New World buy,’Wars’ elevate News Corp. qtr.

NEW YORK — The re-release of the “Star Wars” trilogy and acquisition of the New World Communications Group helped Rupert Murdoch’s News Corp. lift net earnings 38% to $291 million in the March quarter, on 27% higher revenue of $2.9 billion.

The profit was before a one-time $38 million charge relating mainly to a restructuring at News Corp.’s troubled book publisher HarperCollins, which lost $7 million in the quarter and has seen its earnings plummet 79% for News Corp.’s fiscal year to date, which finishes June 30.

Meanwhile, News Corp. finance exec Bill Sorenson told Wall Street analysts on a conference call that the company is “continuing to work” with EchoStar Communications Corp. to resolve differences that have threatened to unravel the two companies’ sat-TV partnership, according to analysts who were on the call. Sorenson refused to give any time-frame on when the two companies would reach a decision.

He also revealed on the conference call that News Corp. has put its Fox Kids Worldwide Inc. $150 million initial public offering “on hold,” analysts said. Sorenson did not elaborate, but the Fox Children’s Network, the main business in the company to be taken public, would be dramatically affected if News Corp. succeeded in buying control of the Family Channel. That deal is still under negotiation, however, which could explain why the offering is now on hold.

Aside from HarperCollins, every other division of News had a strong quarter. The “Star Wars” re-release helped 20th Century Fox report 36% higher operating income of $64 million on revenue, which doubled to $883 million. Video sales of “Independence Day” also contributed to the result, News Corp. said.

News Corp.’s television division increased operating income (profits before interest and taxes) 78% to $105 million, mostly due to the inclusion of New World Communications Group, which was acquired in January. News Corp. did not break out the impact of the acquisition or release adjusted numbers, but it said the Fox Television Stations group increased profits 31% and the original Fox station group showed only “marginal” growth.

News Corp. added that the New World stations, which had been performing poorly before their acquisition, had begun to show improved performance.

The company also said that the television division was also helped by a strong performance at the Fox network, helped by the Super Bowl broadcast and higher season-to-date ratings. The television operating income also includes the Asian sat-TV business Star TV, which News said continues to lose $80 million to $90 million annually, although foreign exchange movements in the quarter slightly reduced the losses and benefited News Corp.’s TV earnings, a spokesman said Wednesday.

News Corp.’s print businesses also had a strong quarter, helped by lower paper prices. The newspapers’ operating income rose 37% to $121 million, largely in the U.K., while TV Guide and the coupon inserts business delivered 20% higher profit of $99 million.

HarperCollins stands out as the one major trouble spot. Its quarterly loss is partly due to the absence of Harper’s educational publishing business, sold early last year, although News also blamed the poor operating results on “lower net sales at the U.S. adult trade group.”

To reduce costs, HarperCollins recently reduced the size of its San Francisco office and has combined some operations in New York. Part of the $35 million one-time charge taken against earnings in the quarter went to severance pay and other costs related to the restructuring, in addition to the closure of a CD-ROM interactive publishing division at Harper Collins and closure of a similar business at News’ U.K. newspaper business.

Wall Street analysts said the overall quarterly result was a little higher than expectations. “Overall, it was a pretty solid quarter,” said Lehman Bros. analyst Larry Petrella, although he that added investors are more concerned about uncertainty about the EchoStar deal and questions about News Corp.’s long-term earnings growth.

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Scene News from Variety