News Corp. net income up on strong TV performance but clock ticking on MySpace
News Corp.'s hard-knuckled negotiations with cable operators are paying dividends: The media conglomerate posted a 36% jump in net income for its fiscal first quarter, thanks to double-digit gains from cable and television groups.
The company reported a net income of $775 million, or 30 cents a share, for the three-month period ending Sept. 30. That's up from $571 million, or 22 cents a share, a year ago. Revenues of $7.4 billion rose 3% from a year earlier.
Chief Operating Officer Chase Carey credited the network and cable groups with driving News Corp.'s growth.
Operating income for the Cable Network Programming group rose 28%, to $659 million, up from $513 million a year earlier. The company's cable networks -- including its powerhouse Fox News Channel, FX and regional sports networks -- are its largest profit generators.
Carey also singled out Fox's ability to get paid by distributors for their local TV stations as key to its television segment's success. Earlier this year, the company struck such a deal with Time Warner Cable and last week it concluded negotiations for similar deals with Cablevision Systems and satellite broadcaster Dish Network.
"These deals are critical to driving Fox's financial success," Carey said on a call Wednesday with financial analysts.
News Corp.'s television group, which includes the Fox broadcast network and Fox-owned television stations, reported an operating income of $105 million -- an increase of $67 million from the same time a year earlier. The TV stations' contributions doubled from a year ago, reflecting increased political advertising, as well as gains from automotive, telecommunications and the financial sectors.
The film group, by contrast, reported a 28% drop in operating income to $280 million, compared with $391 million a year earlier, when the studio released "Ice Age: Dawn of the Dinosaurs." Carey said the the film group has had "a few disappointing quarters without breakout hits," but also "avoided big losses." He professed optimism about the upcoming holiday releases.
MySpace came in for the harshest criticism, with search and ad revenues revenues down $70 million from a year earlier. Carey acknowledged that the social network is "a problem," but he said the company believes there is a strong enough foundation to justify redefining and rebuilding the site around "social entertainment."
It's clear the clock is ticking for MySpace. The company does not break out its results, choosing instead to lump it in a category called "Other," which reported an operating loss of $150 million, $30 million greater than the prior year.
"The current losses are not acceptable or sustainable," Carey said.
Asked how long MySpace had to reverse declines in revenue and users, Carey responded that he would think "in quarters, not in years."
-- Dawn C. Chmielewski
News Corp. COO Chase Carey at an event in Beverly Hills, California. (Credit: Valerie Macon /Getty Images)