News Corp.'s Earnings Up 19%

From Reuters

News Corp. said Tuesday that fiscal fourth-quarter profit rose 19%, boosted by advertising revenue at Fox News Channel, ticket sales for “Ice Age: The Meltdown,” and the sale of radio stations.

The results for the period ended June 30 were in line with Wall Street expectations. The owner of 20th Century Fox film studios and the Times of London newspaper also said it expected fiscal 2007 operating income growth of 14% to 16%.

Analysts are eyeing Fox Interactive Media, which oversees the wildly popular online site, as a big area of growth for the company despite the division’s relatively small contribution to revenue so far.

News Corp. signed a deal Monday to have Google Inc. become the search advertising partner for MySpace in a deal worth at least $900 million.


“Most excitingly for me, our digital media assets represent our next generation of growth, to become drivers in the same way Sky Italia or Fox News or Star are for us today,” Rupert Murdoch, chairman and chief executive, told analysts on a conference call.

At a time when media companies have sought ways to stay relevant with a younger generation of viewers, analysts say News Corp. has bought a potential cash cow in its acquisition of MySpace last year. MySpace added its 100-millionth member this week.

“Far more important than the fourth fiscal-quarter results is the growth potential from yesterday’s announcement with Google and what that means for earnings growth we’ll see for Fox Interactive Media over the next three years,” Pali Capital analyst Richard Greenfield said.

News Corp.'s fourth-quarter profit was $852 million, or 27 cents a share, compared with $717 million, or 22 cents, a year earlier. Revenue rose 11% to $6.8 billion.

Profit was boosted by a $134-million gain from the sale of a radio station group in the Netherlands and Germany.

News Corp.'s results were led by strong gains in its movies division, in which DVD sales of “Big Momma’s House 2" and box-office sales for the latest “Ice Age” film boosted operating income 83% to $200 million.

The TV division’s operating profit rose 17% to $403 million, on higher ratings for shows such as “American Idol.”

Cable network operating income rose 42% to $194 million on higher Fox News ad sales. Newspaper division operating income fell 32.5% to $170 million.


Shares of News Corp. rose 36 cents, or nearly 2%, to $19.34 ahead of the earnings report. The stock was flat in after-hours trading.