Carey: Broadcast a Billion Dollar Business
News Corp. rides cable, broadcast to higher earnings
By Jon Lafayette -- Broadcasting & Cable, 2/2/2011 4:32:55 PM
With retransmission agreements providing hundreds of millions of dollars of new revenue, News Corp.'s broadcast business should generate $1 billion in operating income per year in the new future, according to COO Chase Carey.
"We have retrans agreements in place with four of the larger distributors and have now set the market for our broadcast business," Carey said during Wednesday's second quarter earnings call with analysts. " As we continue to secure new agreements over the next couple of years we will be taking this business to a whole new level of profitability." (Fighting for those retrans and cable carriage fees cost the company $47 million in the quarter.)
Carey said the projection assumes a relatively stable ad market. Right now the market is considerably stronger than that.
Carey said that prices in the scatter market are one-third above the upfront and that second half growth at the cable networks looks stronger than first half growth.
News Corp. said its second quarter earnings were higher as a recovering ad market helped both its cable and broadcast operations. The company also said it would "consider strategic options," including a sale for Myspace, the social network site that was hot when News Corp. acquired it in 2005, but has been losing popularity ever since.
Net income climbed to $642 million, or 24 cents a share, from $254 million, or 10 cents a share, a year earlier, the company said. Those results included a $275 million charge related to the Myspace social media site, which was restructured. News Corp. also had a $500 million charge to settle litigation in its second quarter earnings a year ago. Excluding those charges, earnings were up 16%.
Revenues rose to $8.8 billion from $8.7 billion in second quarter earnings.
"News Corporation's second quarter results demonstrate the mounting vigor of our global channels business. In the U.S. market, our cable channels are still expanding and adding subscribers, while increasing their revenues and profits at a double-digit pace on the strength of affiliate fee increases and buoyant advertising markets, Rupert Murdoch, chairman and CEO said in a statement. "I am also pleased with the continued recovery of our U.S. broadcasting business, including our local TV stations and the Fox Broadcasting Company, which posted its best quarterly profit in two and a half years."
"I am confident that the significant positive momentum from these businesses will not only continue to drive News Corporation's growth for the remainder of the fiscal year, but also strengthen the company for growth in the years to come," Murdoch added.
News Corp.'s cable network programming segment grew operating income by 22% to $735 million from $604 million. The company noted that that gain came despite a "distribution contract renewal dispute," referring to being off Dish Network in October.
Revenue grew to nearly $2 billion from $1.8 billion a year ago. Ad revenues at the domestic cable channels grew 12% in the second quarter.
Operating income for News Corp.'s television segment jumped to $151 million from $29 million. Revenues were up 20% to $1.4 billion, reflecting a stronger overall local advertising market, plus increased political advertising. Fox Broadcasting Co.'s second quarter results were up 24% as increase ad revenue from NFL games and entertainment programming offset lower revenue from post season baseball, where there were lower ratings and one fewer game than a year ago.
Looking ahead, News Corp. said was reiterating its guidance that operating income growth would be in the low double-digit range for all of fiscal 2011.
Since it last reported earnings in November, "Myspace have been below expectations and our new film releases were somewhat below our original expectations," said CFO David Devoe. "On the other hand our television and cable segments continue to out perform our expectations due to the buoyant advertising markets and recent retrans and cable affiliation agreements."
No related content found.
-
No Top Articles
VIEW ALL GALLERIES
