News Corp. Profit Up 7.8% as Sales Surge

News Corp. on Wednesday said its fiscal fourth-quarter profit rose 7.8%, boosted by stronger advertising sales at its TV networks and stations.

The company posted net income of $399 million for the three months ended June 30, up from $370 million from a year earlier. Revenue climbed 20% to $5.52 billion.

News Corp. earned 29 cents per American depositary receipt, compared with 24 cents last year. (Each ADR represents four common shares.) The bottom-line results exceeded Wall Street’s expectations by a penny, according to Thomson First Call.

But analysts were even more impressed by News Corp.’s top-line performance -- its quarterly revenue beat some projections by more than $500 million -- and its strong operating profit across the board. Overall, operating profit for the quarter jumped 31% to $747 million.

“News Corp. is growing significantly faster than its peer group of media companies,” said Richard Greenfield of Fulcrum Global Partners.

News Corp. executives said the company’s operating profit should show gains in the “mid-to-high teens” for the fiscal year that began in July. For the just-ended fiscal year, News Corp. recorded operating profit of $3.1 billion.

Some analysts questioned whether that forecast was too conservative. But Chairman Rupert Murdoch cited “the uncertainty of this economy and what it might mean to advertising.”

News Corp.’s holdings include the 20th Century Fox film studio, Fox Broadcasting TV network, Fox News Channel, FX cable channel, Weekly Standard magazine, Gemstar-TV Guide, publishing house HarperCollins and more than 175 newspapers, including the New York Post.

The company recently completed its acquisition of a 34% interest in El Segundo-based DirecTV Group Inc., adding to a constellation of satellite-television properties, which also includes British Sky Broadcasting, Australia’s FoxTel and money-losing Sky Italia.

News Corp.’s board decided this week to move the company’s place of incorporation to the U.S. from Australia and to make the New York Stock Exchange the main market for its common shares. Most analysts believe the switch, which would put News Corp. in the Standard & Poor’s 500 stock index, will help drive up demand for its shares, particularly among institutional investors.

News Corp. announced its earnings after the markets closed. News Corp.’s depositary receipts were down 52 cents to $32 on the New York Stock Exchange. Also on the Big Board, Fox Entertainment fell 30 cents to $25.38.

Operating profit at the company’s cable networks soared 60% during the quarter to $154 million, lifted in part by revenue gains at Fox News Channel and FX. Results were also helped by the sale of the Los Angeles Dodgers to Boston real estate developer Frank McCourt for $421 million.

The Dodgers lost $32 million for the fiscal year, including $15 million during the fourth quarter, David DeVoe, the company’s chief financial officer, told analysts.

Operating profit at the company’s Fox Broadcasting network and its stations jumped 21% to $351 million. Though prime-time ratings were down from last year and the network was forced to absorb increased marketing costs as it launched six new summer shows, it received a big bump from the blockbuster program “American Idol.” The talent show, which rolled out for a third season in January, helped swell ad revenue for the division.

“This was a year where we got off to a tough start, but we made significant strides,” President Peter Chernin said.

The Fox film division posted a 7% increase in operating profit to $91 million, driven largely by the DVD release of “Cheaper by the Dozen” and continued demand for DVDs of older films, including “Ice Age” and “Something About Mary.” Popular TV shows continued to sell too, including “The Simpsons,” “24” and the 1970s hit “MASH.”

The bottom line was weighed down by the marketing costs of Fox’s new film releases, including “The Day After Tomorrow” and “I, Robot.”

Operating profit at News Corp.’s newspaper division rose 14% to $144 million, helped by strong gains in ad revenue in Australia.

For the full fiscal year, News Corp. earned $1.65 billion, or $1.20 per ADR, compared with $1.05 billion, or 83 cents, for the previous year. Revenue grew 20% to $20.96 billion.