Wall Street Journal
News Corp.'s net income climbed 11% in the latest quarter, as gains in its cable-television networks and film business offset declines at its newspaper and broadcast-TV divisions.
Reflecting what media executives say are improving but still cautious conditions in advertising spending and the economy, News Corp. expanded the range of its earnings guidance for its full year, ending next June.
The New York-based media company said it expects profits to increase in a percentage range from the high single digits to the low double digits, excluding special items. Three months ago, News Corp. said it expected profits to rise by a high-single-digit percentage.
Reflecting what media executives say are improving but still cautious conditions in advertising spending and the economy, News Corp. expanded the range of its earnings guidance for its full year, ending next June.
The New York-based media company said it expects profits to increase in a percentage range from the high single digits to the low double digits, excluding special items. Three months ago, News Corp. said it expected profits to rise by a high-single-digit percentage.
News Corp.'s broadcast-TV business isn't doing as well as
its cable-TV. Above, 'So You Think You Can Dance.'
Economic conditions are "clearly in better shape than they were a year ago," though a recovery is still a "little fragile," Chairman and Chief Executive Rupert Murdoch said on a conference call.
News Corp., which owns The Wall Street Journal, reported net income of $571 million, or 22 cents a share, for its fiscal first quarter, ended Sept. 30. A year earlier, net income was $515 million, or 20 cents a share. The year-earlier results also included a $422 million write-down of News Corp.'s investment in a German TV company now known as Sky Deutschland. Revenue fell 4.1% to $7.2 billion.
The cable-TV division posted another strong performance. Gloom continued, however, for the broadcast TV and newspapers business. In general, results were helped by cost cutting at several businesses.
As advertising spending has eroded, News Corp. businesses across the glob have stressed alternative ways of making money. In the U.S., News Corp. is pressing cable- and satellite-TV companies to pay cash fees for the rights to pipe the Fox network into people's homes. Traditionally, network owners haven't been paid cash for their broadcast networks.
Mr. Murdoch said the company may not make a self-imposed deadline of next summer to start charging user fees to access all the company's news Web sites. Analysts say it may be difficult to retain ad revenue if subscribers flee paid Web sites for free alternatives.
Operating income at the film-and-TV production unit rose 56%. Box office returns from the latest installment of the "Ice Age" series and DVD sales of the most recent "X-Men" movie helped drive the increase. The year-earlier period also included a weaker slate of films.
Operating income rose 41% for News Corp.'s cable channels, which continue to benefit from higher fees paid by cable- and satellite-TV companies. Advertising sales slipped for the cable channels from a year earlier, however, as they did in the prior quarter. Investors worry the fees may not have much room to grow, removing a major growth engine for the company.
News Corp. executives said international cable channels are a new growth area.
At News Corp.'s broadcast-television division, which includes the Fox network and local TV stations affiliated with Fox, operating income dropped by about half to $38 million in the quarter. News Corp. executives said trends for local television stations are improving from a year earlier, when Mr. Murdoch said "business just stopped" at the height of the financial crisis.
The newspapers unit posted an 81% drop in operating profit. Reduced expenses couldn't offset steep ad declines. In addition to The Journal, News Corp. publishes the New York Post in the U.S., four U.K. national papers and a string of papers in Australia. Mr. Murdoch said The Journal is profitable but "barely."
He also said the company plans to keep "absolute control" of the name and content of its Dow Jones Indexes business, which News Corp. has put up for auction. He said he couldn't comment on whether the company would merge Dow Jones Indexes with another index.
The division housing the MySpace social-networking site posted a loss as ad sales fell. MySpace has slashed its work force, installed new management and shifted tack to focus on its online video, games and music offerings as it faces competition from Facebook and other popular Web hangouts.
"It's clearly still a work in progress," said Chase Carey, News Corp.'s president and chief operating officer, said on the conference cal.
News Corp. has had preliminary discussions about a deal to buy at least parts of NBC Universal, an alternative to Comcast Corp.'s negotiations to acquire a controlling stake in the TV-and-movie company from General Electric Co. Mr. Murdoch said on the call Wednesday that the company wasn't interested in NBC "as such." "When things come around, we'll kick the tires, but we're not in any talks with anybody at the moment," he said.
Comcast and GE, which is the majority owner of NBC Universal, have worked out the general outlines of a deal, according to people familiar with the matter. An announcement could be ready as early as next week or the week after, those people and others familiar with the talks say.
News Corp., which owns The Wall Street Journal, reported net income of $571 million, or 22 cents a share, for its fiscal first quarter, ended Sept. 30. A year earlier, net income was $515 million, or 20 cents a share. The year-earlier results also included a $422 million write-down of News Corp.'s investment in a German TV company now known as Sky Deutschland. Revenue fell 4.1% to $7.2 billion.
The cable-TV division posted another strong performance. Gloom continued, however, for the broadcast TV and newspapers business. In general, results were helped by cost cutting at several businesses.
As advertising spending has eroded, News Corp. businesses across the glob have stressed alternative ways of making money. In the U.S., News Corp. is pressing cable- and satellite-TV companies to pay cash fees for the rights to pipe the Fox network into people's homes. Traditionally, network owners haven't been paid cash for their broadcast networks.
Mr. Murdoch said the company may not make a self-imposed deadline of next summer to start charging user fees to access all the company's news Web sites. Analysts say it may be difficult to retain ad revenue if subscribers flee paid Web sites for free alternatives.
Operating income at the film-and-TV production unit rose 56%. Box office returns from the latest installment of the "Ice Age" series and DVD sales of the most recent "X-Men" movie helped drive the increase. The year-earlier period also included a weaker slate of films.
Operating income rose 41% for News Corp.'s cable channels, which continue to benefit from higher fees paid by cable- and satellite-TV companies. Advertising sales slipped for the cable channels from a year earlier, however, as they did in the prior quarter. Investors worry the fees may not have much room to grow, removing a major growth engine for the company.
News Corp. executives said international cable channels are a new growth area.
At News Corp.'s broadcast-television division, which includes the Fox network and local TV stations affiliated with Fox, operating income dropped by about half to $38 million in the quarter. News Corp. executives said trends for local television stations are improving from a year earlier, when Mr. Murdoch said "business just stopped" at the height of the financial crisis.
The newspapers unit posted an 81% drop in operating profit. Reduced expenses couldn't offset steep ad declines. In addition to The Journal, News Corp. publishes the New York Post in the U.S., four U.K. national papers and a string of papers in Australia. Mr. Murdoch said The Journal is profitable but "barely."
He also said the company plans to keep "absolute control" of the name and content of its Dow Jones Indexes business, which News Corp. has put up for auction. He said he couldn't comment on whether the company would merge Dow Jones Indexes with another index.
The division housing the MySpace social-networking site posted a loss as ad sales fell. MySpace has slashed its work force, installed new management and shifted tack to focus on its online video, games and music offerings as it faces competition from Facebook and other popular Web hangouts.
"It's clearly still a work in progress," said Chase Carey, News Corp.'s president and chief operating officer, said on the conference cal.
News Corp. has had preliminary discussions about a deal to buy at least parts of NBC Universal, an alternative to Comcast Corp.'s negotiations to acquire a controlling stake in the TV-and-movie company from General Electric Co. Mr. Murdoch said on the call Wednesday that the company wasn't interested in NBC "as such." "When things come around, we'll kick the tires, but we're not in any talks with anybody at the moment," he said.
Comcast and GE, which is the majority owner of NBC Universal, have worked out the general outlines of a deal, according to people familiar with the matter. An announcement could be ready as early as next week or the week after, those people and others familiar with the talks say.
