News Corp. Profit Rises on Higher TV Fees, Advertising

Publishing Revenue Declined 9%, Partly Due to News of the World Closure Amid Hacking Scandal

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News Corp. CEO Rupert Murdoch
News Corp. CEO Rupert Murdoch

News Corp., owner of Fox Broadcasting and The Wall Street Journal, said quarterly profit rose 65% from the year-earlier period as TV revenue increased and the hacking scandal in the U.K. seemed to remain contained -- albeit at a cost.

Net income rose to $1.06 billion, or 42 cents a share, from $642 million, or 24 cents, the company said in a statement.

News Corp., run by CEO Rupert Murdoch, gets most of its profit from a TV business that receives fees from pay-TV operators for broadcast and cable programming. Ad revenue at its cable TV properties in the U.S., which include FX and Fox News, rose 9%.

"The cable networks business is the single-most-important segment within News Corp., both in overall size and with respect to being an ongoing growth driver," Mike Morris, a media analyst with Davenport & Co., said in an interview before the release of News Corp.'s results. He rates the shares "buy" and doesn't own any.

Total revenue in the quarter ended Dec. 31 rose about 2% to $8.98 billion. Analysts on average had estimated $8.91 billion.

Publishing revenue declined 9.2% to $2.13 billion, partly because of the loss of revenue from the News of the World, which it shut down last summer as it moved to contain the hacking scandal.

The company said spent $87 million in the quarter and $104 million in the second half of last year on fallout from the scandal, which is now the subject of at least three separate inquiries.

There are 829 "likely victims" of phone hacking, according to a U.K. police probe. At least three top executives have departed since December and Murdoch's son, James, is loosening his ties to London and moving back to New York to work more closely with Chief Operating Officer Chase Carey.

But the scandal hasn't hurt the company's business, said Alan Gould, an Evercore Partners analyst in New York. "If anything, what you're seeing is Chase gaining power internally at the expense of James," Mr. Gould said in an interview before News Corp. released its results. Gould rates the shares "overweight" and doesn't own any.

News Corp. shares have gained 8.6% since the Guardian reported July 4 that the News of the World had accessed the voicemail of missing teenager Milly Dowler, who was later found murdered.

Soon after that report, the company moved to stop a drop in its share price by buying back $5 billion in shares. The company, as of Feb. 7, had repurchased $2.67 billion in shares as part of that program, according to a company filing.

But the rate of purchases may have slowed in the last two months, said David Bank, an analyst with RBC Capital Markets, in an interview before News Corp.'s results. "We'd like greater clarity on the timing and pacing of share buybacks," he said.

Revenue from News Corp.'s film business dropped in the December quarter, according to Box Office Mojo, as ticket sales for 20th Century Fox and Fox Searchlight films fell 16% to $252.9 million, from $299.5 million a year earlier.

-- Bloomberg News --

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