Rupert Murdoch’s News Corporation reveal healthy quarterly profits
RUPERT Murdoch’s News Corporation revealed better-than-expected quarterly profits yesterday thanks to a strong performance from its cable television networks.
The owner of the Times and Sun newspapers made $2.2 billion (£1.4bn) in the three months to 30 September, compared to $738 million in the same period last year, aided by a $1.4bn pre-tax gain on the sale of pay-TV encryption firm NDS.
At the group’s cable networks division, operating income rose 23 per cent to $953m, lifted by growth at regional sports channels, the FX network and Fox News Channel.
The firm booked a $75m pre-tax gain from its participation in BSkyB’s share buy-back programme.
But the publishing business – which includes the group’s newspapers – reported a 48 per cent drop in operating income to $57m due to lower advertising revenue.
News Corp said it took a $67m charge in the quarter for costs related to ongoing investigations into the phone hacking scandal, which led to the closure of the News of the World.
It said the advertising declines were most pronounced in Australia and the United States and were partially offset by increased contributions at the British newspapers, which benefitted from the launch of the Sunday edition of the Sun in February.
In June, News Corp said it would separate its publishing and entertainment assets by next year in a move to satisfy shareholders pressing the company to shed its troubled newspapers business. It promised more details by the year end.
Murdoch, News Corp’s chief executive, said: “We are committed to leading the change that the marketplace and our customers demand as the company builds on its success at leveraging multi-platform opportunities for our content.
“We believe that our ability to do so will be enhanced by the flexibility and management focus that will result from the proposed separation of our entertainment and publishing businesses. We have made considerable progress in this process and look forward to providing more details by the end of the calendar year.”
News Corp’s revenue for the quarter was $8.1bn, a 2 per cent increase from a year earlier.
Operating income at the company’s movie unit, which released animated mega-hit Ice Age: Continental Drift, rose 15 per cent from a year earlier to $400m.
Satellite broadcaster Sky Italia suffered from higher programming expenses and a strengthened dollar, the company said. The service’s operating income plunged 81 per cent to $23m.
Chief operating officer Chase Carey said the group had lost out on ad spending during the London Olympics but the current quarter would be “a bit better” for the company.
Andrew Gibson, head of research at Galvan Research & Trading, highlighted that BSkyB, in which News Corp holds a 39.1 per cent stake, last week “reported broad-based growth in the first quarter, helped by events such as the US Open, Ryder Cup and Olympic Games”.
Gibson added: “BSkyB has delivered a stellar performance, not only from an almost inevitable boost from the summer sporting event bonanza, but also from a product up-sell to each customer.”