Cable the key as News Corp steams on
Joseph O'Halloran | 07-11-2012
Despite taking a hefty blow from costs associated with the News of the World closures, News Corp has delivered solid growth in its first financial quarter, led by cable TV revenues.
In all for its first quarter ended 30 September 2012, News Corp reported total revenue for the three months of $8.14 billion, a $177 million, or 2%, increase over the $7.96 billion of revenue reported in the prior year quarter, which led to a first quarter total segment operating incomeof $1.38 billion compared to $1.39 billion reported a year ago.
Driving the revenue increase was notable growth, 16%, at News Corp’s cable network programming segment which also was the engine for a $178 million, or 23%, increase in overall operating income improvements at the company’s cable network programming, television and filmed entertainment division.
Operating income contributions from US channels increased 33%, led by growth at the Regional Sports Networks (RSNs), FX Network and Fox News Channel. Yet strong local currency operating profit growth at the Fox International Channels was said to have been offset by the adverse impact of the strengthened US dollar and the impact of the inaugural broadcasts of the new BCCI cricket rights at STAR.
However, the strong performance in the cable sector was partially offset by declines at the company’s direct broadcast satellite (DBS) TV and publishing segments, the latter of which is still feeling the shockwaves of the News Of The World phone-hacking scandal which threatened not only the company’s profits but also the future of chairman and chief executive officer Rupert Murdoch and his family members on the board. Indeed Murdoch’s position has been threatened by legal actions and an increasing amount of shareholder revolt.
Specifically, the Q1 figures included a hefty blow of $67 million in charges related to the costs of the ongoing investigations initiated upon the closure of The News of the World, $50 million more than that of the corresponding period of the previous year. This year’s first quarter results also included $5 million of costs related to the proposed separation of the News Corp’s company’s entertainment and publishing businesses, a move that Murdoch recently described as fundamentally vital in ensuring the media giant’s future viability.
Excluding these charges from both years, respectively, first quarter adjusted total segment operating income of $1.45 billion increased $48 million, or 3%, from $1.40 billion in the first quarter of the previous year. The quarter’s results also included $1.38 billion of income in principally reflecting a pre-tax gain on the sale of the NDS conditional access firm to Cisco as well as a $75 million pre-tax gain from its participation in the share repurchase programme of BSkyB in which News Corp holds a 39.1% stakes and whose own financial performance has been even more impressive.
Commenting on the results, Rupert Murdoch said: “Our operational discipline and focus on innovation continued to drive the company’s momentum in our fiscal first quarter, led by double-digit growth in our channels business and the global success of our film and television content. We are committed to leading the change that the marketplace and our customers demand as the company builds on its success at leveraging multi-platform opportunities for our content. We believe that our ability to do so will be enhanced by the flexibility and management focus that will result from the proposed separation of our entertainment and publishing businesses.”