TV ops fuel Rupe's profit surge
This article was updated at 7:42 p.m.
NEW YORK — News Corp.’s profit surged nearly 70% last quarter, with gains across the board led by booming cable networks, a much improved broadcast TV biz and newspapers in the U.K. and Australia.
Chairman-CEO Rupert Murdoch said Fox will launch one new channel this year but was mum on genre. He said the net will bow on DirecTV but won’t be exclusive to the satcaster. While he noted that a biz news channel “is something we could do quite easily,” he said that would require more distribution than DirecTV’s 12.6 million subscribers could offer.
Fox is also said to be pondering a reality channel, a weather web and a Hispanic net.
News Corp.’s earnings jumped to $465 million from $275 million, operating income grew 22% to $838 million, and revenue rose 19% to $5.2 billion for the three months ended in March.
On the strength of those numbers, the company upped its full-year financial forecast.
Operating income at Fox News Channel doubled and FX’s ratings powered ahead as the net averaged 1 million viewers in primetime in the quarter. Chief operating officer Peter Chernin expects big bucks as the net’s affiliation deals come up for renewal. He called the cable assets the fastest-growing piece of News Corp.’s portfolio. Income at the unit jumped 51% to $143 million.
Television income, including the Fox broadcast net, TV stations and Star in Asia, posted a 25% profit increase to $259 million — reflecting double-digit earnings improvement at the networks and stations.
Execs said the net is regaining momentum and Murdoch promised during a conference call not to make the mistake of overexposing the network’s ratings juggernaut, “American Idol.” Chernin noted that Fox has ordered six new shows to bow in June as the net tries to shift product from the crowded fall season. “All the signs point to a healthy upfront. We don’t think it will be insane, but healthy,” he added.
However, Chernin said the TV studio is scaling back on production from a peak of 28 shows. “It was down to 23-24 last season, and I’d expect it to be down to about 19 (this season). Given the economics of that business, we’ve been trying to be more disciplined and not take orders on shows we don’t think have long-term potential.”
The net’s operating income rose by $14 million on higher ad pricing in primetime and stronger sports advertising from the National Football League, where post-season ratings were up 10% year on year.
Fox station earnings grew 24%.
At filmed entertainment, homevideo sales rose 6% to $214 million. Company cited “League of Extraordinary Gentlemen” and catalog titles like “Planet of the Apes,” “Moulin Rouge” and “Ice Age,” plus more worldwide theatrical coin from “Cheaper by the Dozen.”
“Master and Commander: The Far Side of the World,” released on video two weeks ago, is expected to fuel sales in the current quarter.
Chernin said he’s upbeat on the summer bigscreen slate including “Man on Fire” and upcoming pics “The Day After Tomorrow,” “Garfield” and “Alien vs. Predator.”
Sky Italia, News Corp.’s new Italian pay TV unit, lost $25 million vs. $106 million in the quarter ended in December. Revenue stood at $492 million. Between Sky Italia, BSkyB, DirecTV and some other assets, News Corp. has 27 million subs worldwide.
Newspaper operating income rose 53% to $176 million, reflecting circulation revenue increases in the U.K. combined with advertising strength in the U.K. and Australia.
At book publisher HarperCollins, operating income rose 57% to $36 million on a 30% hike in revenue. Company cited a handful of bestsellers including Rick Warren’s “The Purpose Driven Life.”
Magazines and inserts saw income rise 11% to $84 million.
Murdoch said Chernin’s new contract has been hashed out and is “in the hands of lawyers,” meaning the valued second-in-command is all but certain to reup. The looming expiration of Chernin’s current contract had been making Wall Streeters nervous.
Murdoch confirmed “sporadic exchanges” with Liberty Media’s John Malone, who has said he’d like to swap his News Corp. preferred stock for some of the media giant’s smaller assets. Murdoch said nothing at News Corp. is for sale. But, he noted, with “Family Channel, nothing was for sale then either. But when someone came along and offered $5.5 billion, we changed our minds.” (Disney bought Fox Family.)
He noted that Malone is keen on building up internationally.
Also last quarter, News Corp. sold the Los Angeles Dodgers to Frank McCourt for $421 million and decided to formally shift its headquarters from Australia to the U.S.