Profits dip after company's record-breaking 'Avatar' hit
After a year of record-breaking success, News Corp. executives knew sooner or later that the “Avatar” hangover would kick in. But not everyone is blue since the company’s cable profits alone have tripled in the last five years.In reporting fiscal year results on Wednesday, executives said they expect operating profits in film to be down by $300 million in the coming year, from the $1.3 billion 20th Century Fox booked for the year ended June 30. That record result reps more than a $500 million boost over the prior year. Much of the studio’s recent success can be attributed to “Avatar’s” record box office performance starting in December and then robust DVD sales during the past several months, making it the most successful movie of all time. But clearly the “Avatar” effect is waning. Even the movie’s strong DVD sales, including in Blu-ray, couldn’t help reverse a profit decline in the last quarter for News Corp.’s film unit. Profits slid to $137 million, down 32% vs. the same period in 2009. Overall, News Corp.’s revenues increased 8% in the fiscal year to $33 billion, and operating profits were up 11% to $4 billion. The bright spot was News Corp.’s cable networks, led by Fox News and the family of regional sports nets, which now account for more than half of the company’s operating profits. Profit at the cable nets, which also include FX, have more than tripled in the past five years, said News Corp. president Chase Carey. When asked about the global economy, News Corp. chairman Rupert Murdoch said he still sees “fragility” in the medium term but that he was encouraged by the “almost inexplicable” gains in advertising in nearly all categories. Fox News, for one, saw ad gains of 20% in the last quarter, News Corp.’s Sun newspaper in the U.K. picked up a 22% gain, and the Wall Street Journal got a boost of 14%. Murdoch said it was still too early to gauge the results of his efforts to put his print content behind paywalls, particularly at the Times of London. He did say that he believed the iPad would be “a game-changer” in the paywall area and also in how news is presented and consumed in the future. Murdoch said the company is working with regulators as part of its $12 billion-plus bid to buy back the 60% of pay TV sat operator BSkyB that it does not own. Meanwhile, News Corp.’s efforts to turn around MySpace are still a work in progress. The category that includes digital media reported operating losses of $174 million in the last quarter, and $575 million for the full year, due to lower search and ad revenues. Murdoch, however, insisted he is still committed to MySpace, the social networking site for which News Corp. paid $580 million five years ago. A new management team is performing an overhaul that will completely change the look of MySpace in the next several months, he said. “We are going to see it out for some time yet,” Murdoch added.
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