Modest Profit Gains at News Corp.

NEW YORK, February 5: Net
income for the second quarter at News Corporation rose just 1.2 percent to $832
million on revenues of $8.6 billion, which were up 10 percent on the year-ago
period.

While the company posted a
modest increase in profits, operating income rose 24 percent to $1.4 billion. Commenting
on the results, Rupert Murdoch, News Corp.’s chairman and CEO, noted: “We are obviously proud of the
results we delivered during the second quarter, the highest operating income
quarter in our history, but most important is the balanced nature of our
earnings momentum with double-digit growth at nearly every operating segment.
Domestically, the strength of our broadcast network and cable assets has
enabled us to capitalize on the current advertising market, while at the same
time we continue to ramp up affiliate revenues across our cable channels. And
our Internet platform is now delivering real profits from locked in search
revenues as well as from advertising revenue growth as a result of our
hyper-targeting initiatives. We are also generating increased profits
internationally led by continued subscriber growth at SKY Italia, expanded
offerings from our Fox International Cable channels, and sustained strength at
our Australian newspaper group. Our unrelenting focus on exploring new
opportunities as consumer choice evolves and developing market leadership
positions regardless of borders has enabled us to deliver consistently strong
financial results irrespective of individual market conditions.”

The filmed entertainment
segment took a hit, with operating income falling 14 percent to $403 million,
on revenues of $1.98 billion, which were down 12.7 percent.

In the television segment,
operating income more than doubled to $245 million, led by improved results at
FOX, MyNetworkTV and STAR, which offset lower contributions from the television
stations. Television revenues totaled $1.53 billion, reflecting a small drop on
the year-ago period.

The cable network
programming division delivered a 23-percent rise in operating income to $337
million, reflecting increased contributions from Fox News Channel, the Regional
Sports Networks and the Fox International Channels, partially offset by launch
costs associated with the Fox Business Network and the Big Ten Network.
Revenues gained 34 percent.

SKY Italia emerged from
last year’s $12 million loss to post a profit of $62 million, with more than 400,000
net subscribers added over the past year. At the end of the quarter, SKY Italia
had 4.43 million subscribers. Revenues rose 25 percent to $955 million.

—By Mansha Daswani