Cable Nets Push News Corp. Earnings
By John M. Higgins -- Broadcasting & Cable, 8/10/2005 2:48:00 PM
News Corp. Chairman Rupert Murdoch deflected questions about his son, Lachlan, preferring to talk to investors about a quarter that was strong overall, but weak for Fox broadcast units.
Asked about any succession plans made after the departure of Lachlan Murdoch, News Corp.’s one-time heir-apparent, the elder Murdoch replied, "There’s nothing to be said other than what Lachlan said, and what I said. Any succession planning is up to the board of News Corp. to do what they think is best on behalf of shareholders."
Asked about possible changes to Murdoch family trusts to give more power to Rupert's daughters from his most recent marriage, Murdoch alluded to the attorney for his second wife, Anna: "I don’t think you’re very wise to listen to loose-lipped divorce lawyers. Frankly, there isn’t any change."
Fox’s victory as the No. 1 U.S. network proved a bit shallow, with the broadcast division’s earnings falling during the most recent quarter.
For News Corp.’s fourth fiscal quarter ended June, the worldwide broadcast division’s revenues increased 6% to $1.4 billion compared to the same period last year, but operating income fell 2% to $344 million. The company didn’t detail results for the U.S. broadcast units, but acknowledged that the Fox broadcast network's operating income declined because of higher license fees for returning programming. Operating income for Fox’s TV stations fell 5% because of a soft ad market and the smaller audience reflected by Nielsen’s new local people meters in a few markets.
Cable networks did far better. Revenues increased 24% to $1.3 billion. Operating income grew strongly, but at a much slower rate, 14%, hitting $137 million.
Fox News Channel is carrying the division. The cable news outlet’s operating income soared 30%. But operating income appears to have fallen during the quarter, as revenue gains were "more than offset" by the cost of theatrical movies and two FX original series, The Shield and Rescue Me.
News Corp. President Peter Chernin says that the issues at FX and similar ones with Fox’s regional sports networks are largely one-time events. "You can expect growth rates on an aggressive level going forward," Chernin says.
Across the company, revenues increased 12% to $6.1 billion while operating income jumped 41% to $955 million. The profit swing stems primarily from a dramatic improvement by News Corp.’s international newspapers and the elimination of losses in international direct broadcast satellite operations.
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