News Corp. Quarterly Results From Continuing Operations Rise Amid Scandal

1:04 PM PST 08/10/2011 by Georg Szalai
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UPDATED: Fiscal fourth-quarter earnings fall 22 percent including a $254 million loss on the sale of MySpace as COO Chase Carey discusses the Hulu auction, and CEO Rupert Murdoch says Fox Business Network is breaking even.

NEW YORK - Rupert Murdoch's News Corp. reported improved fiscal fourth-quarter earnings from continuing operations, but profit fell 22 percent including a $254 million loss related to the sale of social network MySpace, after the market close on Wednesday. The results included stronger TV and film results.

The entertainment giant also raised its quarterly dividend from 7.5 cents to 9.5 cents per share in another nod to shareholders concerned about the recently reignited phone hacking scandal. The news followed a recent increase in the company's stock buyback program to $5 billion. During a conference call, president, COO and deputy chairman Chase Carey said that News Corp.'s stock remains "woefully undervalued" and said that additional stock buybacks are possible in the future.

Management predicted low to mid teen percentage growth in operating profit for the latest fiscal year driven by cable TV networks growth,
higher broadcast retransmission consent revenue and the lack of MySpace losses, partially offset by lower newspaper results due to the recent shutdown of the News of the World tabloid in the U.K., which was at the center of the phone hacking scandal. 

"While it has been a good quarter from a financial point of view, our company has faced challenges in recent weeks relating to our London tabloid, News of the World," chairman and CEO Murdoch said in a statement in a reference to the ongoing scandal. "We are acting decisively in the matter and will do whatever is necessary to prevent something like this from ever occurring again."

The entertainment conglomerate said it has paid U.K. satellite TV operator BSkyB a $63 million break-up fee for not having completed plans to acquire full control of the company.



News Corp. posted a quarterly profit from continuing operations of $982 million compared with a year-ago profit of $902 million. Including the $254 million loss from the sale of MySpace, quarterly earnings declined to $728 million, or $683 million in earnings attributable to shareholders, down from $875 million in the year-ago period.



Revenue for the quarter ended June 30 rose 11 percent to $8.96 billion from $8.11 billion. Among the conglomerate's various businesses, its film and TV divisions were key growth drivers.

Full-year profit rose from $2.54 billion to $2.74 billion on revenue that climbed from $32.78 billion to $33.41 billion.

Quarterly profit at News Corp.'s film unit gained 53 percent to $210 million as revenue increased 14 percent to $2.0 billion. The company cited the worldwide theatrical performance of Rio, the home entertainment results of Black Swan and The Chronicles of Narnia: Voyage of the Dawn Treader, as well as worldwide pay and free TV catalog product as key growth drivers. Stronger profit at Twentieth Century Fox Television, led by the growth of digital distribution revenue from library content and contributions from the Glee concert tour, also boosted results.

News Corp.'s broadcast unit roughly doubled its operating profit to $233 million on a 7 percent revenue increase to $1.12 billion amid a stronger advertising market and higher retransmission consent fees. TV advertising sales are currently trending down in the mid to high single digit percentage range, but in the low single range when excluding political revenue in the year-ago period, Carey said.

The company's cable networks division recorded a 12 percent operating profit gain to $631 million as revenue rose 15 percent to $2.15 billion diriven by a 23 percent U.S. ad improvement. Asked about Fox Business Network, management said it is breaking even on a cash flow basis and is "making great strides," as Carey put it.

Asked about the auction of onine video site Hulu, Carey said it is progressing "largely according to plan," but he signaled that News Corp. -could in the end opt to not sell as it must answer the question of whether it makes sense "to pursue that path or for us to stay in an ownership position."

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

 

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