There’s a lot to absorb in the latest News Corp earnings release. It includes a $67M charge for costs tied to the hacking-scandal investigations and a $152M impairment charge with the newspapers and digital games businesses. But there’s also a $1.38B gain from the sale of software security firm NDS and $75M from BSkyB’s share-repurchase plan. All together, the company reports net income of nearly $2.3B, up from $786M in the quarter last year, on revenues of $8.14B, +2.2%. Revenues are shy of the $8.16B that analysts expected. Earnings per share, stripped of one-time events, came to 43 cents, beating expectations of 38 cents.
Once again, the cable networks were the stars of the show with revenues of $2.45B (+15.5%) and operating income of $953M (+23%). Domestic ad sales improved 8%, with particular strength at Fox News and the regional sports networks. Domestic affiliate revenues were up 16%. Filmed Entertainment, which offered Ice Age: Continental Drift, beat profit expectations ($400M, +15.3%) but with revenues slightly down ($1.75, -1.9%). Investors may question the television unit results. They underperformed the market’s high expectations due to what the company says were “lower national advertising revenues” that reflect the drop in Fox Broadcasting’s primetime ratings and the impact of the London Olympics. With rising retransmission consent payments and strong sales of political ads the unit delivered revenues of $959M (+3.9%) with operating income of $156M (+17.3%) — missing forecasts that anticipated more than $200M.
Publishing also fell short with revenues of $2.02B (-2.5%) and operating income of $57M (-48.2%). News Corp attributes that to lower ad revenues across all divisions including the U.S. and Australian newspapers. CEO Rupert Murdoch says the company should be helped when it separates publishing and entertainment into separate companies. “We have made considerable progress in this process and look forward to providing more details by the end of the calendar year.”