News Corp., Fox Entertainment Group Reports Fiscal 2004 Results

Aug 11, 2004  •  Post A Comment

News Corp. Chairman and CEO Rupert Murdoch on Wednesday said it was likely the media giant would launch two more cable networks in the next 12 months and another pair of networks in the 12 months after that, as the company makes good on its commitment to develop new networks.

Mr. Murdoch also said it was unlikely that the company would increase its stake in Fox Entertainment Group or DirecTV Group any time soon. News Corp. currently controls more than 82 percent of FEG and 34 percent of DirecTV.

Speaking to analysts during a conference call to discuss the company’s fiscal 2004 results, Mr. Murdoch declined to provide any details of the new channel launches, other than to describe some of the channels as “big ones” and others as “smaller ones.”

On the topic of increasing News Corp.’s stakes in FEG and DirecTV, Mr. Murdoch largely dismissed the idea that the entertainment titan might raise its ownership stakes in either company.

He said News Corp. was contractually barred from boosting its stake in DirecTV this year because of huge tax consequences for former controlling parent General Motors, and advised that investors shouldn’t expect the company’s position to change once that tax threat disappears.

Meantime, President and Chief Operating Officer Peter Chernin defended the company’s decision to go year-round with its television season, saying that the company feels “very good about our summer launch.”

He said of the seven shows that premiered this summer, three-“Trading Spouses,” “The Simple Life 2” and “Quintuplets”-are “real successes,” while the series “Method & Red” and “North Shore” “are on the bubble.”

The comments came as FEG reported a 31 percent surge in fiscal 2004 profit, buoyed by an improved advertising market, strong film results, and substantial growth at the company’s cable networks.

For the 12 months ended June 30, FEG reported a profit of $1.35 billion versus a year-earlier profit of slightly more than $1 billion. For the fiscal fourth quarter, FEG generated a profit of $323 million versus $258 million a year ago. Revenue climbed 14 percent to $3.2 billion for the fiscal fourth quarter, while it rose 11 percent to $12.2 billion for the year.

Those results helped the overall News Corp. report a 57 percent increase in fiscal 2004 profit to $1.65 billion, while revenue advanced 20 percent to nearly $21 billion.

A sizable piece of the company’s growth came from FEG’s cable networks, which booked a 63 percent surge in operating income to $488 million, driven by a run-up in advertising at Fox News Channel, which booked an 86 percent increase in operating profit for the fiscal year. Revenue for the overall cable group climbed 12 percent to $2.4 billion.

Advertising growth at the company’s regional sports networks, FX and Speed Channel combined to produce a 32 percent increase in operating income. The group also benefited from the absence of the money-losing Los Angeles Dodgers professional baseball team, which News Corp. sold earlier this year.

Higher advertising revenue helped Fox Broadcasting Co. narrow its fiscal-year loss to $80 million from a year-earlier red ink of $100 million, while revenue at the broadcast network rose 6.5 percent to $2.4 billion.

At the company’s television stations, a boost in market share, a reduction in operating expenses and strong prime-time advertising revenue helped the station group book a 6 percent increase in operating profit to $977 million and a 2 percent rise in revenue for the fiscal year.