News Corp. Profit More Than Doubles on TV Fees, Ad Sales
News Corp. Profit More Than Doubles on Higher TV Fees
Jonathan Alcorn/Bloomberg
Signage is displayed on the garage entrance to the Fox Entertainment Group Inc. Studios building in Los Angeles.
Signage is displayed on the garage entrance to the Fox Entertainment Group Inc. Studios building in Los Angeles. Photographer: Jonathan Alcorn/Bloomberg
News Corp., the owner of Fox Broadcasting and the Twentieth Century Fox film studio, said second-quarter profit more than doubled, driven by higher television subscriber fees and advertising sales.
Net income climbed to $642 million, or 24 cents a share, from $254 million, or 10 cents, a year earlier, the New York- based company said today in a statement. Excluding restructuring and impairment charges, earnings were 29 cents a share, compared with the 28-cent average of analysts’ estimates compiled by Bloomberg.
“The strength came where you expected it, in broadcast and in cable,” said David Bank, a media analyst at RBC Capital Markets in New York. “There was likely weakness at MySpace and film had a tough comparable period. These were basically in line.”
News Corp.’s Fox broadcast network, along with other broadcasters in the industry, sought fees from TV distributors last year for their TV signals that used to be free. Those payments, along with new revenue from newspapers’ Internet paywalls and a tablet-only news product, are part of Chairman and Chief Executive Officer Rupert Murdoch’s plan to get paid for content by subscribers.
Murdoch today introduced the Daily, a news publication tailored specifically for Apple Inc.’s iPad, in a bid to expand into delivering content only digitally. The publication will cost 99 cents a week, or $39.99 a year, and include high- definition video and 360-degree photos. News Corp. spent $30 million to get the publication off the ground, and it will cost about $500,000 a week to operate, Murdoch said.
Cable and Satellite
Sales in the quarter ended Dec. 31 were little changed at $8.76 billion, compared with analysts’ $8.72 billion estimate.
News Corp., also the owner of Fox News and the Wall Street Journal, rose 41 cents, or 2.6 percent, to $16 at 4 p.m. New York time in Nasdaq Stock Market trading. The Class A shares have increased 9.9 percent this year.
Operating profit for the television unit rose fivefold to $151 million on higher political and automotive advertising, and National Football League advertising increases that offset lower advertising for Major League Baseball’s World Series.
Cable networks, such as FX, increased operating income 22 percent to $735 million, on a 12 percent gain in revenue. At the U.S. channels, advertising grew 12 percent and affiliate fees rose 10 percent. News Corp.’s Fox TV has been pushing distributors to pay so-called retransmission fees for its programming, following the drop in advertising sales during the U.S. recession.
MySpace ‘New Owners’?
Lower search and advertising revenue at the social network MySpace led to increased losses at the company’s Digital Media Group. The unit that includes that group had operating losses of $156 million in the quarter, compared with a $125 million loss a year earlier.
Chase Carey, News Corp.’s chief operating officer, said on a conference call with investors that the company is evaluating strategic alternatives for “new owners” for MySpace.
As part of Murdoch’s efforts to add to subscription operations, the company is bidding for the 61 percent of pay-TV operator British Sky Broadcasting Group Plc it doesn’t already own. News Corp. is offering remedies to try to avoid a lengthy antitrust review of its 7.8 billion-pound ($12.6 billion) bid.
To contact the reporter on this story: Brett Pulley in New York at bpulley@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom in New York at pelstrom@bloomberg.net.
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