News Corp earnings beat Street
LOS ANGELES, California – NEWS Corp said that net income for the latest quarter tripled from a year ago yesterday, reflecting a one-time gain from the sale of its stake in digital video technology company NDS. Revenue rose two per cent thanks to growth at pay TV networks such as Fox News Channel.
Fiscal first-quarter net income came to US$2.23 billion, or 94 cents per share, compared with US$738 million, or 28 cents per share, a year ago.
Excluding about US$1.38 billion in special gains, largely due to the NDS sale, adjusted earnings came to 43 cents per share, beating the 37 cents expected by analysts polled by FactSet. News Corp had a 49 per cent stake in NDS, which was acquired by Cisco Systems in July.
Revenue of US$8.14 billion was roughly in line with the US$8.15 billion analysts were looking for.
Shares rose 52 cents, or 2.1 per cent, to US$24.80 in after-hours trading following the release of results. In the regular session, shares closed up 36 cents, or 1.5 per cent, at US$24.28.
The company, which is controlled by CEO Rupert Murdoch, said that charges related to the phone-hacking scandal in Britain came to US$67 million, up from US$17 million a year earlier. For the fiscal year through this past June, the company had already spent US$224 million handling a UK probe into allegations against its newspapers.
At its US pay TV networks, advertising revenue rose eight per cent, led by Fox News and its regional sports networks. Fees from distributors such as cable TV companies rose 16 per cent domestically. The segment was again the company’s most profitable, generating operating profit of US$953 million on US$2.45 billion in revenue.
The company said it expects full-year adjusted operating income in the year through next June to grow in the “high single- to low double-digit” percentages from the US$5.6 billion made in the most recent fiscal year. The forecast excludes the US$224 million spent on the UK probe in fiscal 2012.
The company is in the midst of a plan to split into two companies, one housing its newspapers, Australian operations and for-profit education business, and the other its more profitable TV and movie businesses.
Despite the split, analysts remain concerned that company founder Murdoch would use company cash — which grew to US$12 billion in the quarter from US$9.6 billion at the end of June — to spend on expensive acquisitions.
Last week, Murdoch used Twitter to criticise the announced merger between Pearson PLC’s Penguin Books and Bertelsmann SE’s Random House as a “faux merger disaster.” That sparked speculation that he would make a bold bid to buy Penguin and merge it with News Corp’s HarperCollins.
Chief Operating Officer Chase Carey said he was not about to “comment on Rupert’s tweets.”
“I’m not going to get too deep into the rumours on what we’re buying or what we’re looking at,” he said.