News Corp. reports 47% jump in third-quarter earnings

News Corp. reported a 47% jump in net income in its third quarter, buoyed by strong performances from its cable and film groups.

The media conglomerate reported net income of $937 million for the quarter ended March 31,  compared with $639 million from the same time a year ago. Revenue increased to $8.4 billion, up 2% from a year earlier.

“Once again, News Corporation showed strong operational momentum in the quarter, driven by significant growth at our Cable Network Programming and Filmed Entertainment segments," Chairman and Chief Executive Rupert Murdoch said in a statement.

The company's cable networks reported operating income of $846 million, a 15% gain over the prior year -- thanks to double-digit growth at Regional Sports Networks, FX Network and Fox News. 

The film studio showed an operating income of $272 million, an improvement of nearly 10% from the same period a year ago.  Movie results reflected strong box office and home entertainment performances of "Alvin and the Chipmunks: Chipwrecked" and "The Descendants." 

However, the British phone hacking scandal continues to drag on the company's earnings. News Corp. took a charge of $63 million in costs related to the ongoing investigation of conduct at the now-shuttered News of the World tabloid.

News Corp. has been buffeted by the continuing fall-out from the British phone hacking scandal, which erupted last summer when it was revealed that a detective working for one of News Corp.'s tabloids had hacked into voice mail messages left for a missing schoolgirl who was later found dead.

Earlier this month, a committee of British lawmakers issued a blistering report finding that Murdoch had "exhibited willful blindness" toward the illegal phone hacking at the now-shuttered News of the World and is "not a fit person" to lead a major international company such as News Corp.

News Corp.'s board subsequently issued a unanimous statement affirming the directors' confidence in Murdoch and his ability to run the company he built from a single newspaper in Adelade, Australia.

Saudi Prince Alwaleed Bin Talal Bin Abdulaziz, News Corp.'s second largest shareholder, also voiced his continued backing of Murdoch in an interview with the Guardian, but expressed concern that the situation is damaging the reputation of the company beyond its British newspapers.

"I really hope that this is behind us because really it is not helping the name of the company," he told the Guardian. "We hope that this page is folded and put behind us because really it is not something to be proud of."

Murdoch's youngest son, James Murdoch, resigned as chairman of satellite broadcaster British Sky Broadcasting in April, ahead of what was expected to be a critical report from the parliamentary committee on his handling of the ethics scandal. 

Media regulators in Britain are evaluating whether BSkyB is a "fit and proper" holder of a broadcast license, because of News Corp.'s nearly 40% stake. Some politicians have used the Culture, Media and Sport committee's critical report to call for swift action -- a call the regulators have resisted.

RELATED:

Report questions Rupert Murdoch's fitness to lead News Corp.

James Murdoch steps down as chairman of British Sky Broadcasting

News Corp. posts 65% income gain on strength of film and cable TV

 -- Dawn C. Chmielewski

Photo: News Corp. Chief Executive Rupert Murdoch at the National Summit on Education Reform in San Francisco. Credit: Noah Berger / Associated Press

the Regional Sports Networks (“RSNs”), FX Network and FOX News

News Corp. board issues statement supporting CEO Rupert Murdoch

News Corp.'s board of directors offered their unanimous support for Chairman and Chief Executive Rupert Murdoch one day after Britain's Parliament issued a report on the phone hacking scandal that concluded the mogul was "not a fit person" to run the media conglomerate.

The directors met Wednesday and issued a statement that the members remain confident in Murdoch's fitness to lead News Corp. and support his remaining in charge.

"The board based its vote of confidence on Rupert Murdoch's vision and leadership in building News Corp., his ongoing performance as chairman and CEO, and his demonstrated resolve to address the mistakes of the company identified in the Select Committee's report," the company said in a statement.

The parliamentary report, issued Tuesday, concluded that three newspaper executives from News Corp.'s News International subsidiary misled the committee during its 2009 investigation into phone hacking at the London-based News of the World tabloid, which has since been shuttered. It also found that News Corp and News International failed to properly investigate possible wrongdoing -- and exhibited "willful blindness" to the questionable conduct.

