News Corp. Beats Wall Street's Expectations With Quarterly Results

Rupert Murdoch

News Corp.'s fiscal year ends in June, so pay information for chairman and CEO Rupert Murdoch and other top executives always is disclosed outside the traditional reporting season. For the fiscal year that ended last summer, Murdoch's compensation amounted to $30 million, down 10 percent. President and COO Chase Carey earned $24.8 million, down from $30.2 million the year before.

The company reports $9.54 billion in revenue, up 14 percent from a year earlier; television segment shows growth despite falling ad revenue for "American Idol."

News Corp. on Wednesday reported it earned $2.85 billion in its fiscal third quarter due to a $2.43 billion windfall related to its increased stake in Sky Deutschland and its sale of a stake in SKY Network Television in New Zealand. Revenue was $9.54 billion while analysts expected $9.14 billion.

Excluding those huge items related to satellite TV in Germany and New Zealand, News Corp. earned 36 cents per share, down from 38 cents a year earlier but about a penny more than analysts had predicted.

The conglomerate controlled by chairman and CEO Rupert Murdoch reported that operating income improved in half of its six segments.

Cable network programming recorded $993 million in operating income, up from $846 million. Filmed entertainment showed $289 million, up from $272 million. Television was $196 million, up from $171 million.

Not faring as well were direct broadcast satellite television, which showed an $11 million operating loss compared with a $40 million operating gain; publishing ($85 million down from $130 million); and "other" (an operating loss of $190 million compared with an operating loss of $147 million).

On the revenue side, only publishing and "other" fell year-over-year, impressing some analysts who projected that only the cable network programming segment would show meaningful growth.

During the regular session, News Corp. shares dropped 1 percent to $31.98 but in the after-hours session the stock was rising more than 3 percent.

“In our fiscal third quarter News Corp. achieved organic growth across our cable, film and television segments and, through the consolidation of Sky Deutschland and sale of stakes in SKY New Zealand and Phoenix Satellite Television, we advanced our strategic agenda to simplify our global portfolio," Murdoch said.

In the most recent quarter, News Corp. said it spent $42 million in its ongoing handling of the News of the World phone-hacking scandal, down from $63 million in the same quarter a year ago.

At cable network programming, the conglomerate's largest segment, ad revenue for the Fox News Channel fell in comparison with a year ago when presidential candidates were spending heavily with the network. More than making up for Fox News though, were gains for regional sports networks, FX Networks and National Geographic Channels.

Despite tough year-over-year comparisons, COO Chase Carey told analysts on Wednesday that "Fox News has been a success story second to none."

Carey also said deals with Netflix have been an "important addition to our business," but News Corp. continues to be "careful" about windowing when it comes to licensing FX content, in particular, to Netflix and other streaming outlets.

Because digital distribution is flourishing and Blu-ray is helping to stabilize the physical side of things, home entertainment is up more than 5 percent for News Corp., Carey said.

In the television segment, growth came courtesy of a near doubling of retransmission consent revenue and lower programming costs for Fox Broadcasting. Those improvements, though, were partially offset by lower advertising revenue at American Idol, where ratings have been dropping.

Despite fragmentation, he said "event television" is still broadcast TV, though some old rules need to be discarded in terms of programming and in the way the business is handled.

For filmed entertainment, Life of Pi was cited as a driver of growth, as was strong home entertainment performances from Taken 2 and Ice Age: Continental Drift.