News Corp. income rises in fiscal Q3
Higher TV ratings overcome DVD shortfall
By Danny King -- Video Business, 5/7/2008
MAY 7 | News Corp.’s fiscal third-quarter earnings rose as higher advertising sales from strong ratings at its TV and cable networks overcame lagging revenue from its DVD and theatrical releases.
Net income for the quarter ended March 31 was $2.69 billion, or 92¢ a share, up from $871 million, or 27¢, a year earlier, as revenue increased 16% to $8.75 billion. Excluding one-time items such as News Corp.’s DirecTV stock swap with Liberty Media, earnings per share increased 15% to 30¢ from 26¢, chief financial officer David DeVoe said in a conference call today.
News Corp.’s strong performance came in spite of a filmed entertainment division whose earnings fell 36% from a year earlier. Theatrical and home entertainment revenue for the 20th Century Fox unit fell as current DVD releases such as Alvin and the Chipmunks and Juno failed to keep pace with year-earlier hits including Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan and Night at the Museum, DeVoe said.
20th Century Fox Home Entertainment division had a 12% share of the $5.6 billion U.S. home entertainment market in the first quarter, trailing Walt Disney Studios Home Entertainment and Time Warner’s Warner Home Video, according to Video Business research and Rentrak figures. No Fox title cracked the first quarter’s Top 10 list of DVD sellers and rentals. Alvin was released April 1 and Juno on April 15.
“Year-ago results were very strong,” said DeVoe, who added that current-quarter home entertainment results are likely to be bolstered by the release of Horton Hears a Who!
DVD sales are likely to be further driven by Blu-ray Disc sales and rentals, which News Corp. president Peter Chernin reiterated would approach $1 billion this year once manufacturers boost supply.
“It’s hard to find more than one or two Blu-ray players in a store right now. That should change starting in June,” said Chernin. “Once the price comes down, you’ll begin to see much expanded orders in Blu-ray.”
News Corp.’s earnings were largely driven by gains in its TV and cable networks units, which accounted for more than half of the company’s operating profit. Fox’s Feb. 3 Super Bowl broadcast was the most watched TV program in 25 years, while cable networks such as Fox News Channels had ratings increases of more than 10%, DeVoe said.
“We’re coming off a year where we’ve led the other networks by a bigger margin than in many, many years,” News Corp. chairman Rupert Murdoch said on the call.
Murdoch also scoffed at the notion that News Corp.’s $580 million offer for Tribune newspaper Newsday would be rejected in favor of New York cable operator Cablevision’s higher bid, adding that the company would boost annual cash flow by $100 million a year by combining some Newsday operations with News Corp.’s New York Post.
“I don’t think Cablevision will prevail,” said Murdoch. “Just be patient for a couple days.”
