A wacky Kazakh journalist burnished News Corp.’s stellar studio perf, but steep losses at nascent MyNetworkTV squeezed profits.
The film studio was on fire as profits surged 57% to $470 million. “Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan” led a powerful roster of video product in film and TV. Revenue rose 41% to $2.26 billion.
But thanks in part to weblet MyNet — not to be confused with juggernaut Netco MySpace — News Corp.’s net income fell 24% to $822 million for the fiscal second quarter.
Company noted that the year-earlier income was inflated by a $370 million one-time gain.
News Corp.’s total revenue rose 18% to $7.84 billion.
Television segment profit plunged 37% to $112 million, with revenue about flat at $1.6 billion.
“Clearly, MyNetworkTV is not going as originally planned,” News Corp. chief operating officer Peter Chernin said during a conference call.
He declined to quantify the red ink, which some Wall Streeters have estimated at about $25 million since the net launched in fall.
Chernin promised that beefed up management and major programming changes will start to turn MyNet around. Plan is to swap low-rated telenovelas, which were the weblet’s mainstay, for two nights of Intl. Fight League and two nights of classic movies. Chernin said that will slash costs by more than 50%.
“We know that there will always be fits and starts at the launch of any new network,” he said. “We learned first and foremost that we need a dedicated management team, and we hired Greg Meidel.” The industry vet joined the network in mid-January.
MyNet was News Corp.’s hasty response to last year’s merger of the WB and UPN, which left a number of Fox stations that had been UPN affiliates without programming.
“We will have better, cheaper, more advertising-friendly programming going forward,” Chernin said, predicting narrower losses by the fourth quarter and “better results into next year.”
Meanwhile, the Fox network followed its now august tradition of a weak first half of the season, followed by a blowout second half as “American Idol” crushes competition.
“We must do a better job of launching new programs in the fall,” Chernin said vehemently.
Profits at the Fox net dropped 36%. Ratings fell and several shows were canceled. Company also cited weak ratings for Major League Baseball’s postseason and higher NFL costs.
Fox TV station revenue rose 8% year on year, largely from political advertising that offset the drag from MyNetworkTV stations.
Execs were much happier discussing record results at the studio, where management is, Chernin said, “relentlessly and obsessively focused on profitability.”
It shows. “Borat” and “Night at the Museum” were big winners theatrically in the quarter. “The Devil Wears Prada,” “Little Miss Sunshine,” “Ice Age 2: The Meltdown” and “X-Men: The Last Stand” buoyed homevideo.
Chernin was upbeat on three upcoming animated pics: “The Simpsons Movie” this summer followed by “Ice Age 3” and “Dr. Seuss’ Horton Hears a Who,” featuring the voice of Jim Carrey.
The studio was “just getting started” with its new Fox Atomic label, led by Peter Rice, he noted.
Cable network programming saw profits rise 5% to $275 million thanks mostly to the Fox News Channel, where profits jumped 25%. Results at other nets, including FX and Fox Sports, were hit by higher programming and marketing costs.
Overall cable revenue rose 13% to $920 million.
Chairman-CEO Rupert Murdoch said there could be an announcement as soon as next week on the long-anticipated Fox Business Channel, which could see an early fall launch.
Fox Interactive Media, led by MySpace, more than tripled its revenue year on year to $125 million for the quarter and is on track to hit $500 million for the full fiscal year.
“We’re starting to see some of the improvements we’ve made in advertising technology pay off,” Chernin said. He said the unit was “overdelivering on our impressions” under a long-term deal with Google, which will kick in “several hundred million” in revenue next year.
Book publishing, led by HarperCollins, saw income drop by $20 million to $54 million. Revenue was flat at $393 million.
Profits at the newspaper biz surged to $170 million from $69 million. Revenue rose slightly to $1.1 billion.
Murdoch confirmed that he’s indeed working with the Chandler family in their attempted buyout of Tribune Co.
“We’re interested quite openly and frankly in doing something that could lead to a joint operating agreement” between News Corp.’s New York Post and Tribune’s Newsday, he said. It would entail “a pretty small investment (by News Corp.), under the Chandlers.”
Magazines and inserts saw income of $74 million, about flat from the $76 million the year before.
Wall Street, a fan of News Corp. these days, shrugged off the MyNetwork woes, driving the shares up 1.95% to close at $24.62.