Peter Chernin: Film projects slowing down
Says 'de facto actors strike' already happeningNEW YORK -- News Corp. president and COO Peter Chernin on Wednesday warned of the negative impact of what he argued is already a "de facto actors strike" that has started slowing down projects.
"It is difficult for anyone to start a movie now," because a formal strike would interrupt it, he said on his company's earnings call following improved fiscal third-quarter earnings driven by strong TV results. "It's a really bad thing for the industry," especially after an "extremely devastating" writers strike, Chernin said.
Asked about producers' strategy in their AFTRA talks compared with SAG talks, he said they are not looking for quick deals with anyone group over another. Instead, "we seek fair deals for everyone," he added.
Chernin also told analysts Wednesday that News Corp. will make only select films available day-and-date on cable VOD, compared to a recent push by Time Warner to make all its output available in that form (HR 5/1).
His firm will "keep monitoring and experimenting" with different genres in this window to ensure DVD sales don't get cannibalized, Chernin explained. "It's too soon to tell" if day-and-date VOD always brings financial benefits, he concluded. "I wouldn't expect it to be overwhelmingly additive."
Chernin also formally confirmed that Fox Interactive Media, the unit that houses MySpace, will fall slightly short of its full fiscal year target of $1 billion in revenue. He suggested it would hit about $900 million, but emphasized News Corp. remains very happy with the "very healthy business" and pointed to "significant progress."
News Corp. management also made clear that while it remains open to discussions, it is very happy running FIM as a standalone business. Chernin and chairman and CEO Rupert Murdoch said they haven't held talks with Yahoo, AOL and Microsoft, which have been possible merger or other deal partners, in a couple of weeks.
Murdoch also expressed confidence that News Corp. would be successful in the coming days with its bid for Tribune Co.'s Long Island newspaper Newsday despite a higher offer from Cablevision Systems.
However, he rejected recent criticism that his empire was refocusing on print media after the recent acquisition of Dow Jones, which just completed its first full quarter in the News Corp. family. "That is not our intent," Murdoch said. "We have not changed our playbook."
After the market close, News Corp. reported a fiscal third-quarter profit of $2.7 billion, compared with $871 million in the year-ago period. The latest period included a $1.7 billion gain from an asset swap with Liberty Media that handed control of DirecTV John Malone's company.
News Corp.'s operating income and revenue grew 16% each to $1.4 billion and $8.75 billion, respectively.
Murdoch said the results give him confidence that News Corp. will continue to do well even in a sluggish U.S. economy. "Our ability to generate returns from a multitude of sources puts us in a great position to maintain our financial momentum even in times of economic uncertainty," he said. He also described the U.S. economy as "stressed," with Chernin pointing out a slowdown in TV station ad pacings in the current quarter.
Operating income at News Corp.'s film division declined 36% to $261 million from a year-ago record of $410 million.
The conglomerate's broadcast TV unit boosted its operating profit 53% to $419 million despite additional costs for broadcasting the Super Bowl as the Fox network and TV stations saw growth, and MyNetworkTV narrowed its losses.
News Corp.'s cable networks increased operating income 17% to $330 million. Continued growth at the Fox News Channel and FX was partially offset by startup costs for Fox Business Network and the Big Ten Network.
FIM had quarterly operating income of $27 million, up from $3 million in the year-ago period, on revenue of $210 million, up 55%, executives said. Advertising revenue rose 18%.
Chernin also said Wednesday that online video joint venture Hulu has had "a much stronger start than expected."
And Murdoch said he likes German pay TV firm Premiere AG and signaled he could further boost his investment in it. For now though, News Corp. wants to be inside the company to further gauge its potential.