The stock is down 2.2% to $27.60 at mid-day. But that’s the equivalent of a shoulder shrug for News Corp‘s disclosure last night that weaker-than-expected results at Fox, the publishing operations, and Sky Italia mean that this year’s cash flow will grow by a “mid- to high-single-digit” percentage as opposed to the earlier projection for “high-single to low-double-digit” pickup. News Corp shares are still trading near all time highs. And analysts overwhelmingly say that they’re unfazed by the soft ratings at Fox, and the local economic slowdowns affecting News Corp’s Italian satellite service and Australian newspapers. “None of these factors come as a huge shock,” RBC Capital Markets’ David Bank says. “Additionally, none of them are real thesis changers.” Lazard Capital Markets’ Barton Crockett calls them “transitional” issues, adding that “cable network growth will pick up in a couple of quarters, and over-power the Fox and Sky Italia issues.” Wells Fargo’s Marci Ryvicker also observes that “the next positive catalyst is around the corner”: In about a month News Corp will file with the SEC financial details about its plan to create separate companies for its entertainment and publishing assets.
Interestingly, Bernstein Research’s Todd Juenger notes that the recent problems at Fox may benefit the entertainment company later. It will “help set up easy comps for the Fox Group out of the gate,” he says. He acknowledges that the network has “serious primetime programming problems to solve” — including weak ratings for The X Factor and American Idol. But the network’s been hardest hit by an unusual run of bad luck with its sports programming including a four-game World Series, “a horrible set of college football bowl matchups,” and “a pretty bad set of NFL playoff matchups.” The likelihood of that happening again is “very low,” he says.