News Corp.'s TV Units Push Profits Up

'American Idol' Ratings Strength Cited, While Newspapers See Decline

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NEW YORK (AdAge.com) -- "American Idol," the Fox broadcast network and the company's cable channels helped News Corp. record third-quarter profits of $820 million, more than double the profit margin earned by the company in the comparable period last year.
Fox's 18- to 49-year-old ratings were up 17% for its third quarter, thanks to 'AI,' '24' and 'House.'
Fox's 18- to 49-year-old ratings were up 17% for its third quarter, thanks to 'AI,' '24' and 'House.'

Operating income at News Corp.'s cable networks rose 23%, thanks in large part to increased revenue at the company's 14 regional sports networks and advertising strength at Fox News Channel. Cable-network programming saw operating income at $211 million, up $39 million, or 23%, from the comparable period last year. At Fox News Channel alone, operating income was up 24% compared with the year-ago period.

Ratings drive Fox turnaround
News Corp.'s TV arm -- which includes the Fox network, local Fox affiliates and the company's international TV networks -- saw operating revenues increase 29% to $286 million, a jump triggered by ratings strength at the Fox network and News Corp.'s Asian pay-TV company Star.

According to a company statement, Fox Broadcasting Co. saw a profitable third quarter vs. a loss in the year-ago quarter. The turnaround was driven by hit shows such as "American Idol," which created higher overall ratings and increased ad rates for the network. For the period, Fox's ratings were up 17% among the 18-49 demographic. However, increased ad revenue was partially offset by higher programming costs from "American Idol," "24" and "House."

News Corp.'s newspaper segment -- which includes papers such as The New York Post, and U.K. titles The Times and The Sun -- reported a decline of $33 million to $153 million, though the drop was attributed to comparisons with the same quarter last year, which included returns from TSL Education, a publishing division that has since been sold.

MySpace and Mobizzo
In a statement, News Corp. Chairman-CEO Rupert Murdoch said: "This quarter saw accelerated progress in our new media evolution. MySpace expanded to over 70 million registered users, solidifying the prominence as one of the fastest growing sites on the Internet. We also launched Mobizzo, a new destination for mobile content, putting us in the vanguard of this exploding new platform."

Merril Lynch analyst Jessica Reif commented on the News Corp. earnings report in a research note. "News Corp. continues to demonstrate the best operating momentum and strongest growth profile of the diversified media companies, in our opinion," Ms. Reif wrote. "'American Idol's' domination of primetime television has helped drive Fox ratings up 14% this season, 'Ice Age 2' has been the year's biggest movie (worldwide box office $594M) and MySpace is the leader in the fastest-growing segment of the Internet: community sites."
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