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News Corp. Profit Driven by TV, Cable Gains

May 7, 2008  •  Post A Comment

News Corp. said Wednesday its fiscal third-quarter earnings rose on higher ratings for its broadcast and cable networks. Profit from News Corp.’s newspaper division was bolstered by its first full-quarter ownership of Dow Jones.
Net income for the quarter ended March 31 was $2.69 billion, or 92 cents a share, up from $871 million, or 27 cents, a year earlier, as revenue increased 16% to $8.75 billion. Excluding one-time items such as News Corp.’s DirecTV stock swap with Liberty Media, earnings per share increased 15% to 30 cents from 26 cents, Chief Financial Officer David DeVoe said on a conference call Wednesday.
News Corp.’s earnings were largely driven by gains in its television and cable networks units, which accounted for more than half of the company’s operating profit. Fox’s Feb. 3 Super Bowl broadcast was the most watched TV program in 25 years, while cable networks such as Fox News Channel saw ratings increases of more than 10%, DeVoe said. Such performance overcame about $40 million in start-up costs for the Fox Business Network and Big Ten Network.
“We’re coming off a year where we’ve led the other networks by a bigger margin than in many, many years,” News Corp. Chairman Rupert Murdoch said on the call.
The company took ownership of Dow Jones and its Wall Street Journal unit in December, boosting its newspaper division’s operating profit by 38%. The company recently bid about $580 million for Long Island newspaper Newsday, an offer since eclipsed by a bid from New York cable operator Cablevision.
“I don’t think Cablevision will prevail,” said Mr. Murdoch, adding that his company may gain $100 million in annual cash flow by combining some of Newsday’s operations with News Corp.’s New York Post. “Just be patient for a couple days.”
News Corp.’s strong performance came in spite of a filmed entertainment division whose earnings fell 36% from a year earlier. Theatrical and home entertainment revenue for the Fox unit declined as current DVD releases such as “Alvin and the Chipmunks” and “Juno” failed to keep pace with year-earlier hits such as “Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan” and “Night at the Museum,” DeVoe said on the call.
News Corp. is banking on improved DVD performance from Blu-ray disc sales and rentals, which News Corp. President Peter Chernin reiterated would approach $1 billion this year once manufacturers boost supply.
“It’s hard to find more than one or two Blu-ray players in a store right now. That should change starting in June,” Mr. Chernin said. “Once the price comes down, you’ll begin to see much expanded orders in Blu-ray.”

2 Comments

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