RELATED:

Report questions Murdoch's fitness to lead News Corp.

Despite Murdoch furor, BSkyB says it is a 'fit and proper' broadcaster

News Corp.'s woes in Britain reignite calls for scrutiny in the U.S.

-- Dawn C. Chmielewski

Photo of Rupert Murdoch and wife Wendi Deng Murdoch as they are driven from The Royal Courts of Justice after he gave evidence to a judicial inquiry into press ethics in Britain. Credit: Photo by Peter Macdiarmid / Getty Images.

Despite Murdoch furor, BSkyB says it is a 'fit and proper' broadcaster

LONDON -- British Sky Broadcasting insisted Wednesday that it remains a "fit and proper" holder of a broadcasting license in Britain, despite a damning parliamentary report on media baron Rupert Murdoch, whose News Corp. owns a controlling stake in the company.

In an earnings report, the lucrative satellite television service said it was cooperating with British regulator Ofcom as part of the agency's evaluation of whether BSkyB remains a suitable holder of a broadcasting license.

The company said its "positive contribution to U.K. audiences, employment and the broader economy, as well as its strong record of regulatory compliance and high standards of governance" qualified it to maintain its license.

The statement came a day after an excoriating report by a parliamentary committee branded Murdoch as "not fit" to run a major international company. The report accused three senior News Corp. executives of lying to the panel during its investigation into phone hacking by the News of the World.

Murdoch shut down the tabloid last summer at the height of public outrage over phone hacking, which now appears to have been common practice at the paper. The furor also forced Murdoch to abandon his bid to buy the 61% of BSkyB that News Corp. does not already own.

The head of BSkyB sought to put some distance between his company and Murdoch's on Wednesday.

"It's important to remember that Sky and News Corp. are separate companies," Chief Executive Jeremy Darroch told reporters. "We believe that Sky's track record as a broadcaster is the most important factor in determining our fitness to hold a license. And the evidence shows that Sky serves U.K. audiences and customers well."

BSkyB reported a 5% rise in revenue over the last nine months, compared with same period a year earlier. Its adjusted operating profit during that period exceeded $1.4 billion, a 15% increase.

RELATED:  

News Corp.'s woes in Britain reignite calls for scrutiny in U.S.

Report questions Rupert Murdoch's fitness to lead News Corp. 

News Corp. executives may be in contempt of Parliament. So what?

-- Henry Chu

Photo: Media magnate Rupert Murdoch and son James attend a horse race in Britain in March 2010. Credit: Adrian Dennis / AFP/Getty Images

Rupert Murdoch acknowledges News Corp. errors

News Corp. Chief Executive Rupert Murdoch sought to move beyond a damaging report from Parliament accusing him of "willful blindness" in failing to properly investigate allegations of phone hacking by one one of his company's London-based tabloids.

Murdoch, in a message to News Corp.'s 50,000 employees Tuesday, said the findings by the Culture, Media and Sport committee were "difficult to read" -- but afforded "an opportunity to reflect upon the mistakes we have made.

"We have done the most difficult part, which has been to take a long, hard and honest look at our past mistakes," Murdoch wrote. "There is no easy way around this, but I am proud to say that we have been working hard to put things right."

The select committee of the House of Commons found that "News of the World" and News International, the company's British publishing division, misled the committee in a 2009 investigation into phone hacking by blaming the actions on a "rogue reporter."  The committee found that the media company continued to downplay the involvement of its employees in phone hacking and engaged in a cover-up, rather than seeking out wrongdoing.

News Corp. issued a statement Tuesday acknowledging the "hard truths" that emerged from the committee's investigation: that it had been "too slow and too defensive; and that some of our employees misled the Select Committee in 2009." 

But News Corp. took issue with some comments, which the company labeled "unjustified and highly partisan." This appeared to be a reference to an explosive line in the report that called Murdoch  "not a fit person" to lead a major international company.

