Bloomberg News

News Corp. Profit Tops Analyst Estimates on TV Ad Gains

November 07, 2012

News Corp. Boosts Profit After Making Gains in TV Advertising

News Corp. gets most of its revenue from its entertainment operations, which include the Fox News cable network and Twentieth Century Fox film studio. Photographer: Scott Eells/Bloomberg

News Corp. (NWS:US), the media company run by billionaire Rupert Murdoch, reported profit that topped analysts’ estimates, fueled by TV advertising and affiliate fees from pay-TV providers.

Fiscal first-quarter net income rose to $2.23 billion, or 94 cents a share, from $738 million, or 28 cents, a year earlier, the New York-based company said yesterday in a statement. Excluding some items, per-share profit was 43 cents. That beat the average analyst estimate (NWSA:US) of 37 cents, according to data compiled by Bloomberg.

News Corp. posted profit gains at its cable-network unit, Twentieth Century Fox studio and broadcast-TV operations. Domestic cable channels saw 8 percent ad growth, outpacing companies such as Comcast Corp. (CMCSA:US) and Discovery Communications Inc. (DISCA:US) Profit fell at the publishing business slated to be spun off next year.

“This was a solid quarter and pretty good beat,” Paul Sweeney, an analyst with Bloomberg Industries, said in an interview. The dual revenue from advertising and affiliate fees makes cable networks “the best business in the media industry,” he said.

News Corp. shares (NWSA:US) rose 1.6 percent to $24.67 in New York at the close. The stock has climbed 38 percent this year, bolstered by repurchases and the spinoff plan.

Breakup Plan

Murdoch, who started building his media empire more than a half-century ago with newspapers, announced plans in June to split off News Corp.’s declining publishing division, home to the Wall Street Journal and the U.K.’s Sun. The company gets most of its revenue from its entertainment operations (NWSA:US), and investors see the breakup as a way to better spotlight the value of that business.

“Key, must-have content is as important as ever,” Chief Operating Officer Chase Carey said on a conference call with analysts about the earnings report.

Television remains strong amid competition from online providers, Carey said. The ad market has been relatively reserved, he said, citing an uncertain economy.

While the entertainment company will continue to be led by Murdoch, News Corp.’s board has yet to designate a chief executive officer for the publishing side. Murdoch has said that the company is evaluating internal candidates for the job. Top executives at the business include Dow Jones & Co. Editor-in- Chief Robert Thomson.

Net income last quarter benefited from the sale of a 49 percent investment in NDS Group Ltd. to Cisco Systems Inc. (CSCO:US) for about $1.9 billion. News Corp. recorded a $1.4 billion gain from the transaction.

Sales Increase

Sales (NWSA:US) advanced 2.2 percent to $8.14 billion in the period, which ended on Sept. 30. Analysts had estimated $8.15 billion on average, according to data compiled by Bloomberg.

Operating income from the company’s cable networks, which include FX and Fox News, increased 23 percent to $953 million. The publishing unit saw a 48 percent decrease to $57 million, partly due to a decline in print advertising.

The U.S. newspaper advertising market shrank 6.6 percent in the first half of this year, according to the latest figures from the Newspaper Association of America.

The company recorded $67 million in expenses last quarter from dealing with the fallout from a hacking scandal that erupted at Murdoch’s U.K. newspapers last year. News Corp. reporters had accessed the voice mail of a murdered teenager, Milly Dowler, for news stories, causing a firestorm within the upper levels of British media and government.

Rebekah Brooks, the former head of News Corp.’s British newspapers, was charged by London police for her part in those alleged crimes.

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

  • NWS
    (News Corp)
    • $15.0 USD
    • 0.08
    • 0.55%
  • NWSA
    (News Corp)
    • $15.57 USD
    • 0.09
    • 0.58%
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