You will be redirected back to your article in seconds

Fox lot slows trot

Film's 4th qtr. cuts in on News Corp. profit

NEW YORK — A $119 million fourth quarter loss at 20th Century Fox helped drag down News Corp.’s full-year fiscal 1997 net profit by 27% to $561 million, the company said Tuesday.

Red ink from the Fox lot was expected, given the dismal domestic B.O. performance of “Speed 2” and “Volcano.” But News Corp. surprised Wall Street with disclosure of a $1 billion preferred stock buyback, a move long demanded by investors and sure to buoy the company’s stock price in coming days.

News Corp.’s fiscal 1997 earnings result showed a decidedly mixed picture for the media conglomerate, with a strong improvement from the print side of the company and a weaker contribution from the TV and film side. Additionally, a $448 million onetime loss due largely to restructuring costs at HarperCollins hurt the bottom line.

The company reported a 10.1% increase in operating income, before interest and taxes, to $1.3 billion on 13.5% higher revenue of $11.2 billion for the year.

While the company did not break out specific fourth quarter numbers, and instead reported just the full year results, a comparison with the third quarter numbers showed operating income fell 23% to $238 million in the fourth quarter, which ended June 30.

The decline was entirely due to the studio, which ended the year with operating income of $104 million, down from $223 million at the nine-month mark.

News Corp. said in a statement the strong performance of the studio earlier in the year was offset by “disappointing results from ‘Volcano’ and ‘Speed 2,’ which were both released in the fourth quarter.”

The company did not specify the write-downs on either film. “Volcano” had a budget of about $90 million and took in $47 million domestically and $20 million overseas, so far, while “Speed 2” cost about $160 million and took in $47 million domestically and about $55 million overseas to date.

And despite speculation among some on Wall Street that News Corp. would write down “Titanic” now — several months before its December release — a spokesman said the company’s policy was not to write down a picture before its release date.

TV OK

The television division did a little better than film, finishing the year with operating income of $447 million, up 8%. In the fourth quarter the division had operating income of $169 million, up 14%.

Much of the growth was due to the expansion of the TV station group as a result of this year’s acquisition of New World Communications Group, News Corp. said, while a downturn at the Fox network offset the extra profit from the TV station group.

News Corp. said the U.S. television group only increased operating income 4%, suggesting some of the growth overall came from overseas. News Corp. gave no other details.

News Corp. said the Fox network’s performance improved through the year but it “was unable to offset the impact of weaker results achieved during the first half of fiscal 1997.”

Paper lion

The profit figures showed just how much News Corp. remains a print-based company. In contrast to the softness at film and TV, newspapers grew operating income 26% to $476 million in the year and magazines increased operating income 23% to $302 million. Both results included strong growth in the fourth quarter.

The only print business suffering is HarperCollins, which finished the year with operating income of $12 million compared with $68 million a year earlier. In the fourth quarter it had $1 million in operating income compared with $14 million a year earlier.

News Corp. said the downturn was due both to the sale last year of its educational publishing business and “generally difficult conditions in trade publishing both in North America and overseas.” The company announced earlier this month plans to focus on a narrow range of businesses and at the same time disclosed a $270 million onetime charge to cover restructuring costs.

Other losses

That charge made up the bulk of a $448 million abnormal loss. Other elements of the abnormal loss included costs of closing a CD-ROM facility, early repayment of debt and losses on sale of the company’s interest in Australian Newsprint Mills.

Analysts were pleased with News Corp.’s announcement of the stock buyback, the first in the company’s history. The comglom has hurt the price of its preferred stock by using it to make expensive acquisitions, such as New World Communications.

News Corp.’s preferred stock has for the past several months traded well below that of common, closing Tuesday at $14.12 compared with $17.50 for the common stock.

The company gave few details about the buyback, which will have to be cleared through the Australian Stock Exchange. It noted that it “has cash in excess of its immediate needs,” which it can use to finance the buyback. At June 30 the company had cash of $2.7 billion, the earnings release showed. Its debt was $8.4 billion, up from $6.6 billion a year earlier.

More Film

  • Valerian review

    EuropaCorp Posts Half-Year Loss of $83 Million

    NEW YORK — A $119 million fourth quarter loss at 20th Century Fox helped drag down News Corp.’s full-year fiscal 1997 net profit by 27% to $561 million, the company said Tuesday. Red ink from the Fox lot was expected, given the dismal domestic B.O. performance of “Speed 2” and “Volcano.” But News Corp. surprised […]

  • Palm Springs Where to eat Drink

    Palm Springs Hotter Than Ever: Places to Eat, Drink, Stay

    NEW YORK — A $119 million fourth quarter loss at 20th Century Fox helped drag down News Corp.’s full-year fiscal 1997 net profit by 27% to $561 million, the company said Tuesday. Red ink from the Fox lot was expected, given the dismal domestic B.O. performance of “Speed 2” and “Volcano.” But News Corp. surprised […]

  • 'Icarus' Returning to Theaters After Russia

    'Icarus' Returning to Theaters Following Russia Olympics Ban (EXCLUSIVE)

    NEW YORK — A $119 million fourth quarter loss at 20th Century Fox helped drag down News Corp.’s full-year fiscal 1997 net profit by 27% to $561 million, the company said Tuesday. Red ink from the Fox lot was expected, given the dismal domestic B.O. performance of “Speed 2” and “Volcano.” But News Corp. surprised […]

  • Sebastian-Stan I Tonya Scene Stealer

    Sebastian Stan Talks Jeff Gilooly, Mustaches and 'I, Tonya'

    NEW YORK — A $119 million fourth quarter loss at 20th Century Fox helped drag down News Corp.’s full-year fiscal 1997 net profit by 27% to $561 million, the company said Tuesday. Red ink from the Fox lot was expected, given the dismal domestic B.O. performance of “Speed 2” and “Volcano.” But News Corp. surprised […]

  • Palm Springs Film Festival Programming Honchos

    Brains Behind Palm Springs Festival Programming Grilled

    NEW YORK — A $119 million fourth quarter loss at 20th Century Fox helped drag down News Corp.’s full-year fiscal 1997 net profit by 27% to $561 million, the company said Tuesday. Red ink from the Fox lot was expected, given the dismal domestic B.O. performance of “Speed 2” and “Volcano.” But News Corp. surprised […]

More From Our Brands

Access exclusive content