News Corp. Q4 financials rise

'Avatar' powers record fiscal year film profit, ads keep rising

NEW YORK -- Rupert Murdoch's News Corp. swung to a fiscal fourth-quarter profit thanks to special gains and lower impairment charges than in the year-ago period.

The entertainment conglomerate Wednesday afternoon posted a profit of $875 million, compared with a year-ago loss of $203 million. Revenue rose 6% to $8.11 billion.

For the full fiscal year, News Corp. turned a profit of $2.5 billion, compared with a year-ago loss of $3.4 billion, which included $9.2 billion in impairment charges, partially offset by one-time gains. Full-year revenue jumped 8% to $32.8 billion. One of the year's biggest financial drivers was the success of "Avatar," which management said will be hard to replicate in the new fiscal year.

For the full year, film operating profit hit a record $1.3 billion driven by blockbuster theatrical and home entertainment performances of "Avatar" and "Ice Age: Dawn of the Dinosaurs." The film division had brought in seven consecutive years of record operating profits before ending that streak last year. For the new fiscal year, News Corp. eyes film profit to be in the mid-$300 million range below the just-ended year.

"Despite the volatility of world economies, News Corporation continues to thrive on a truly global scale," chairman and CEO Murdoch said.

Film unit operating profit for the latest quarter of $137 million was down from $203 million a year earlier primarily due to less theatrical money than in 2009 when "Night at the Museum: Battle of the Smithsonian" and "X- Men Origins: Wolverine" scored at the boxoffice.
But home entertainment results saw a rare improvement in a generally sluggish quarter thanks to DVD sales of "Avatar."

Quarterly TV operating profit rose 13% to $113 million as local TV station ad revenue jumped 29% (and 8% for the fiscal year). Fox results declined amid higher programming costs.

Like executives at other sector giants, management also emphasized that TV ad momentum continues in the second half of 2010.
News Corp. president, COO and deputy chairman Chase Carey said on a conference call that TV station ad pacings are up 30%-plus at the moment. And Murdoch spoke of 80%-90% increases in local auto ads.

Cable network division operating profit multiplied from $134 million to $563 million as ad revenue rose 11% in the latest quarter.

The digital media group posted higher losses amid "lower search and advertising revenues at MySpace." The company wrote down the value of its mobile and outdoor business by $217 million. Carey said the firm is looking at a potential disposal of its mobile entertainment operation.

Here are some other highlights from Wednesday's earnings call:
- CFO David DeVoe predicted only modest economic growth ahead, but continued healthy ad markets. He said the company is targeting low double digit growth in total segment operating profit in the new fiscal year over the $4.46 billion recorded in the just-ended year.

- Carey said News Corp.'s offer to acquire full control of U.K. satellite TV firm BSkyB is "full and fair," and the conglomerate will remain disciplined on the deal. If it doesn't come together, he said the company has other uses for its cash. He didn't provide specifics.

- German pay TV platform Sky Deutschland remains "a work in progress," but given the size and wealth of the market, it has good return potential, Carey said.

- Carey once again said the broadcast business has "a lousy business model," but News Corp. and other sector giants have started to develop a dual revenue stream thanks to retransmission consent fees.

- Asked about a recent rumor that News Corp. had considered buying the Texas Rangers baseball team, Murdoch said his company is not in the business of buying sports teams, just sports rights.

- Murdoch reiterated that Apple's iPad is "a real game changer in the presentation of news," which could draw in more younger readers to newspaper and other content again.

- "We haven't lost any business," Murdoch said when asked whether a year-long boycott of Glenn Beck on Fox News by liberal groups has affected the program. Revenue and profit remain strong, he said.

- Murdoch predicted the Western economies will remain "fragile."
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