Cable networks, TV lead enhanced News Corp Q2 results

Joseph O'Halloran | 07-02-2013

Even though the trading period showed the ongoing effects of corporate reorganisation, the second quarter of fiscal 2013 has seen TV units deliver the goods for pay-TV behemoth News Corp.

For the quarter ended 31 December 2012, News Corp reported total revenue of $9.43 billion a 5% year-on-year increase driven by the stand-out $398 million (18%) growth at itscable network programming segment. This division’soperating income improvements, in combination with those from the TV segments, were instrumental in the corporation posting a 5% increase in total segment operating income to $1.58 billion.
Television alone reported quarterly segment operating income of $224 million, up 19% year-on-year. Driving this increase was a more than doubling of retransmission consent revenues and increased local advertising at the Fox Television Stations driven by political advertising revenues during the US presidential election season. However, they were also negatively affected by lower US advertising revenues, primarily reflecting lower primetime ratings at the Fox Broadcast Network and three fewer World Series games in the current year, as well as increased costs associated with expanded college football coverage.
The results also included a $56 million hit relating to the closure of The News of the World following the phone hacking scandals in the UK, actually $21 million less than in the corresponding period of the prior year, as well as $23 million of costs related to the proposed separation of the company’s entertainment and publishing businesses.
The quarter also showed just how important sports is to News Corp, with $1.4 billion of income related to gains on the acquisitions of additional ownership stakes in FOX SPORTS Australia and Fox Star Sports Asia as well as a $131 million gain from the company’s participation in the share repurchase programme of BSkyB whose crown jewels include broadcasting rights to English Premier League football and the UEFA Champions League.
A clearly bullish News Corp chairman and CEO, Rupert Murdoch, said the figures reflected the strong momentum the company had gained despite the scandals of the recent past that had precipitated the splitting up of the business divisions and even had some doubting the viability of the company in its present form.
He said: “The strategies we executed against in the quarter continue to bolster News Corp’s competitive position and enhance our ability to benefit from global demand for content, especially sports programming. As we make progress toward the proposed separation of our entertainment and publishing businesses later this year, I am confident in the future prospects for both businesses.”