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News Corp. Searches for New Hits

By Constance Gustke   |   Friday, 10 Jun 2011 02:52 PM

The media landscape is shifting as fast as the weather. New media upstarts like Netflix (NFLX) have rolled out game-changing methods of distribution, like on-demand video. Older media companies are scrambling to adapt. Some media titans, such as CBS Corp. (CBS) still count on hit TV programs. But News Corp. (NWS) is between mega-hits.

Last year, it reported record revenues mostly fueled by the blockbuster movie Avatar. So far this year, the media conglomerate’s revenues are a mixed bag. They come from golden media names such as Fox Broadcasting, The Wall Street Journal, and Twentieth Century Fox. But some divisions, such as MySpace, are logging losses (the social media also-ran is on the block).

In the third-quarter, News Corp.’s film division’s revenues plunged 50 percent. Cable network programming was one bright spot, where revenues rose 25 percent.

It’s no surprise that News Corp.’s overall third quarter revenues suffered. They fell 6 percent to $8.26 billion, versus $8.79 billion a year ago. Net income plunged $200 million to 24 cents a share, versus 32 cents a year ago.

Still, News Corp. is helmed by media powerhouse Rupert Murdoch, who has muscled his way into TV (Fox) and even launched the first newspaper for an iPad (The Daily). Some analysts don’t count him out, just down for the moment.

Stronger revenues ahead?

Zacks Research currently has a short-term hold recommendation on News Corp., noting that top and bottom third-quarter results missed estimates.

But Nomura Securities analysts rate News Corp. a buy. Analysts there think that fourth quarter results should pick up, driven by cable, television, and publishing growth.

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The media landscape is shifting as fast as the weather. New media upstarts like Netflix (NFLX) have rolled out game-changing methods of distribution, like on-demand video. Older media companies are scrambling to adapt. Some media titans, such as CBS Corp. (CBS) still count...
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