Murdoch on Earnings Call: "Worst Is Over"
News Corp. Operating Income Drops to $755 million
By Claire Atkinson -- Broadcasting & Cable, 5/6/2009 4:42:01 PM
News Corp's latest set of numbers reflected the ever widening gulf between the profitability of the media conglomerate's broadcast assets and its cable cousins.Operating income at News Corps.' global stable of cable networks grew 30% to $429 million, for quarter ended March 31. The Television unit, which includes the broadcast network and the local stations, operating income was $4 million down from $415 million in the same period a year ago.
Fox Television Stations fiscal third quarter operating income decreased 72% on the same period last year. Last year, Fox had both the Super Bowl and eight additional local stations which were sold in July 2008 which affected the comparable numbers.
Chief executive Rupert Murdoch said in a statement, "Despite this tough environment, we have proven resilient in several key areas this quarter. Our Cable Network Programming segment showed remarkable growth, led by the Fox News Channel which nearly doubled its operating income over the year ago quarter." On the earnings call he added, "it's clear the worst is over," speaking of the income drop.
Net income was flat at $2.7 billion, thanks to a $1.2 billion gain on the sale of a stake in set top box firm NDS Group. Adjusted operating income at News Corp. dropped to $755 million from $1.4 billion. Revenue was $7.3 billion, down from $8.7 billion in the prior period. Fox Interactive Media, which houses ventures such as MySpace, saw lower advertising revenue, the company said in its earnings statement.
Despite the more positive sentiment, News Corp. reported a 6 percent decline in advertising at its cable channels, which were dragged down by Regional Sports Networks, while the general purpose networks all saw ad sales improvement.
Murdoch did add a caveat to his rosier viewpoint, "I want more evidence the worst is over. There is a real feeling we've hit the bottom, but it's early days yet.”
Murdoch added that the last month has seen an improvement in operating conditions. Offering some full year guidance, he said total revenue would be down 14 percent overall. Stations would be down 23 percent, Fox Broadcasting down 6 percent and cable channels would be up 2 percent based on current quarter estimates. "That's more information than I've given in the past," he quipped.
The call was Chief Operating Officer Peter Chernin's final earnings call before his departure in June. Murdoch said he'd be expecting some real hits from Chernin, who has a guaranteed production deal with News Corp.
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