News Corp. Earnings Jump in Third Quarter

Cable and TV business gain

By Jon Lafayette -- Broadcasting & Cable, 5/8/2013 4:47:33 PM

News Corp. reported sharply higher earnings, with strong showings by its cable and TV businesses.

Third-quarter net income more than doubled to $2.85 billion, or $1.22 a share, from $937 million, or 38 cents a share, a year ago.

The third-quarter results included $42 million of costs related to the ongoing investigations into the cellphone hacking scandal that led to the closure of The News of the World newspaper. That compares to $63 million in the year-ago quarter.  This year's third-quarter results also included $25 million of costs related to the proposed separation of the company's entertainment and publishing businesses. 

Revenue rose 14% to $9.54 billion.

"In our fiscal third quarter, News Corp. achieved organic growth across our cable, film and television segments," CEO Rupert Murdoch said in a statement. "We also announced our plans to broaden our core cable business with the unveiling of our national sports channel Fox Sports 1 and our third branded FX channel, FXX.  Both initiatives underscore our strategy of maximizing existing assets and leadership positions to drive sustainable growth and long-term value." 

Murdoch said the company was on target to complete the proposed separation of its businesses near the end of the fiscal year.  "As we prepare to launch two new industry leaders with new News Corporation and 21st Century Fox, I am more confident than ever of the long-term value the separation will unlock for the Company and its shareholders," he said.

Operating income at News Corp.'s cable network programming unit rose 17% to $993 million. Revenue was also up 17%, with the domestic channels up 16%, led by strong growth at the regional sports networks and FX Networks. That was offset by higher programming and marketing costs at FX and National Geographic Channels.

Affiliate revenue was up up11% domestically and 42% at the international channels.

Domestic ad revenue was up 2%. FX and National Geographic Channels recorded double-digit sales gains, while Fox News Channel dropped compared to the elections year of 2012.

News Corp.'s television division reported 15% higher operating income of $196 million while revenues were flat at $1.23 billion.  The company said retrans income doubled while programming expenses were lower. Ad sales were down because of lower ratings for American Idol.