"They read the newspapers."
Translation:Αυτοί διαβάζουν τις εφημερίδες.
Yes, αυτοί and αυτή are homophones. The problem of course is only in listening. So I'd suggest that new learners should pay specific attention not only to the pronoun, but the form of the main verb as well, so that confusion would be avoided, if that's possible. (like this case. You can figure out the third plural by the form of the verb διαβάζω. Διαβάζουν is third plural.) ^.^