Fox Entertainment Group, News Corp.'s publicly-traded 80%-owned subsidiary posted a five-fold gain in pre-tax operating income to a record $2.1 billion, for its fiscal year 2003, which ended June 30. Revenues were up 13% to $11 billion for the year.
The profits this year look particularly good compared to last year when the company took a write-down of nearly $1 billion for national sports contracts, primarily Major League Baseball and the National Football League. No further sports-related write-downs were taken this year.
For the company's fiscal fourth quarter (ended June 30), pre-tax profits were up 58% to $505 million on a 15% gain in revenue to $2.8 billion.
The company reported that the Fox TV network turned the profit corner during the fourth quarter but remained in the red for the full year, while narrowing the previous year's loss. The network posted fourth quarter operating income of $29 million versus an $89 million loss in the fourth quarter of 2002.
For the full year, the operating loss totaled $183 million, a $100 million improvement over the $283 million posted in fiscal year 2002.
The company attributed the network's improved financial performance to better ratings and ad sales thanks to programs like American Idol and 24 (not to mention Joe Millionaire).
The Fox owned station group posted a 13% gain in revenues for the full fiscal year to just over $2.1 billion.
In a conference call with analysts last week, Lachlan Murdoch, who oversees News Corp.'s publishing operations and TV stations arm, said that the profit margins of the company's UPN affiliates (the Chris-Craft stations that it bought a couple of years back) trailed the Fox affiliate O&O's by 16% to 20%. "That's the bad news," he said. The goods news is the UPN stations are profitable and performing ahead of last year. But that's not good enough, he said, although he's willing to give UPN management "a shot with this new season to turn around the performance of the network. If they can't turn it around, we have lots of options and I will leave it at that."
The Fox cable networks nearly doubled their pre-tax operating income for the fiscal year to $472 million, on a 22% revenue gain to $2.1 billion. For the fourth quarter, the cable profits were up 140% to $106 million on a 19% revenue gain to $637 million.
News Corp. chief operating officer Peter Chernin reported that talks continue with affiliates on a renewal of the recently expired agreement under which stations contribute roughly $50 million a year toward the company's rights payment for the NFL in exchange for program exclusivity. "We are optimistic we'll have something finalized pretty quickly," he said.