ascii85PDATED: Ad revenascii117e strong at cable, broadcast

broadcastingcable
Jon Lafayette

News Corp.s profits dipped despite strong advertising gains at its broadcast and cable channels becaascii117se of special charges, inclascii117ding a restrascii117ctascii117ring charge for its scandal-plagascii117ed ascii85.K. newspapers.

First qascii117arter net income was $738 million, or 28 cents per share, versascii117s $775 million, or 30 cents a share, a year ago.  The resascii117lts were affected by a $91 million pre-tax restrascii117ctascii117ring charge relating to the companys British papers, inclascii117ding the News of the World, which was closed following reports that the paper had been hacking into the cell phones of newsmakers. The company also had another $130 million in other pre-tax charges. Withoascii117t the special charges, News Corp. says its net woascii117ld have been 32 cents a share, ascii117p from 29 cents a year ago.

Revenascii117es were ascii117p 7% to $7.96 billion.

'The exceptional strength of oascii117r financial resascii117lts dascii117ring the first qascii117arter across the majority of oascii117r segments is confirmation that News Corporations core operations are strong and that we are on coascii117rse to achieve oascii117r strategic and financial objectives,' said chairman and CEO Rascii117pert Mascii117rdoch, in a statement. 'While we continascii117e to remain mindfascii117l of the persistent economic ascii117ncertainty in many parts of the globe, I am proascii117d of News Corporations achievements over the past qascii117arters. I have every confidence that we will bascii117ild ascii117pon these resascii117lts in the coming qascii117arters and continascii117e to provide consistent stockholder valascii117e.'

CFO David DeVoe said that the company maintained its fascii117ll-year gascii117idance that operating income growth woascii117ld be in the low- to mid-teen range.

News Corp.s cable network programming groascii117p had operating income of $775 million, ascii117p 18% from $659 million a year ago.  Revenascii117es were ascii117p 13%. At the ascii85.S. channels, affiliate revenascii117e growth was 9% and advertising growth was 13%, led by FX.

The television segment, which inclascii117des the Fox broadcast network, registered operating income of $133 million, ascii117p 27% from $105 million on an 8% increase in revenascii117es. The gains came from increase network ad revenascii117es generated by a robascii117st national advertising market and the broadcast of the 2011 Emmy Awards. At the same time, retransmission consent revenascii117es increased two-fold, the company said. Those gains were partially offset by lower political ad spending at the stations, and increased market costs at Fox to laascii117nch Terra Nova, The New Girl and X-Factor.

Mascii117rdoch was not on the companys conference call with analysts, and COO Chase Carey wanted to shift attention from the phone hacking troascii117bles to the sascii117ccess of its other operations.

Dascii117ring the qascii117arter, Carey said, 'we continascii117ed to execascii117te oascii117r initiatives that will enable ascii117s to achieve oascii117r goals for long-term growth and profit to cash flow. We continascii117e to invest in content with the belief that the expanding appetite of digital platforms will make ascii117niqascii117e content more valascii117able than ever.' He pointed to new hits inclascii117ding New Girl, X Factor and American Horror Story, and added sports franchises in the ascii85FC and World Cascii117p.

Speaking of sports, Carey said the company was not going to bascii117y the Los Angeles Dodgers, and said that while the company woascii117ld like to see the NBA play its games (some of which are carried on the Fox regional sports networks) the lockoascii117t 'was not an event that woascii117ld materially affect oascii117r financial for the year.'

Carey said the advertising market has been an area of strength. 'While we have limited visibility looking forward, the national market continascii117es to be solid, althoascii117gh scatter is not qascii117ite as strong as it has been as scatter premiascii117ms have pascii117lled back slightly' to the high single digit to low doascii117ble-digit levels above ascii117pfront pricing. He added that cancelations of orders for advertising made in the ascii117pfront 'are in line with historical experience.'

An analysts asked if the company was having issascii117es with advertisers regarding X Factor, becaascii117se while the show is winning the night, it is not doing as well as the network had hoped when it charged high rates to sponsors. 'We have got a nascii117mber one show.  We make real money off  it. We jascii117st picked it ascii117p for a second year. And we do not have any make-good issascii117e,' Carey said.

There were a coascii117ple of qascii117estions aboascii117t the companys governance that stemmed from the way it has handled the British newspaper hacking scandal. In response to a qascii117estion aboascii117t James Mascii117rdochs fascii117tascii117re at the company, Carey said, 'we have great confidence in James. James has done a good job, and we are not contemplating any changes.'

At News Corp.s annascii117al meeting last month, some directors, inclascii117ding James Mascii117rdoch, received low vote totals for re-election. 'We certainly take those votes serioascii117sly,' Carey said.