Murdoch wrote that the company should have acted more quickly and aggressively to uncover wrongdoing, and he expressed regret for failing to rectify the situation sooner. 

News Corp., and Murdoch, sought to underscore the company's efforts to fix the situation. Murdoch noted that an autonomous committee set up by News Corp. has completed a review of conduct at the company's other British publications, The Times and Sunday Times and The Sun, and found no evidence of illegal conduct beyond one incident reported months ago, in which disciplinary action was taken.

News Corp. General Counsel Gerson Zweifach is also creating a system of education and a compliance structure across the company's businesses. News International, the group that controls the company's British publications, also instituted governance reforms.

"The opportunity to emerge from this difficult period a stronger, better company has never been greater," Murdoch wrote. "And I will look to each of you to help me ensure that News Corp.'s next 60 years are more vital and successful than ever."

RELATED:

News Corp. admits errors as panel calls Rupert Murdoch unfit leader

Rupert Murdoch unfit to lead company, British lawmakers say

Deeming Rupert not 'fit' opens a partisan divide

 -- Dawn C. Chmielewski

Photo: Rupert Murdoch, right, and his son James Murdoch in July 2011. Credit: Sang Tan /  Associated Press

News Corp. admits errors as panel calls Rupert Murdoch unfit leader

LONDON -- News Corp. says it is studying a report from a panel of British lawmakers that Rupert Murdoch “exhibited willful blindness” toward illegal phone hacking at the News of the World tabloid and that he "is not a fit person" to head a major international company.

The company said in a statement Tuesday morning, in responding to the scathing findings, that it “acknowledges significant wrongdoing at News of the World and apologizes to everyone whose privacy was invaded."

The panel stated that James Murdoch, the news tycoon’s son, showed poor leadership in failing to get to the bottom of the hacking scandal. Yet the lawmakers said that neither of the Murdochs had lied to Parliament about their knowledge of the extent of the problem.

But three other senior executives at News Corp. and the now-defunct News of the World -– including Les Hinton, one of Rupert Murdoch’s closest associates -– did mislead Parliament about how widespread the practice of snooping into cellphones was, the report said.

News International, News Corp.'s British arm, as a whole tried to hide the problem, suppressing documents and making statements to Parliament that were not completely truthful, according to the report.

"Their instinct throughout, until it was too late, was to cover up rather than seek out wrongdoing and discipline the perpetrators," the report said.

The stinging report by Parliament's committee on the media comes a week after Rupert and James Murdoch testified here before a judicial inquiry into media ethics. The report, months in the making, is certain to add pressure on the Murdochs as their global media empire struggles to deal with the continued fallout from the hacking scandal.

In particular, the report's most controversial statement, that Rupert Murdoch is unfit to lead an international company, could imperil News Corp.'s nearly 40% stake in the television company British Sky Broadcasting. British regulatory authorities are charged with determining whether major stakeholders such as Murdoch are "fit and proper" owners of mass media in Britain.

The committee's finding on Murdoch's unfitness was not unanimous. In fact, it led to a bitter split along party lines, with four Conservative Party members refusing to endorse the report on the grounds that such a declaration was outside the scope of the panel's investigation.

The report was approved on a 6-4 vote.

Committee members stressed they were completely agreed on their finding that three of Murdoch’s senior executives essentially lied to Parliament about phone hacking, which News International insisted for years was confined to one "rogue reporter."

One of those executives, Colin Myler, is now the editor of the Murdoch-owned New York Daily News.

Though misleading Parliament is a serious offense, it is unclear what punishment can actually be applied.

The committee called it "astonishing" that Rupert and James Murdoch took so long to find out that phone hacking went far beyond a lone reporter. Police say that thousands of people may have had their phones hacked into by the News of the World in its pursuit of sensational stories.

The scandal exploded in the public consciousness last summer with the revelation that among the hacking victims was a 13-year-old girl who was kidnapped and later found slain.

