News Corp. fiscal 3Q profit falls, below Street

AP News
Posted: May 04, 2011 8:07 PM
News Corp. fiscal 3Q profit falls, below Street

News Corp., the media conglomerate controlled by Rupert Murdoch, said Wednesday that net income for its latest quarter fell 24 percent as the afterglow of its blockbuster movie "Avatar" faded.

A boost from the Super Bowl, broadcast by the company's Fox network this year, wasn't enough to make up for it, even though the football game ranked as the most-watched TV program in U.S. history.

Net income for the fiscal third quarter, which ended in March, dropped to $639 million, or 24 cents per share. That compared with earnings of $839 million, or 32 cents per share, a year earlier.

If not for the $80 million cost of settling a lawsuit at its publishing division, News Corp. would have earned 26 cents per share. That figure fell a penny below the average estimate among analysts polled by FactSet.

Revenue fell 6 percent to $8.26 billion, also short of the $8.45 billion expected by analysts.

The company's cable TV channels such as Fox News Channel continued to shine. Domestic ad revenue grew 14 percent. The company also got more money from pay-TV providers such as DirecTV for rights to carry the channels on lineups.

Operating income at News Corp.'s movie studio fell compared with last year's quarter, which was elevated by "Avatar" _ a 3-D breakthrough that broke box-office records. Studio costs this year rose because of the expense of promoting the animated hit "Rio," which came out after the quarter ended.

Broadcast television income rose nearly fourfold, helped by airing the Super Bowl in February. But losses continued to grow at the unit that houses MySpace, the once-popular social network that the company now hopes to sell.

The Daily, a newspaper available only on the iPad, had a loss of $10 million, but Chief Operating Officer Chase Carey said the venture was in its early days with the tablet computing market in its infancy. News Corp. also owns several other newspapers, including The Wall Street Journal, which has the highest circulation in the U.S.

On a conference call with analysts, Carey expressed caution about its pending $12.4 billion acquisition offer for the 61 percent of British Sky Broadcasting Group PLC that it doesn't already own.

News Corp. announced it was bidding 700 pence per share (about $11.56) for the satellite TV company last June. The stock closed at 847 pence on Tuesday, which could ultimately boost what News Corp. has to pay. Regulators continue to examine the deal.

Carey said the rise in the stock price was "clearly troubling" and painted an "unrealistically rosy view" of the BSkyB's future. "We will pursue other options with our capital if we can't reach a reasonable deal," he said.

The New York-based company said it expects improved earnings in its quarter ending in June, although it provided no figures. It reaffirmed its guidance for annual adjusted operating profit; it expects an increase in the "low double digit" percentages from $4.46 billion a year ago.

The widely traded Class A shares fell 49 cents, or 2.8 percent, to $16.85 in extended trading after the results were released Wednesday. Earlier, shares closed down 18 cents, or 1 percent, at $17.34.