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News Corp. Second-Quarter Profit Rises on Higher Television Fees

Wednesday, 08 February 2012 04:47 PM

News Corp., owner of Fox Broadcasting and the Wall Street Journal, reported second-quarter profit increased 65 percent on higher television subscriber fees and advertising.

Net income gained to $1.06 billion, or 42 cents a share, from $642 million, or 24 cents, a year earlier, the New York- based company said today in a statement. Profit, excluding some items, was 39 cents a share, compared with the 34-cent average of 23 analysts’ estimates compiled by Bloomberg.

News Corp., run by Chief Executive Officer Rupert Murdoch, who controls about 40 percent of the voting shares, gets most of its profit from a television business that receives fees from pay-TV operators for broadcast and cable programming. Sales at its cable television properties, which include FX and Fox News, rose 9.5 percent to $2.16 billion on fees from pay-TV operators.

“The cable networks business is the single most-important segment within News Corp., both in overall size and with respect to being an ongoing growth driver,” Mike Morris, a media analyst with Davenport & Co., said in an interview before the release of News Corp.’s results. He rates the shares “buy” and doesn’t own any.

Sales in the quarter ended Dec. 31 rose about 2 percent to $8.98 billion. Analysts on average had estimated $8.91 billion.

Hacking Victims

Publishing revenue declined 9.2 percent to $2.13 billion. News Corp. has been trying to contain a hacking scandal at its U.K. publishing unit that is the subject of at least three separate inquiries. There are 829 “likely victims” of phone hacking, according to a U.K. police probe. The company said it had a $87 million charge due to the investigations.

At least three top executives have departed since December and Murdoch’s son, James, is loosening his ties to London and moving back to New York to work more closely with Chief Operating Officer Chase Carey. The scandal hasn’t hurt the company’s business, said Alan Gould, an Evercore Partners analyst in New York.

“If anything, what you’re seeing is Chase gaining power internally at the expense of James,” Gould said in an interview before News Corp. released its results. Gould rates the shares “overweight” and doesn’t own any.

News Corp. has gained 8.6 percent since the Guardian reported on July 4 that a News Corp. newspaper accessed the voice mail of murdered teenager Milly Dowler. The shares rose 0.6 percent to $19.62 at the close in New York.

Share Buyback

The company, as of Feb. 7, had repurchased $2.67 billion in shares as part of a $5 billion buyback program, according to a company filing.

“We’d like greater clarity on the timing and pacing of share buybacks,” David Bank, an analyst with RBC Capital Markets, said in an interview before News Corp.’s results. The rate of purchases many have slowed in the last two months, said Bank, who rates the shares “top pick” and doesn’t own any.

Revenue from News Corp.’s film business dropped in the December quarter, according to Box Office Mojo, as ticket sales for 20th Century Fox and Fox Searchlight films fell 16 percent to $252.9 million, from $299.5 million a year earlier.

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Wednesday, 08 February 2012 04:47 PM
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