News Corp. reports fourth-quarter profit
EmptyNEW YORK -- News Corp. management on Wednesday forecast another strong fiscal year for the conglomerate's film operations, which brought in the sixth profit record in a row for the latest year, and its digital media assets, which exceeded a $500 million revenue target by $50 million and turned its first profit for the year.
The company in its fourth quarter and fiscal 2007 earnings report Wednesday predicted that its Fox Interactive Media unit would exceed $1 billion in revenue in the recently started new fiscal year, with the MySpace online networking juggernaut set to pitch in more than $800 million. This should boost FIM's profit from $10 million in the latest year.
For the company as a whole, brass projected an operating income gain in the low-teen percentage range for the new fiscal year, even when including about $340 million in investments in new networks and other businesses.
News Corp. chairman and CEO Rupert Murdoch said in a conference call that the continued digital transformation of his company is his biggest focus, promising also to further grow traffic and advertising at the firm's newspaper, TV station and other Web sites.
Overall, he said that News Corp. is still "in the early stages" of digital growth, adding that MySpace, despite some Wall Street concerns over slowing expansion, should continue to see steady gains.
The conglomerate's film unit reported a full fiscal-year operating profit of $1.2 billion, even though the division reported lower fiscal fourth-quarter results. Counting just the film studio, without TV production, this marked the sixth operating income record in six years.
News Corp. president and COO Peter Chernin acknowledged the tough comparisons for the new fiscal year after a "phenomenal" performance but lauded his film team for having provided "a very strong start" this summer season.
He predicted that the film unit could set another record or at least get "awfully close" to the latest year's results.
Overall, News Corp. reported a fiscal fourth-quarter profit from continuing operations of $890 million, up 24% from $718 million in the year-ago period or up 4.5% from $852 million when not adjusting for discontinued operations. It also recorded operating profit of $1.2 billion, up 18%, driven by double-digit percentage gains in its cable network, satellite TV, magazine and newspaper units. Revenue rose 8.6% year-over-year to $7.4 billion.
News Corp.'s film unit reported fiscal fourth-quarter operating income of $106 million, down from $200 million last year, which included strong boxoffice results from "Ice Age: The Meltdown."
The latest period included the home entertainment success of "Night at the Museum" and early results from the theatrical runs of "Fantastic Four: Rise of the Silver Surfer" and "Live Free or Die Hard."
News Corp.'s operating profit for the TV unit fell $18 million to $385 million as increased contributions from the Fox Broadcasting Co. were more than offset by losses from the first year of MyNetworkTV and lower results from Fox TV stations and Indian pay TV firm Star.
Chernin said he is optimistic that the Fox network will bring in its fourth consecutive key ratings win in the upcoming fall season thanks to strong programming, high-single-digit ad-rate gains in the upfront and a "very strong" scatter market.
News Corp.'s cable networks division grew its operating profit 46% to $284 million, driven by continued growth at the Fox News Channel, FX and regional sports networks.
Italian satellite TV arm Sky Italia, meanwhile, boosted its quarterly operating profit 85% to $155 million as its subscriber base grew to 4.2 million at the end of the quarter and fiscal year.
Murdoch said the overall ad market seems fairly upbeat to him, shrugging off the suggestion that the current debt market crunch could pull down ad spending significantly.
Asked about new contract talks with the WGA, Chernin said they have been "very slow" but predicted no immediate strike risk. He also echoed other industry executives in saying that accelerated production work should keep content companies in business in case of a strike next summer.
Chernin also repeated past comments that day-and-date film-release trials with cable operators haven't been conclusive so far, meaning that News Corp. will do further testing before expanding the use of the new release window.