News Corp's News Division Lost 55% of Its Profit. Its AI Licensing Deals Keep Growing.

News Corp delivered a split Q3 2026. Total revenue rose 9% to $2.2 billion and overall segment EBITDA climbed 18% to $343 million. Dow Jones, Digital Real Estate Services and Book Publishing all posted double-digit profit increases. But the news media division, the one that actually makes the journalism, saw EBITDA collapse 55% to $15 million.

The cause is clear: launch costs for the California Post, a new digital publication targeting the US West Coast, and softer performance from Australian and UK operations. Revenue in the segment rose 5% to $538 million, but the spending outpaced the growth.

Meanwhile, AI content licensing has become a meaningful revenue line. The Meta deal, signed in early March, is worth up to $50 million per year for access to Wall Street Journal and other News Corp properties for AI model training. The OpenAI partnership continues. Negotiations are active with additional firms, and management said it expects to receive a share of a $1.5 billion Anthropic payment that will begin hitting revenue later in the calendar year.

Digital subscriptions now represent 62% of total revenue across the company.

The dual strategy is becoming explicit: monetise content through traditional subscriptions and advertising, and simultaneously licence the same content to AI companies for training data. Thomson's "woo or sue" framing captures it. If a tech company will pay for access, do the deal. If it scrapes without permission, litigate.

For marketers, the implications sit in two places. First, publisher economics are under strain. A 55% profit drop in a news division means cost pressure will flow into editorial quality, ad load decisions and commercial partnerships. If your media plan relies on premium news environments, the quality of that inventory is not guaranteed to hold.

Second, the AI licensing model changes how publisher content circulates. If News Corp content trains AI models that then generate summaries, recommendations and answers, the traditional advertising touchpoint around that content disappears. The revenue shifts from advertising to licensing fees, but the marketer loses the impression.

For Australian publishers, the California Post investment shows News Corp's attention and capital flowing offshore. The softer Australian performance mentioned in the earnings is a signal worth watching.

News Corp is building a two-revenue-stream business. The news division's profit collapse is the cost of the transition. Whether the AI licensing revenue compensates in time is the open question.