Broadcast, Cable, Web Growth Lift News Corp. Earnings

Feb 4, 2008  •  Post A Comment

Soaring growth from Fox Broadcasting as well as its cable and Internet operations helped boost News Corp. earnings 1.5% year-to-year in the second fiscal quarter ended Dec. 31.
Net income rose to $832 million, or 27 cents per share, for second quarter 2007 compared to $822 million, or 26 cents per share, in second quarter 2006.
Revenue rose to $8.59 billion, up 9.5% from $7.84 billion in second quarter 2006.
“We are very pleased,” said News Corp. Chairman Rupert Murdoch. “We are never content.”
Mr. Murdoch said he is confident in the “resilient” U.S. economy as well as the economic boosters coming in the form of interest rate cuts from the Federal Reserve and a stimulus package expected from the Bush administration and Congress.
“We at Fox have not seen any weakness to date,” News Corp. President-Chief Operating Officer Peter Chernin said. Because Fox is “not in a make-good situation,” he added, it has been able to capitalize on strong scatter market pricing.
Mr. Chernin declined to speak abut the weekend reports that an end may be near to the three-month-long writers strike, other than to express “optimism.”
Mr. Chernin made clear that Fox, which is poised to finish No. 1 among the lucrative 18- to 49-year-old viewers for the fourth consecutive season, is not going to follow NBC Universal’s recent lead and “abandon” the upfront sales tradition. “We think it’s a valuable part of the process from both sides,” he said, referring to advertisers and networks.
The earnings report was released Monday, the day after Fox Broadcasting aired the most-watched Super Bowl in history—“a game for the ages,” Mr. Murdoch said—and a day of related programming the News Corp. chief said brought in more than $250 million in gross revenue on the network level.
For the quarter, improvements at Fox Broadcasting and at MyNetworkTV helped offset lower contributions from Fox-owned TV stations. The TV division’s earnings more than doubled to $245 million from $112 million a year ago.
Despite losses at 5-month-old Fox Business Network, the cable network division’s profits grew 23% from $275 million to $337 million. One of the drivers was Fox News Channel’s 47% growth in operating income, most of it from higher subscriber fees and advertising rates. The regional sports networks and international channels accounted for another 15% spike in operating income, News Corp. said.
Higher programming costs led to a decline in operating income at FX despite increased affiliate and ancillary revenues.
In the segment dominated by Fox Interactive and MySpace.com, earnings soared to $23 million from $1 million in the year-ago quarter as revenue climbed more than 9.5%.

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