News Corp. Profit Falls on Fox, MyNetworkTV

Feb 7, 2007  •  Post A Comment

News Corp. profit fell 24 percent last quarter as the launch of MyNetworkTV increased costs and the Fox broadcasting company lost ground due to weak baseball ratings and higher spending on football programming.

Net income fell to $822 million in the fiscal second quarter ended Dec. 31, compared with $1.1 billion a year earlier. Revenue rose 18 percent to $7.84 billion across the media conglomerate’s operations.

Operating income at the company’s television division, which includes Fox broadcasting and the TV station unit, fell 39 percent to $112 million from a year ago. Fox broadcasting’s operating income fell 36 percent as post-season Major League Baseball ratings disappointed and National Football League costs rose. The company’s television stations increased operating profit 8 percent as political advertising boosted revenue. News Corp.’s cable channels reported a 5 percent increase in operating profit.

The broadcast business’ results reflect the cyclical nature of News Corp.’s prime time schedule, with a fall lineup that in recent years hasn’t performed strongly until an “American Idol” fueled mid-season resurgence. Last quarter, a decline in Fox’s prime time ratings and cancellation costs for several new series was offset by lower programming costs, the company said in a statement Wednesday.

The performance of MyNetworkTV, which News Corp. launched with a lineup of weeknight soap operas, drew News Corp. CEO Rupert Murdoch’s attention.

“Our second fiscal quarter was a success both financially and strategically,” Mr. Murdoch said in the company’s earnings report. “The quarter was not without its challenges, however. In particular, we were disappointed with the results at MyNetworkTV, whose ratings have been far below expectations. We are focused on reversing this performance, and since quarter’s end, have brought in new management and will introduce new programming to jump-start its recovery.”

News Corp.’s cable networks posted operating income of $275 million, News Corp. said. Increased programming and rights costs at the sports networks more than offset higher advertising and affiliate revenues. At FX, “Nip/Tuck” helped bolster advertising revenue on its ratings gains. Those revenue improvements were mostly offset by increased marketing spending for the new Courteney Cox series, “Dirt,” the company said.

“Dirt” premiered to strong ratings, though its audience subsequently dropped off.

At News Corp.’s other divisions, the film studio posted sharply higher operating income, the direct broadcast satellite unit trimmed its losses, and the newspaper business more than doubled its earnings.

News Corp.’s first quarter earnings report

(Editor: Baumann)