RELATED:

Rupert Murdoch apologizes, again

For Murdoch, media is about friends and influence

Murdoch son tells of contacts with British officials on BSkyB bid

-- Henry Chu

Photo: British Conservative member of Parliament Louise Mensch speaks at a news conference on the scathing report "News International and Phone-Hacking" on Tuesday. Credit: Carl Court / AFP/Getty Images

Rupert Murdoch unfit to lead company, British lawmakers say

This post has been corrected. See the note below for details.

LONDON -- Rupert Murdoch "exhibited willful blindness" toward the illegal phone hacking that was rife at the News of the World tabloid and is "not a fit person" to head a major international company such as News Corp., a panel of British lawmakers said in a stinging report Tuesday.

Murdoch's son, James. also showed poor leadership in failing to get to the bottom of the hacking scandal, but neither he nor his father lied to Parliament about their knowledge of the extent of the problem, the report said.

However, three other senior executives at News Corp. and the now-defunct News of the World -– including Les Hinton, one of Rupert Murdoch’s closest associates -– did mislead Parliament about how widespread the practice of snooping into cellphones was, the report said.

And as a whole, News International, News Corp.'s British arm, deliberately tried to hide the problem by suppressing documents and making statements to Parliament that were not fully truthful, according to the report.

"Their instinct throughout, until it was too late, was to cover up rather than seek out wrongdoing and discipline the perpetrators," the report said.

The scathing report by Parliament's committee on the media comes a week after Rupert and James Murdoch testified here before a judicial inquiry into media ethics. The report, months in the making, is certain to add pressure on the Murdochs as their global media empire struggles to deal with the continued fallout from the hacking scandal.

In particular, the report's most controversial statement, that Rupert Murdoch is unfit to lead an international company, could imperil News Corp.'s nearly 40% stake in the television company British Sky Broadcasting. British regulatory authorities are charged with determining whether major stakeholders such as Murdoch are "fit and proper" owners of mass media in Britain.

The committee's finding on Murdoch's unfitness was not unanimous. In fact, it led to a bitter split along party lines, with four Conservative Party members refusing to endorse the report on the grounds that such a declaration was outside the scope of the panel's investigation.

The report was approved on a 6-4 vote.

Committee members stressed they were completely agreed on their finding that three of Murdoch’s senior executives essentially lied to Parliament about phone hacking, which News International insisted for years was confined to one "rogue reporter."

One of those executives, Colin Myler, is now the editor of the New York Daily News.

Though misleading Parliament is a serious offense, it is unclear what punishment can actually be applied.

The committee called it "astonishing" that Rupert and James Murdoch took so long to find out that phone hacking went far beyond a lone reporter. Police say that thousands of people may have had their phones hacked into by the News of the World in its pursuit of sensational stories.

The scandal exploded in the public consciousness last summer with the revelation that among the hacking victims was a 13-year-old girl who was kidnapped and later found slain.

[For the Record, 11:41 a.m., May 1: A previous version of this post stated that the New York Daily News was owned by Rupert Murdoch's News Corp. The New York Post is owned by the company.]

RELATED:

British police arrest 6 in phone hacking scandal

Rupert Murdoch sorry about phone hacking but is also defiant

Murdoch son tells of contacts with British officials on BSkyB bid

-- Henry Chu

Photo: Media tycoon Rupert Murdoch leaves from a London courthouse last week after testifying at a British judicial inquiry on media ethics. Credit: Justin Tallis / AFP/Getty Images

News Corp.'s lobbying style under spotlight in British inquiry

News Corp.'s relationships with British regulators and politicians have gone under the microscope this week during a judicial inquiry into media ethics.

At issue is whether News Corp. officials got too cozy with British government officials when trying to push through its since-aborted deal to acquire the 61% of satellite broadcaster BSkyB that it didn't already own and used its media properties to curry favor with influential politicians.

Some of what's frowned upon in England is often standard operating procedure here. In the United States, media companies all have large staffs on Capitol Hill for lobbying and go out of their way to sway regulators. Often media companies hire ex-regulators to help make their case. Comcast, for example, recruited former FCC Commissioner Meredith Baker as a lobbyist last year just months after she voted to approve the cable company's acquisition of NBCUniversal.

