Cable TV Lifts News Corp. but Fox Underwhelms

News Corp., Rupert Murdoch's media company that's set to split in two by the middle of this year, reported profit that topped analysts' estimates on higher advertising and subscriber fees for its cable networks.

 

 

Affiliate fees from U.S. pay-TV carriers rose 13% in the quarter that ended Dec. 31, while U.S. advertising at the domestic cable channels grew 8%, the company said today in a statement.
"Our domestic cable business continues to hit every target we set," said Chase Carey, president and chief operating officer at News Corp., in a conference call to discuss the results. He all but acknowledged the still-unannounced national sports cable network that News Corp. reportedly plans, calling it the "worst kept secret" in media.
But the Fox broadcast network did not meet expectations, Mr. Carey noted. "We hoped 'X Factor' would grow as it moved in to the competition phase but it disn't happen," he said. The World Series only lasted four games, down from seven in 2011, he added. And the NFL playoffs did not do as well as in the year before.
Mr. Murdoch, who started building his media empire more than a half-century ago with newspapers, is giving in to shareholder pressure to cleave the declining publishing division from his more profitable entertainment businesses. News Corp.'s 20th Century Fox film studio and the Fox cable and broadcast networks will form a faster-growing company without the weight of newspapers, where ad dollars and circulation are falling industrywide.
Net income in the quarter more than doubled to $2.38 billion from $1.06 billion a year earlier.
In December, News Corp. revealed its publishing business lost $2.1 billion in the fiscal year that ended in June because of restructuring, falling sales and the costs of a phone hacking scandal in the U.K.
News Corp. said today that its most recent quarter included $56 million in costs related to investigations into the hacking scandal, down from $87 million in the quarter a year earlier. The company did, however, incur $23 million in costs related to separating the entertainment assets from the publishing properties.

Mr. Murdoch has appointed Robert Thomson, The Wall Street Journal's editor, as CEO of the publishing company, where he'll oversee all newspapers, the HarperCollins book division and its stake in Australian TV assets. The publisher will retain the News Corp. name, while the entertainment division will be called Fox Group. Mr. Murdoch will be chairman of both companies and CEO of Fox.


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