'Simpsons,' cable growth help with revenue
Robust B.O. from unlikely blockbusters “The Simpsons Movie” and “Live Free or Die Hard” helped push News Corp.’s operating net profit up 23% in the fiscal first quarter.Total revenue rose 19% to a shade less than $7.1 billion for the period ended Sept. 30. Net profit declined 13% to $732 million, due mostly to a one-time gain of $428 million in the year-ago quarter, but on an operating basis, profits increased to $1.05 billion. Quarter was the fourth straight in which operating net profit increased by a high-teen percentage or better. In a conference call with analysts Wednesday, prexy-chief operating officer Peter Chernin also called the WGA strike a “positive” for the company, even if it runs through the end of the fiscal year in June. “We save more money in deals and story costs and not producing pilots than we lose in advertising,” Chernin said. “It will help growth in market share in Fox Broadcasting, and we’re better positioned than any of our colleagues. Our animated shows are a year ahead in terms of scripts, we have ‘American Idol’ and other reality shows coming. A strike lasting longer than eight months or a year would end up hurting other parts of the business.” Aside from the strike, the other hot topic was MySpace, and CEO Rupert Murdoch anticipated as much, taking a solid 10 minutes in his opening remarks to stump for the networking website. “There’s been a lot of chatter about whether MySpace will be able to continue its growth, and I think it’s misguided,” Murdoch said. He hit a few statistical highlights — MySpace has the most traffic of any U.S. site, one in four Americans are registered — and discussed a new plan to capture small-business advertising, which he believes could unlock Google-esque ad revenue. “A lot of the talk about competition centers on Facebook, but Facebook has 45% of MySpace’s unique visitors and 33% of its page views,” Murdoch said. “MySpace is a place for self-expression,” he declared; Facebook is a “Web utility.” In the two years since heavy Net investment began, the company said its online holdings, including Photo Bucket and AmericanIdol.com, are producing $200 million in revenue, up 80% over last year, and are considered profitable. In the film division, operating profits soared 51% from the year-earlier quarter to $362 million, thanks to “Simpsons,” “Die Hard” and homevid sales of “Eragon,” “Night at the Museum” and TV skein “Prison Break.” Losses associated with MyNetworkTV kept the TV unit flat for the quarter, providing perhaps the biggest blemish on the quarterly balance sheet, though the book division also saw operating net slip by $19 million to $36 million. On a dismal day on Wall Street in which the Dow plummeted more than 360 points and the Nasdaq had its worst drop since February, News Corp. shares slid almost 3% to $21.96 on three times normal volume. Murdoch also touched on the Oct. 15 launch of Fox Business Channel, which he said had been generating “wonderful reviews from everybody, some of them anecdotal and some in the business press.” As previously stated, the company projects a total outlay of $130 million, spread over three years, before break-even. Upward of $60 million of that will come in the current fiscal year. The Dow Jones acquisition is likely to close in the coming weeks, execs said, but no other acquisitions are on the horizon. Gloomy forecasts for the general U.S. ad market have hampered the performance of some of the media congloms, but Murdoch said News Corp. is less exposed than some competitors. About 45% of revenues derive from some form of advertising, but just 23% comes from U.S. TV advertising. Scatter ad rates are up by double digits over 2006 levels, the topper added, and Fox has already sold 95% of inventory for Super Bowl XLII at $2.7 million for each 30-second spot.