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News Corp. profits fall as hacking scandal continues to take toll

Rupert Murdoch reads the last edition of the News of the World tabloid

The British phone hacking scandal continues to take its toll on News Corp.

The media conglomerate on Wednesday reported a 5% drop in its fiscal first-quarter earnings, as News Corp. incurred $91 million in charges associated with shutting down its News of the World tabloid in London that has been at the center of the scandal.

News Corp. also incurred $130 million in "other" charges, which include the costs of dropping its bid to acquire 100% of satellite broadcaster British Sky Broadcasting.

Taken together, these charges eroded the company's net income, which fell to $738 million or 28 cents a share, compared with $775 million or 30 cents a share for the same period last year. Meanwhile, revenue grew to $7.96 billion for the quarter that ended Sept. 30, up 7% from a year earlier because of double-digit growth from the company's cable and film groups.

The cable network group, which includes the FX network and Fox News, remains News Corp.'s primary revenue generator. It produced operating income of $775 million for the quarter, up 18% from a year earlier; reflecting higher advertising revenue and higher fees paid by cable, satellite and telecommunications companies for the rights to distribute Fox's cable networks.

News Corp.'s film group reported a 24% increase in operating income for the quarter to $347 million, fueled by the  performance of "Rise of the Planet of the Apes," which grossed more than $450 million in box-office receipts and home entertainment sales of the animated release "Rio" and "X-Men: First Class."

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Photo of Rupert Murdoch reading the final issue of the News of the World tabloid. Credit: Frank Doran / Rex Features

 

 

 

 

 
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