The clubby atmosphere of Washington often makes it easy for companies to glean inside information on regulatory matters. Media watchdogs often complain of the revolving door between government and business.

News Corp. in particular is known for their lobbying prowess. In the 1980s and 1990s when News Corp. was getting the Fox network off the ground, the company had such a run of regulatory victories that some started to sarcastically call the Federal Communications Commission the "Fox Communications Commission."

The Obama administration has cracked down on some lobbying practices making it harder for companies to socialize with regulators and politicians. Also, meetings between industry executives and FCC officials are typically disclosed in public filings, usually with details of what was discussed.

Testifying on Wednesday in London before a judicial inquiry into media ethics, News Corp. founder Rupert Murdoch downplayed the schmoozing he does with lawmakers and government officials and said he never uses his media properties to forward a corporate agenda.

There are some in the United States who might take issue with that claim.

In 2004, the ratings company Nielsen introduced new people meters to measure ratings for local television stations. After the switch, ratings for stations owned by News Corp. dropped and the company started to argue with Nielsen over the accuracy of the new meters.

At that same time, News Corp.'s New York Post tabloid started running stories about politicians and community leaders who were concerned that the new meters were short-changing shows favored by minority viewers. The Rev. Al Sharpton and then-New York Democratic Sen. Hillary Rodham Clinton -– both of whom were often targets of the conservative New York Post editorial page –- also started protesting the new measurement system.

Not disclosed in the 15 articles that the New York Post ran on the issue from February to July 2004 was that News Corp. had a lot at stake in the fight. Also kept out of the stories was that News Corp. was a funder of the activist group Don’t Count Us Out that was created to fight Nielsen over the new meters.

Susan Whiting, then-president and now vice chairman of Nielsen, called News Corp.'s campaign to stop the new technology "despicable" in a 2004 Wall Street Journal article.

News Corp. now owns the Wall Street Journal.

RELATED:

Rupert Murdoch dishes on British politicians

Rupert Murdoch calls phone hacking lazy journalism

For Murdoch, media has always been about friends and influence

-- Joe Flint

Photo: Rupert Murdoch. Credit: Associated Press

News Corp.'s relations with British politicians, regulators questioned

LONDON -- Part of being a media mogul is schmoozing with politicians and regulators who have oversight over the industry, but there is a fine line between lobbying for your business and inappropriate contact. Now Rupert Murdoch's News Corp. is being accused of crossing that line when it was attempting to take over British Sky Broadcasting.

Details of contact between News Corp. executives, including James Murdoch, Rupert's son and the company's deputy chief operating officer, emerged Tuesday during a judge-led inquiry into press ethics prompted by the scandal at the media giant's tabloid newspapers. Operatives for News Corp. papers, including the now-closed News of the World, have been accused of hacking into voice mails and paying off police for stories.

At issue are News Corp.'s interactions with Jeremy Hunt, the secretary of media and culture who had oversight over News Corp.'s proposed deal to buy the 61% of BSkyB it didn't already own. News Corp. withdrew that bid after the phone-hacking scandal exploded and put a dark cloud over the company.

During Tuesday's hearing, James Murdoch denied implications that News Corp. engaged in improper discussions with Hunt while seeking approval of the deal, and bristled at the idea that the company would use its media clout to persuade politicians to advance its corporate agenda.

"The question of support of an individual newspaper for politicians one way or another is not something that I would ever link to a commercial transaction like this," Murdoch said. "Nor would I expect ... political support one way or another ever to translate into a minister behaving in an inappropriate way -– ever. I simply wouldn’t do business that way."

RELATED:

James Murdoch resigns from BSkyB board

James Murdoch testifies about relations with British lawmakers

James Murdoch says he was unaware of wide-spread phone hacking

-- Henry Chu and Joe Flint

Photo: James Murdoch: Credit: Matthew Lloyd / Bloomberg

James Murdoch insists he was unaware of widespread phone-hacking

 

LONDON -- James Murdoch, the son of media titan Rupert Murdoch, testified Tuesday that he had no idea phone hacking was widespread at the News of the World tabloid and that he would have insisted the company "get to the bottom of what was going on" had he known.

