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Fox has ‘Monkey’ on its back

Chernin upbeat on DirecTV talks

NEW YORK — Box office dud “Monkeybone” took a gorilla-sized bite out of earnings at Fox Entertainment and parent News Corp. last quarter, despite an upswing at the Fox broadcast net and continued growth at Fox News.

News Corp. chief operating officer Peter Chernin was upbeat on DirecTV merger talks. And he squashed rumors that News Corp., with little interest in financing UPN losses, would partner with Viacom on the netlet.

News Corp.’s net income fell to $111 million in the third quarter from $300 million a year earlier. Revenue nosed higher to $3.3 billion from $3.2 billion.

Subsid Fox swung to a net loss of $9 million from a profit of $19 million a year ago. Revenue grew to $1.97 billion from $1.88 billion.

Fox also blamed a weak showing for “Say It Isn’t So” and juiced-up marketing costs for big summer pics for the sharp drop in filmed entertainment operating income, which fell to $49 million from $98 million.

Revenue for the division rose slightly to $859 million from $805 million, buoyed by hit feature “Cast Away,” worldwide library deals and video/DVD sales of “X-Men” and “Me, Myself & Irene.”

Speaking to reporters on a conference call, Chernin lit into “Monkeybone,” calling it “a leftover from the last administration” and a “residual hangover from animation” — a field Fox has definitively exited. He said the studio had fully anticipated taking a major writedown for the film.

But, he said, “The film company is moving in the right direction” and is on track to show significant improvement for the year.

Nicole Kidman starrer “Moulin Rouge” kicked off the Cannes Film Festival Wednesday night. “Planet of the Apes,” “Dr. Dolittle 2” and Jet Li’s “Kiss of the Dragon” will hit theaters this summer.

Network cuts losses

In TV, the Fox broadcast net pared operating losses to $3 million from $12 million. Revenue slipped to $426 million from $439 million. Fox noted lower series programming costs plus a 7% boost in season-to-date ratings among adults 18-49. Net replaced older, costlier shows such as “Party of Five” and “Beverly Hills, 90210” with cheaper newcomers.

Success rates with new fare like “Boston Public,” “Dark Angel” and “Grounded for Life” are a happy comparison with last year, when a handful of new series were yanked. Upturn was partly offset by higher sports programming and marketing costs for NASCAR and a weak ad climate.

Fox TV stations saw operating income dip to $76 million from $87 million a year ago. Revenue eased to $320 million from $341 million as advertising sagged in nearly every major category.

The station group is set to expand as Fox closes in on its purchase of broadcaster Chris-Craft, whose stations are affiliates of Viacom-owned netlet UPN. Despite talk of a partnership, Chernin said News Corp. is leery of deepening the relationship if it means investing in the loss-making net.

“We have had talks with them and looked at some numbers, and, honestly, we are scratching our head,” he said, adding, “We like UPN and would like it to thrive and be successful.”

In cable network programming, revenue jumped to $339 million from $273 million. Operating losses were unchanged at $18 million but cash flow jumped to $35 million from $28 million as higher ratings funneled more ad dollars to Fox News and the net added 17 million new subscribers.

Fox Sports Networks was hit by higher programming costs for more NBA and NHL telecasts, and by soft advertising. FX added 13 million subs.

At News Corp.’s other businesses:

  • Newspapers: Revenue fell to $638 million from $686 million. Operating income eased 4% to $134 million.

  • Book publishing/HarperCollins: Revenue eased to $210 million from $242 million. Operating income was flat at $12 million.

  • Magazines and inserts: Revenue slid to $249 million from $265 million. Operating income fell by $6 million to $67 million.

News Corp. also reports numbers for a handful of companies it doesn’t fully own, including U.K. satcaster BSkyB, Sky Latin America, Star in Asia and Foxtel in Australia. Combined losses for these so-called associated entities widened last quarter to $41 million from $24 million.

News Corp. is bundling its worldwide satellite assets into a separate unit called Sky Global Networks and is looking to Hughes Electronics’ DirecTV to be the U.S. piece. Talks with Hughes and parent GM were relaunched last week. “We’re optimistic that we’re nearing the end,” Chernin said.

He said he doesn’t anticipate regulatory hurdles, since the parties have no overlapping businesses. That’s not so, he noted, with DirecTV’s smaller rival EchoStar, which has surfaced as a possible suitor for DirecTV.

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