News Corp. Sends Mixed Messages

Rupert Murdoch’s debt burdened News Corp. posted substantially increased profits in the six months to Dec. 31, but it accompanied the announcement with a warning that “without an improvement in worldwide business conditions, the group may not maintain the rate of growth in earnings for the remainder of the financial year.”

Second quarter results were in fact markedly better than the first, largely as a result of the success of Fox release “Home Alone.” Contributing to increased earnings in both quarters was income from the Harper Collins book publishing group.

Gross revenues for the six months ended Dec. 31 increased 40% to A$5.7 billion ($4.5 billion) from A$4.1 billion ($3.2 billion) for the same period the previous year. Net income was up 69% to A$257 million ($202 million) from A$152 million ($120 million).

Profits were boosted by gains on foreign exchanges (A$41.3 million or $32.6 million), asset sales (A$74 million or $58.4 million) and the exclusion of two months’ losses from BSkyB, in which News Corp.’s Sky TV is partnered with British Satellite Broadcasting. BSkyB is an associated company of News Corp. rather than a subsid (as Sky TV had been), and its accounts are filed separately.

Sky TV chalked up losses of £45 million ($90 million) in the four months prior to the merger and BSkyB is thought to have lost about £20 million ($40 million) since.

The U.S. saw most of News Corp.’s growth and contributed most of its profits in the six month period. U.S. gross revenues of $2.6 billion (up 49%) compare with $1 billion in Australia (up 12%) and $1 billion in the U.K. (up 52%). U.S. operating profit of $450 million (up 70%) compares with $146 million in Australia (down 18%) and $28 million in the U.K. (down 51%).

With the addition of exceptional items, interest costs and taxation, News Corp.’s Brit operating arm, News Intl. – which owns a host of newspapers, as well as the BSkyB stake – reported losses of £169 million ($334 million) in the period. Company says it has been badly hit by the recession and the downturn in advertising.

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