In a London courtroom, Murdoch said he had been assured by underlings that hacking was confined to a "rogue reporter" who was jailed in 2007 for tapping into voicemails left for members of Britain's royal household. Murdoch said he was told that the hacking issue had been safely "packed away" by the time he took control of News International, the British arm of media giant News Corp.

"I was given repeated assurances ... that the newsroom had been investigated, that there was no evidence" of more hacking, Murdoch said at the beginning of his highly anticipated appearance before a judge-led inquiry into media ethics here.

The inquiry was set up last summer after the hacking scandal broke wide open with the revelation that the News of the World had illegally accessed the voicemails left on the phone of a kidnapped teenager. The girl, 13-year-old Milly Dowler, was later found slain.

Police now say the now-defunct News of the World pried into the private voicemails of potentially hundreds of people, including actors, athletes, politicians and family members of murder victims and fallen soldiers.

In his sworn testimony, Murdoch insisted he would have "cut out the cancer" of hacking if he had known that the practice went beyond a single reporter to encompass other journalists at the News of the World. He denied that he was part of a corporate cover-up, but also rejected a suggestion that he was guilty of poor management for not knowing what was going on at one of his newspapers.

The paper's editor and its legal manager were responsible for making sure employees complied with ethical standards, Murdoch said. He also did not participate in editorial decisions, he said.

"I wasn't in the business of deciding what to put in the newspapers," Murdoch testified.

Both Rupert and James Murdoch were called before a parliamentary committee to answer questions on the hacking scandal last July.

Scotland Yard is now pursuing three separate investigations into voicemail interception, computer hacking and payoffs of police and public officials for information.

Dozens of journalists from the News of the World and its sister tabloid, the Sun, have been arrested in connection with the various probes. Britain's chief prosecutor is considering whether to file formal charges against 11 of them.

ALSO:

Netflix posts first loss since 2005, shares plunge

Wolfgang Hammer, Terry Press named to head CBS Films

James Murdoch resigns from BSkyB ahead of phone-hacking report

-- Henry Chu

Photo: James Murdoch gives testimony in London on Tuesday before a judge-led inquiry into media ethics. Credit: AFP/Getty Images

James Murdoch gives up post as News International chief

James Murdoch has resigned his position as executive chairman of News International.

Once seen as the likely successor to his father, Rupert Murdoch, as chairman and chief executive of global media giant News Corp., James Murdoch has seen his reputation tarnished and business judgment questioned by his handling of the phone-hacking scandal that has torn through News Corp.'s British newspaper unit.

Murdoch's relinquishing of his News International title had been expected given that he recently relocated from London to News Corp.'s New York headquarters. Still, the backdrop of the move was not anticipated a year ago when the hacking scandal was still relatively minor in the public's eye.

In announcing the move, News Corp. made no mention of the hacking into phones of celebrities and royal family members and bribing of public officials alleged to have gone on at the company's now closed News of the World tabloid and its Sun newspaper. 

Instead, Rupert Murdoch praised his son's leadership at other units of the company.

"He has made lasting contributions to the group's strategy in paid digital content and its efforts to improve and enhance governance programs," the senior Murdoch said.

James Murdoch said he would focus now on growing News Corp.'s international television business.

Close watchers of the Murdoch family will no doubt start analyzing what the latest news means for James Murdoch's future at News Corp. When Rupert Murdoch visited the Sun the other week in antcipation of the launch of a new Sunday edition, it was older son Lachlan, not James, by his side.

RELATED:

James Murdoch knew of wider phone hacking, ex-colleagues say

James Murdoch quits Glaxo board: Murdoch to focus on BSkyB chairman role

Murdoch to launch new U.K. Sunday paper: Arrested Sun journos return to work

 -- Joe Flint

Photo: James Murdoch. Credit: AFP/Getty Images