Fox, News Corp. bullish on TV
'Idol,' reality shows provide strike buffer, execs sayThe Fox network could gain "significant" ratings market share and win this broadcast season's ratings race in the 18-49 demographic by a bigger margin than last year amid the current writers strike, Peter Chernin, the president and COO of Fox corporate parent News Corp., said Wednesday.
Meanwhile, chairman and CEO Rupert Murdoch signaled during News Corp.'s quarterly earnings call that a U.S. economic downturn could hurt the conglomerate's growth outlook but said that observers have overstated such danger. He said 23% of News Corp.'s revenue depends on U.S. advertising.
Scatter ad growth is in the strong double-digit percentage range, and Super Bowl inventory is more than 90% sold out, he said. Overall, "advertising at News Corp. remains stronger than ever," Murdoch told analysts.
Chernin said the Fox network would save more money in term deals, story and pilot-season costs than it would lose in potential advertising revenue during the current writers strike.
With "American Idol" ready for the new year, more reality fare than others and an animated lineup that is finished about a year ahead of time, Fox is better positioned than its competitors, Chernin said. "We would be in original programming virtually every night of the week in this broadcast season," he added. He said that if the strike lasted for eight months to a year, it could start affecting the company's financials.
After the market close, News Corp. reported a 13% decline in its fiscal first-quarter profit amid tough comparisons with the year-ago period, which included one-time investment gains.
The latest profit of $732 million for the quarter ending June 30 compared with the year-ago $843 million, which included $428 million in gains. Operating income jumped 23% to $1.1 billion though, and revenue rose 19% to $7.1 billion, with the film unit a key driver.
Operating income at News Corp.'s film division jumped 51% to $362 million thanks to blockbusters "Live Free or Die Hard" and "The Simpsons Movie."
The conglomerate's broadcast TV unit reported a 4.7% profit decline to $183 million as improvements at Fox Broadcasting Co. were offset by lower contributions from TV stations and a full quarter of losses at MyNetworkTV, which launched in September 2006.
Again, the company's cable networks were strong contributors. Their quarterly operating income increased 16% to $289 million, with the Fox News Channel's contribution more than doubling. This was partially offset by startup costs for Fox Business Network and the Big 10 Network. Management reiterated its expectation that FBN will break even within three years, and Big 10 before that.
Meanwhile, Fox Interactive Media, which includes MySpace, saw its losses narrow as search revenue was boosted by a partnership with Google. Management on Wednesday again lauded the advertising growth of MySpace, saying the site's hyper-targeting service is a success so far with further improvements to come.
Overall, News Corp. reiterated its full-year financial guidance, but management signaled that economic weakness in the U.S. could affect its advertising revenue and growth later this year and next fiscal year.
Asked about a slow-moving planned swap of assets and cash for Liberty Media's stake in News Corp., Murdoch said the Justice Department started two days of meetings on the issue Wednesday. He said he is "very hopeful" the deal will after that move to the FCC, where he foresees no approval problems.
Paul J. Gough contributed to this report.