Strong Results for News Corp. in Q3

NEW YORK: Driven in part by the success of Avatar, News Corporation beat analysts’ estimates with its third-quarter results, delivering total revenues of $8.8 billion, a 19-percent gain, and a net income of $839 million.

The company reported total segment operating income of $1.25 billion, a 55-percent increase compared to the $810 million reported a year ago. Commenting on the results, Rupert Murdoch, chairman and CEO, noted: “Today’s earnings confirm that no content company is stronger than News Corporation at building both fiscal and operational momentum. Our global portfolio of sought-after content is ideally situated to benefit from the increase in consumer spending, advertising and access to new platforms we are seeing across our regions. The unique strengths of our cable channels—young, vibrant franchises with phenomenal growth and potential—now generate almost half of our operating profit, ensuring that our stakeholders will continue to benefit from News Corporation’s sustained revenue, profit and cash flow strength for years to come.”

Filmed entertainment reported total revenues of $2.4 billion—a 64-percent increase—with an operating income of $497 million, a 76-percent gain, setting a record for the highest operating income of any fiscal quarter for this segment. Avatar was the main contributor to the gains, but the studio also reported the strong theatrical performance of Alvin and the Chipmunks: The Squeakquel, as well as the worldwide home-entertainment performance of Ice Age: Dawn of the Dinosaurs, X-Men Origins: Wolverine and Night at the Museum: Battle of the Smithsonian.

In the television segment, revenues were up slightly to $1.2 billion, and operating income soared from $9 million to $40 million, reflecting increased contributions from the Fox Television Stations (FTS) and improved operating results at MyNetworkTV. These results were partially offset by lower contributions from FOX Broadcasting Company, due to higher programming costs from increased license fees for returning series and decreased advertising revenue due to lower ratings.

The cable network programming division continues its strong run, with revenues up 16 percent to $1.8 billion, delivering an operating income of $588 million, a 38-percent gain, with improved results from the FOX News Channel (FNC), the Regional Sports Networks (RSNs), FX, the Fox International Channels and STAR. FNC, in particular, achieved its highest ever quarterly profit. Meanwhile, the Fox International Channels reported double-digit affiliate and advertising revenue growth in Asia and Europe, and STAR’s third quarter operating results improved versus the same quarter a year ago on 43 percent advertising revenue gains led by the Indian market.

Revenues were stable at SKY Italia at $954 million, but operating income almost halved to $35 million. The quarter end subscriber base of 4.7 million declined 39,000 from the previous quarter end.