Rupert Murdoch’s News Corporation has cut its full-year growth forecasts after an underwhelming performance at its Fox broadcast network took the shine off a leap in quarterly profits.
The media giant also said that the ongoing investigation into the phone-hacking scandal at the defunct News of the World had cost it $56 million (£35.6m) during the three months to 31 December, following an $87m bill in the same period in 2011.
News Corp said profits for the current year are now expected to show “mid to high single-digit” percentage growth, down from the “high single to low double-digit” increases it predicted in November. Fox’s X Factor talent show failed to generate large audiences, while its Italian satellite arm, Sky Italia, lost subscribers. The group has a 39 per cent stake in BSkyB, which competes against Virgin Media in the UK. Virgin has agreed a $23.3bn takeover by US cable giant Liberty Media, headed by Murdoch’s long-term rival John Malone.
News Corp chief operating officer Chase Carey said: “Clearly, X Factor was a disappointment for us. Maybe early in the year, we were a little too optimistic.”
Net profits jumped to $2.4bn in the second quarter, more than double the $1.1bn it reported a year earlier, while revenues grew 5 per cent to $9.4 billion.
Along with the costs from the News of the World, the group took a $23m hit as it prepares to split itself into two separate listed entities – one containing its media and entertainment assets, with the other comprising its publishing and education businesses.