Dot-coms making news
NEW YORK — Rupert Murdoch is really into the Internet.
Murdoch said Wednesday that News Corp.’s recent spate of deals in the online space indicates a major — if not the major — focus for the company going forward.
Murdoch touted News Corp.’s online future, but the recent past is also noteworthy: fourth-quarter profit soared 67% to $717 million on strong perfs in film, cable and publishing. Revenue jumped 12% to $6.1 billion.
As for the Web, conglom has just formed Fox Interactive and pacted to acquire Internix Media and MySpace.
“There’s no greater priority for the company today,” the chairman-CEO said during a conference call with analysts to discuss quarterly earnings. He anticipated more news in coming months, including the purchase of a stake in a search engine.
Separately, News Corp. in a filing with the SEC unveiled the bonuses of its top execs, including $18.9 million for Rupert Murdoch and $5.8 million for Lachlan Murdoch. Chief operating officer Peter Chernin received $11.9 million in cash plus $6.9 million worth of so-called restricted stock units, now issued in place of options. Chief financial officer David DeVoe took home about $4.4 million in cash and $1.4 million in restricted stock units.
Murdoch also said there’s been no change to a key family trust. The trust is said to ensure that control of the conglom passes to his oldest children, including Lachlan Murdoch, News Corp.’s former deputy chief operating officer who ankled July 29.
He wouldn’t discuss why Lachlan, who was considered his heir apparent, left suddenly. But his exit is believed to be partly due to family tensions over Murdoch’s wife Wendy Deng. Deng and Murdoch have two toddlers.
Murdoch said during a conference call that News Corp. will retain its shareholder rights plan — also known as a poison pill — for at least two more years to guard against any incursion by Liberty Media chief John Malone, who owns a large chunk of News Corp. voting stock.
News Corp. said the move was aimed at stopping “potential future acquisitions of significant amounts of News Corp. voting stock by Liberty without consultation with the board.”
For the fourth quarter, filmed entertainment income rose by $14 million to $109 million, driven by homevid releases of “Alien vs. Predator,” “Sideways” and “Napoleon Dynamite.” Conglom also cited theatrical distribution of “Star Wars: Episode 3 — Revenge of the Sith” and “Mr. & Mrs. Smith” as well as pay-TV availability of “The Day After Tomorrow” and “Garfield.”
Quarter included releasing costs and initial results of “Kingdom of Heaven” and costs for “Fantastic Four,” which came out in July.
Chernin said homevideo revenue grew 32% for the fiscal year and, unlike other studios, “we are not seeing any unusual shortfall in the number of copies we are selling.”
Looking ahead as the DVD market matures, he does see a diminution in that kind of explosive growth.
Cable network programming income jumped by $17 million to $137 million on advertising and affiliate strength at Fox News Channel, FX and regional sports nets.
Fox News profits rose 30%.
The television segment saw operating income fall $7 million to $344 million.
Higher profits from Star were offset by a dip at Fox Broadcasting
Station income fell 5% on a soft ad market and the impact of Local People Meters, which have lowered the ratings at many Fox stations.
Murdoch said he looks forward to increasing synergies between Fox’s group of 35 owned TV stations and Fox News Channel.
He declined to name a successor to Lachlan Murdoch, who had been chairman of the station group, but said the group is being managed day-to-day by former FNC executive Jack Abernethy.
Conglom said Fox network profit fell on higher programming costs.
Italian satcaster Sky Italia swung to a $74 million profit from a $26 million loss the year before.
Newspaper income surged by $135 million to $252 million, including the results of the recently acquired Queensland Press Group.
HarperCollins book publisher saw profit jump from $5 million to $12 million.
News Corp.’s fiscal year ended in June.
For the full year, net income rose to $2.1 billion from $1.5 billion Revenue rose 15% to nearly $24 billion.
On the Internet, Murdoch, who was absent from the scene when most media companies were making ill-considered and unprofitable Internet investments, laid out an audacious plan to dive in headlong and take on established players such as Yahoo! and Google.
“News Corp., at its core, is about content. The Web is about personal choice. We intend to combine the two and redefine the meaning of an entertainment vertical,” Murdoch said.
Murdoch said the company planned to build an Internet portal on the scale of Yahoo! around its MySpace.com acquisition and its 200 local Web sites built around its TV stations and newspapers that would capture broadband users and local advertising.
The portal would be built around MySpace.com, acquired last month for about $500 million. It will include email, advanced search, voice communications and other features.
In addition, Murdoch said the company is in negotiations to take a controlling stake in what he described as a “small” search engine, and he confirmed the company held talks with online phone service Skype but that no deal was reached.
(Michael Learmonth in New York contributed to this story.)