News Corp. posts 65% income gain on strength of film and cable TV
Strong performances from the film studio and cable television business helped propel a 65% jump in News Corp.'s net income for its second quarter.
The media conglomerate on Wednesday reported revenue of $8.98 billion for the quarter that ended Dec. 31, up 2% from the same time a year earlier. Net income rose to $1.06 billion, compared with $642 million a year earlier. Earnings per share rose to 42 cents.
“We believe the explosion of consumer demand for digital content, driven by the upsurge in emerging platforms and international opportunities, makes this a great time to be a content leader,” President and Chief Operating Officer Chase Carey told investors.
The British phone hacking scandal, which erupted last summer amid allegations of misconduct at News Corp.'s now-closed News of the World tabloid, continues to take a financial toll. News Corp. recorded an $87-million charge in the second quarter related to the ongoing investigation in Britain.
Chief Financial Officer David DeVoe told investors the costs of hiring outside lawyers and advisors to manage the scandal totaled about $104 million in the first half of the year.
“Due to the forward nature of the ongoing investigations and judicial proceedings, we’re unable to reliably forecast for the full year,” DeVoe said.
Cable television remains the engine that drives News Corp. Operating income rose 20% to $882 million for the second quarter, reflecting improved results at Fox’s Regional Sports networks, reduced rights costs associated with the NBA lockout, and the performance of Fox News and FX.
The film group saw operating income more than double, to $393 million, from $189 million in the same period a year ago.
The studio’s results were driven by home entertainment sales of the summer releases “Rise of the Planet of the Apes” and “X-Men: First Class,” and the animated film “Rio,” as well as the strong second-quarter box office performance of “Alvin and the Chipmunks: Chipwrecked,” which generated more than $300 million in worldwide ticket sales. The television group, which includes the Fox broadcasting network and a local television station group, reported a 25% increase in operating income from a year earlier, to $189 million for the second quarter. The growth reflects increased ad revenue from the network’s fall schedule, led by “X-Factor” and “The New Girl,” and a 100% increase in fees paid to distribute network programming.
Digital distribution fees from subscription service Netflix Inc. and online retailer Amazon.com contributed about $200 million in revenue so far this fiscal year, DeVoe said.
Carey described his frustration at the pace of efforts by cable and satellite distributors to offer movies and TV shows to subscribers who want to watch video online and on portable devices.
“In this world, you can’t spend three or four years getting something going,” said Carey, who noted discussions had been going on in 2009, when he was chief executive of DirecTV. Publishing took a hit in the second quarter, with operating income falling 43% to $218 million, partly because of the lack of contributions from the News of the World, and weak advertising revenue from the company’s Australian newspapers.
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