Bloomberg News

News Corp. Tops Profit Estimates, Doubles Buyback

May 10, 2012

News Corp. signage is displayed outside of the company's offices in New York. Photographer: Victor J. Blue/Bloomberg

News Corp. signage is displayed outside of the company's offices in New York. Photographer: Victor J. Blue/Bloomberg

News Corp. (NWSA:US), the media company run by Rupert Murdoch, had its biggest jump in six months after revenue growth at its cable networks and film studio helped it exceed analysts’ third-quarter profit estimates.

Net income rose 47 percent to $937 million, even as a U.K. hacking scandal increased costs, New York-based News Corp. said yesterday. Excluding some items, profit of 37 cents beat the 31- cent average of analysts’ estimates (NWSA:US) compiled by Bloomberg. The company also doubled its stock-buyback program to $10 billion.

News Corp., owner of Fox Broadcasting and Fox News, derives at least 70 percent of its annual profit from television, and is working to expand in markets outside the U.S. with investments in pay-TV operators. While ratings were weak in the quarter, News Corp.’s cable networks posted gains in ad sales and fees from pay-TV operators, said David Bank, an analyst with RBC Capital Markets.

“Operations are generally accelerating with the exception of the newspaper business, which is the only troubling part,” Bank said in an interview after the earnings report.

News Corp. climbed 4.4 percent to $20.24 at 9:52 a.m. New York time after advancing as much as 5.5 percent for the biggest intraday gain since Oct. 27. The shares had added 8.6 percent this year before today.

No Plans to Sell

A U.K. committee, after probing whether News Corp. misled Parliament in the telephone-hacking scandal involving the company’s journalists, concluded this month that Murdoch is “not a fit person to exercise the stewardship of a major international company.” Now the media regulator Ofcom may force News Corp. to sell or cut its 40 percent stake in British Sky Broadcasting Group Plc. (BSY)

“We don’t have any expectations to sell down part of Sky at this time,” Chief Operating Officer Chase Carey said on a call with analysts after the earnings report.

Revenue rose 1.8 percent to $8.4 billion in the quarter, which ended March 31. Analysts on average had estimated $8.25 billion. Sales at News Corp.’s cable networks, which include FX and Fox News, climbed 16 percent to $2.38 billion.

Revenue at News Corp.’s publishing unit, which includes the Wall Street Journal in the U.S. and the Sun in the U.K., declined 2.8 percent to $2.03 billion.

‘Blind Eye’

Murdoch, 81, controls about 40 percent of News Corp.’s voting shares. The chief executive officer “turned a blind eye and exhibited willful blindness to what was going on in his companies and publications,” according to a May 1 parliamentary report.

Coping with the scandal’s fallout has cost News Corp. about $258 million since it broke in July. That includes $151.4 million in legal fees, with $63 million from the most recent quarter; $15.6 million in settlements; and $91 million from closing the News of the World newspaper.

The company adopted a $5 billion buyback plan in the wake of the scandal and doubled the size of the program today.

The repurchases have helped bolster the stock. The Class A shares have increased 7.3 percent since the Guardian reported on July 4 that a News Corp. newspaper accessed the voice mail of a murdered teenager, Milly Dowler.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • NWSA
    (News Corp)
    • $17.22 USD
    • 0.19
    • 1.1%
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