News Corp profit falls on higher TV expense

NEW YORK - News Corp on Wednesday said quarterly profit fell 8 per cent as TV spending offset robust growth in cable network advertising and films. 

It blamed higher Super Bowl programming expenses at its Fox TV network and a loss from restructuring a cable partnership. 

The owner of the Fox Entertainment Group and Sky Italia said profit fell to US$400 million, or 13 cents a share, in the fiscal third quarter ended March 31 from US$434 million, or 15 cents a share, a year earlier.  

Revenue rose 17 per cent to US$6 billion.  

Wall Street expected the company to post a profit of 17 cents a share on revenue of US$5.8 billion, according to Reuters Estimates. 

Although the company posted a 9 per cent rise in overall operating income to US$889 million, the bottom-line shortfall resulted from a US$77 million loss from the restructuring of a cable sports network co-owned with Cablevision Systems Corp.  

"The quarter was in line, but not high quality," said Jeffrey Bray, managing director of Babson Capital Management, highlighting weakness in News Corp.'s TV divisions.  

"The expectations have been drifting downward for a month," he said.  

Quarterly results were pulled down by a 15 per cent drop in TV operating income to US$221 million due largely to higher programming costs at the Fox Network from the Super Bowl.  

Higher expenses at the TV network offset a stellar 55 per cent rise in operating income from its roster of hit cable channels including Fox News and FX. 

Television revenue could also be hurt by a recent report by ABC, a division of Walt Disney Co., that a former contestant on the hit show "American Idol" had a personal relationship with a judge, the pop singer Paula Abdul. An Abdul representative has denied the allegations. 

News Corp.'s filmed entertainment division also saw a 15 per cent rise in operating income to US$251 million, boosted by "Alien vs. Predator" and the international release of "I, Robot."  

"Two of the crown jewels, cable networks and filmed entertainment, performed better than expected," said Christopher Marangi, an analyst at Gabelli & Co.  

Satellite TV operator Sky Italia's operating loss narrowed to US$21 million from a loss of US$24 million a year ago, on local currency revenue growth of 20 per cent. News Corp. said the division is expected to turn its first profit in the fiscal fourth quarter.  

New York-based News Corp., which in March completed the purchase of shares of the Fox Entertainment Group it did not own, is likely to turn its attention to buying back shares of its voting stake from Liberty Media or launching a big buyback of its shares, analysts have said.  

- REUTERS