News Corp. profits surge in Q2

Film, TV boosts revenue up 2% to $8.98 billion

News Corp. earnings surged 65% to more than $1 billion last quarter, with the conglom taking an $87 million hit related to phone-hacking inquiries and $104 million from shuttering the News of the World newspaper, where the scandal erupted.

Revenue edged up 2% to $8.98 billion.

The film division, with fewer releases, was sharply profitable as were cable and broadcast TV, offsetting a drop in publishing as the U.K. and Australian newspaper biz softened. Chief operating officer Chase Carey said on a conference call Wednesday that he expects continued U.K. declines thanks to the loss of coin from News of the World.

The Wall Street Journal parent Dow Jones & Co., in contrast, held up well year-over-year, Carey said, and anticipates digital digital expansion under new CEO Lex Fenwick. He was just named to replace Les Hinton, who resigned in the phone-hacking wake. “We really have not taken advantage of opportunities to push the envelope (for) broader digital franchises” there, Carey said.

Carey said News Corp. is committed to its newly hatched education division led by top attorney and former New York City Schools Chancellor Joel Klein. Chairman-CEO Rupert Murdoch has called education “the last holdout of the digital revolution” and jumpstarted the unit in late 2010 by acquiring education-technology provider Wireless Generation for $360 million.

Klein, who also heads the conglom’s internal probe into the hacking scandal, is growing increasingly influential in Murdoch’s circle, which has added a handful of new faces in recent weeks. The mogul recently hired Natalie Ravitz, communications director for the New York Board of Education, as his chief of staff. He also named a new general counsel and new head of corporate over the past month.

Carey dismissed rumors that Lachlan Murdoch could return to the company for the Australian newspaper group. “I think Rupert has said clearly in the past he’d be thrilled to have Lachlan back in the company, but right now there aren’t plans to announce anything.”

Carey acknowledged that News Corp. has tons of cash even with its hefty share buyback program and is considering acquisitions. “We’d rather be building businesses than acquiring them, but if we can find businesses that we could buy that meet our threshold … then those are investments to make,” he said.

On the earnings front, lower theatrical releasing costs along with content licensing deals with Amazon and Netflix led film profits to more than double to $393 million from $189 million.

The studio’s fiscal 2012 second quarter included worldwide home entertainment releases of “Rio,” “Rise of the Planet of the Apes,” “X-Men: First Class” and “Mr. Popper’s Penguins” and theatrical releases “Alvin and the Chipmunks: Chipwrecked” and “The Descendants.”

Cable nets reported second-quarter segment operating income of $882 million, up 20%; revenue rose 9%.

Carey said the company’s recently announced investment in new Spanish-language network MundoFox with RCN would be “in the tens, multiples of tens, not three digits” — meaning under a hundred million dollars.

Fox’s Regional Sports Networks had a $55 million benefit from reduced rights costs resulting from the NBA lockout.

International cable channels grew earnings 8%, led by continued momentum in Latin America.

Affiliate revenue grew 9% domestically and 19% internationally.

Advertising revenue at the domestic cable channels grew 6%. Calendar 2011 marked FX’s most watched year in its history.

International ad revenue rose 5%.

The broadcast television business saw profit jump 25% to $189 million citing increased network ad revenue underpinned by the stronger fall schedule led by “X-Factor” and “The New Girl,” strong Major League Baseball and National Football League programming, as well rising retransmission consent revenues.

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