortization, which totaled over $1.3B in the period. However, the gap also reflects working capital dynamics that may not be sustainable, so investors should assess the quality of earnings and the drivers of this divergence to determine if it is a structural advantage or a timing artifact.