News Corp doubles profit, gears up for split
News Corp said Wednesday it is on track to complete the split of the media-entertainment conglomerate by June, as the company reported a jump in profits from its accounting of broadcast operations.
The Rupert Murdoch-led group said profits more than doubled to $2.38 billion, boosted by income from newly acquired broadcasters.
In releasing the earnings, Murdoch said the media-entertainment conglomerate was making "progress" toward the breakup of the group into two companies -- one focused on publishing, the other on the fast-growing entertainment operations.
Chief operating officer and president Chase Carey told a conference call the company was "on track" for the breakup by the end of the company's fiscal year on June 30.
The company announced the restructuring in June, a move partly seen as a nod to shareholders angered by the reputational damage and costs inflicted by a phone hacking scandal in Britain, and partly because of troubles within the group's publishing arm.
Carey repeated the assertion that the move would "unlock value" for shareholders at News Corp, whose assets include the Fox studios and broadcasting operations, a broad array of cable and satellite TV properties, The Wall Street Journal and newspapers in Britain and Australia.
News Corp. revenue for the fiscal second quarter to December 31 rose five percent from a year earlier to $9.43 billion, led by 18 percent growth in cable programming.
The profit adjusted for special items amounted to 44 cents a share, two cents better than Wall Street estimates.
Murdoch said the results show "our strong momentum" as the company "seized opportunities to invest in our core businesses for long-term and sustainable growth."
"The strategies we executed again in the quarter continue to bolster News Corporation's competitive position and enhance our ability to benefit from global demand for content, especially sports programming," he added.
"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."
The company's cable network programming accounted for an operating profit of $945 million and filmed entertainment $383 million.
A big part of the profit jump came from gains posted in accounting for the company's increased ownership stakes in Fox Sports Australia and Fox Star Sports Asia. This added $1.4 billion to profits.
The group saw a modest increase in publishing, a unit which includes The Wall Street Journal and other newspapers. The operating income for the segment was $234 million, a $16 million improvement from a year earlier, helped by improved results from British newspapers, the company said.
Among the disappointments in the past quarter were losses from its Sky Italia satellite TV, which Carey attributed to "the economic crisis in Italy," and sports broadcasting, which we blamed on "a sports schedule which just didn't bounce our way."
Profits dipped at the company's film operations, reflecting negative comparisons to the prior year. The segment profit was $383 million, from $393 a year ago. The biggest contributor was "Life of Pi, which has brought in some $500 million in worldwide box office receipts, but the unit failed to keep up with the pace set last year from "Rio," "Rise of the Planet of the Apes" and "X-Men: First Class."
The results included $56 million set aside for investigations of the phone-hacking scandal in Britain, which led to the closure of The News of the World.
Some $23 million was set aside for charges related to the reorganization of the company.