News Corp Profits Jump 27% Though TV And Interactive Still Struggling
NEW YORK — News Corp.'s fiscal fourth-quarter earnings jumped 27 percent on profit from asset sales and higher operating earnings in most businesses, but the company faces slower growth in the current year.
Chairman and Chief Executive Rupert Murdoch said Tuesday he expects "somewhat less robust growth" in the fiscal year ending next June because consumers are being hurt by higher energy costs, the U.S. real estate crisis and the battered financial industry.
"We are in a much more difficult economic environment," Murdoch told analysts and reporters on a conference call.
News Corp. expects operating income to grow between 4 percent and 6 percent from a base of $5.13 billion in fiscal 2008.
Murdoch said there are "considerable financial challenges" in local advertising for the company's newspaper and television businesses, but that gains in cable networks, satellite television and online properties will more than offset that.
The New York-based media conglomerate, which also owns Twentieth Century Fox, Fox News Channel and Dow Jones & Co., publisher of The Wall Street Journal, rode those businesses to higher net income in the quarter ended June 30 of $1.13 billion, or 43 cents per share. A year ago, the result was $890 million, or 28 cents per share.
The sale of the company's stake in Fox Sports Bay Area and Gemstar-TV Guide International also boosted earnings. Excluding one-time items, earnings rose to 35 cents per share, from last year's adjusted result of 31 cents per share. That was a penny higher than the 34 cents per share analysts had been expecting, according to Thomson Financial.
Part of the per-share jump came because News Corp. had about 530 million fewer shares outstanding at the end of June than it did a year ago after executing a $10.1 billion share repurchase as part of its deal to sell its stake in satellite television operator DirecTV to John Malone's Liberty Media.
The 28 cents figure from a year ago is an aggregate of per-share results for each of the company's two classes of stock. The year-ago earnings were equivalent to 30 cents for each non-voting Class A share, and 25 cents for each Class B share. The company did not break out this year's result across share classes.
Revenue rose 17 percent to $8.59 billion from $7.37 billion last year, and beat Street estimates. Strong gains in film, newspapers and cable were partially offset by declines at its television and interactive units.
Lower ratings at the Fox broadcast network led to a drop in advertising revenue, which delivered a 28 percent slide in earnings at the television unit. Fox-affiliated stations also struggled as advertisers shift spending online.
News Corp. recently sold 8 TV stations for $1.1 billion, but said it had no plans to divest itself of additional stations, even as local advertising revenue dwindles.
Higher ratings and ad revenue at Fox News Channel lifted the cable networks unit to a 10 percent increase in profit. Fox Business Network, started last year, delivered a loss, but News Corp. did not say how much.
The company also said its Fox Interactive Media unit, which includes social-networking site MySpace.com, had lower operating income, blaming higher development and technical costs.
FIM's revenue rose 23 percent, with search revenue contributing half of the gain. The company said costs will rise again in fiscal 2009, but at a pace slower than it expects revenue will increase.
News Corp.'s newspaper publishing unit got a boost from the inclusion of Dow Jones, which it bought last December. The company, which also includes Dow Jones Newswires, the Factiva news database service and WSJ.com, added $24 million in operating income. Higher circulation and ad revenue at News Corp.'s Australian papers also pushed earnings higher.
Murdoch plans to increase the subscription price for WSJ.com, but did not say when or by how much. The site's 1.1 million subscribers pay "a healthy price, and one that will be increased," he said.
Murdoch had reportedly considered lifting the subscription fee on WSJ.com before reversing course earlier this year. Most newspapers support their online sites through ad sales.
DVD sales of the company's movies _ including "Juno" and "Alvin and the Chipmunks" _ helped the film unit's operating income more than double.
SKY Italia reported sharp increases in subscribers, which helped the satellite TV unit post a 37 percent increase in operating income.
Separately Tuesday, News Corp. announced it and private equity firm Permira Advisers LLP raised their offer to buy out public shareholders of News Corp.'s subsidiary NDS Group PLC. The British company, which makes technology for pay TV services, has agreed in principle to accept the new offer.
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JEREMY HERRON | August 5, 2008 07:35 PM EST |
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