Cable networks drive News Corp.’s fourth-quarter results
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Cable is now king at Rupert Murdoch’s News Corp.
Thanks to a strong performance from Fox News and its other cable networks, News Corp. posted profits of $875 million, or 33 cents a share, for its fiscal fourth quarter, compared with a loss of $203 million, or 8 cents, a share a year earlier. Revenue rose 6% to $8.1 billion for the three months ending June 30, compared with nearly $7.7 billion a year ago.
For News Corp.’s full 2010 fiscal year, the company reported net income of $2.5 billion or 97 cents a share, compared with a loss of $3.4 billion or $1.29 a share in fiscal 2009. Annual revenue also grew 8% to $32.8 billion, from $30.4 billion the prior fiscal year.
Cable accounted for half of News Corp.’s profit and cash flow in the quarter and more than helped offset disappointing results from the media conglomerate’s movie studio, 20th Century Fox. Besides Fox News and Fox Business, News Corp.’s cable holdings include the entertainment channel FX and more than a dozen Fox Sports cable channels. The group saw operating income rise 32% to $563 million, compared to the same period a year ago.
While News Corp.’s cable business is firing on all cylinders, its movie operations sputtered a little bit. Despite strong sales of ‘Avatar’ DVDs, the film studio reported a 33% drop in operating income for the quarter to $137 million, compared with $203 million a year ago. The comparatively weak box-office performance of this spring’s films, including ‘Marmaduke’ and ‘The A-Team’ were the main culprits.
The studio also saw a decline in revenue from the sale of its television shows, which also hurt results.
News Corp.’s broadcast unit, which includes the Fox network and its television stations, saw operating income increase 13% to $113 million, compared to the company’s fourth-quarter 2009 performance. The gains reflect a rebound in advertising -- particularly political ads -- for locally owned TV stations. This helped to partially offset the rising programming costs associated with Fox.
While the television group’s operating income was up, the Fox network saw its operating income decline. The company blamed the drop on programming costs in entertainment and sports.
The topic of Fox’s hit ‘American Idol’ was brought up on a call company executives had with analysts and reporters. News Corp. Chief Operating Officer Chase Carey said Fox has the opportunity to reinvent the fading juggernaut of the network, which will return with new and presumably less-expensive judges when it returns for the new season, minus Simon Cowell and Ellen DeGeneres. (Cowell alone brought down a salary of about $35 million).
News Corp.’s MySpace continues to struggle, losing $174 million for the quarter, compared with a loss of $136 million for the same period a year ago, and $363 million for 2009. Murdoch continued to voice support for the social network’s management team, which has undergone numerous shake-ups. One of MySpace’s biggest challenges is replacing a lucrative contract with Google Inc., in which the search giant agreed in 2006 to pay $900 million to place search ads on the social networking site.
‘We’re actively talking to parties,’ Carey said, adding. ‘We’re not expecting a deal like we had before.’
Murdoch reserved the most enthusiasm not for News Corp., but for Apple Inc.’s iPad tablet computer, which he said has the potential of bringing younger readers to newspapers.
‘I believe that s a game-changer,’ Murdoch said, predicting ‘hundreds of millions’ of these devices proliferating around the world.
-- Dawn C. Chmielewski